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Some hospitals lose, some win under possible LIP revamp

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Behind the scenes of a looming budget stalemate it turns out Florida and officials of the federal government are negotiating a revamped funding formula for hospitals that could cause a dramatic change of fortune for them.

Florida has already been told it won’t receive the more than $1 billion in federal aid it has been getting as part of the Low Income Pool (LIP) program. The program is a pot of supplemental Medicaid dollars, mostly money collected from local taxpayers then matched with state and federal dollars.

The threatened loss of the money prompted state Senate Republicans this past week to warn that it could throw this year’s budget into disarray.

The Centers for Medicare and Medicaid Services (CMS), though, has told of a way to keep intact a version of the program — but it includes significant changes.

Under a revised formula under consideration, Florida’s teaching hospitals would lose $166 million in payments while for-profit facilities would gain $173 million.

Specifically, hospitals are being told by CMS that the federal government won’t allow the LIP funding to be used to increase rates for hospitals with ties to local taxing districts that produce the program’s money The changes would essentially raise the base rates of all hospitals evenly, regardless of mission.

The news has made teaching hospitals and other not-for-profit community based systems antsy. Many of them contribute the local money or intergovernmental transfers that are used to draw down matching Medicaid funds.

Here’s why: A spreadsheet making the rounds in Tallahassee shows dramatic changes for many hospitals under the new formula.

Jackson Memorial Hospital would lose $95 million; Shands Jacksonville would be out $4o.5 million; Tampa General would lose $31.8 million; and Shands Gainesville would lose $22.8 million.

University of Miami-affiliated hospitals would lose $8 million and one statutory teaching hospital, Orlando Health, would gain $27.7 million.

In addition to the teaching hospitals, large public facilities also would be hit hard by the proposed changes. Broward Health would lose $21.1 million; Memorial Healthcare System would out $20.8 million; Lee Health System would lose $4.7 million; and Halifax Medical Center would lose $4.2 million. All Children’s Hospital and Miami Children’s Hospital would lose $21.9 million

Although the teaching hospitals would suffer, for-profit facilities would gain money. Hospital Corporation of America, or HCA, facilities would gain the most, with a $127.6 million increase in their reimbursement.

Other hospitals to gain under the formula include Adventist Health Systems $33.7 million; Tenet HealthSystems $27 million; Baptist Health South Florida $24.2 million; and Community Health Systems $20.6 million.

Those figures do not include the affect of the other changes that CMS has told the Agency for Health Care Administration will be made to this supplemental pool of Medicaid money. Federal officials have told Florida it won’t allow LIP money to be used for anyone enrolled in a health insurance exchange or anyone who would be covered under a Medicaid expansion.

That means LIP would exclude about 800,000 Floridians who are Medicaid eligible under the federal health-care law but are not covered in Florida. Another 1.6 million Floridians are insured through the exchange, the majority receiving tax subsidies.

Hospitals worry that coverage for 1.6 million Floridians in the exchange could be in flux if  the U.S. Supreme Court rules against the Obama administration in King v. Burwell.

The news has the statutory teaching hospitals, community hospitals, and even members of the Miami-Dade County delegation scrambling to come up with alternatives.

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