Billions at Stake as State, Feds Negotiate Medicaid

When the 2015 legislative session begins next week, many of the state’s decisions on health care for the poor are on hold as state and federal Medicaid officials negotiate over funding, behind closed doors. Billions of dollars are at stake.

When it comes to health-care funding, Florida’s in a funny position. The state has twice turned down billions of dollars from federal Medicaid that would have covered care for about a million poor Floridians.

This year may be no different.

"I don't believe for one moment that this is a good plan for Florida and I would certainly  not change my opinion on that,," said State Representative Matt Hudson, who chairs the powerful committee in charge of health spending.
 

At the same time, state legislators and Governor Rick Scott want federal officials to keep a special fund for hospitals that treat those same patients. It's called the Low Income Pool.  

It may seem inconsistent, but that's health-care politics in Florida.

Justin Senior, Florida’s Medicaid director, is watching the calendar as he negotiates with federal health officials over renewing the Low Income Pool. It expires June 30.

“In order for us to make any plans for expenditures on July 1 of this year we really do need agreement in principle from our federal partners sometime in late March or very early April,” he said.

The Medicaid budget that Governor Scott recently sent to the Legislature includes more than $1 billion for the Low Income Pool.  But federal Medicaid chief Eliot Fishman told business leaders in Orlando recently that the Low Income Pool – which he calls LIP -- will not be renewed in its present form.

“We extended the LIP for a year with the explicit purpose of moving to a significantly reformed payment system," Fishman said at the Associated Industries of Florida's Health Care Affordability Summit.

To get that money last year, Florida had to agree on an independent evaluation of its Medicaid payment program. Fishman says that report by the consulting company Navigant shows lots of flaws.

“Florida's payment system is complicated and far more so than the payment system in either Medicare or payment systems in other states," he said. "That complexity leads to huge variation within the state in terms of the ratio of Medicaid payment to the cost of care.”

In other words, the program pays way more to some health-care providers than to others for the same service.  

Florida can straighten out its payment problems if it expands coverage to the uninsured, Fishman said. Two years ago, the state House turned down billions of dollars from the Affordable Care Act intended for that purpose.

Fishman said states that did expand are seeing immediate results. In just one year, they've seen steep drops in unnecessary ER visits and hospital admissions.

“You’re talking about really dramatic historic reductions in that kind of utilization that certainly in my field, in health care policy, it’s really revolutionary,” he said.

Also, this issue is not just about the money. Fishman said poor people who can see doctors get illnesses diagnosed sooner. He says it can make a life-and-death difference.

"None of us should forget the sacred obligations that that really puts on us when we are talking about what the future is for the uninsured," he said.

A big difference in the Medicaid expansion debate this year is that big business has added its heft to the push for the state to accept the Medicaid expansion money. That's at least $3 billion a year.

The Senate may be open to considering taking that money, but the House isn't.

"It's dead on arrival." State Representative Cary Pigman, a Republican from Sebring. He's also an ER doctor who chairs a panel on health quality.

Unless, Pigman says, the proposal looks a lot different from last time. It would need to give the state more control, use private insurance, reduce some benefits, and require more from Medicaid enrollees -- healthy behavior, co-pays and willingness to work.

He said the House Republican caucus won't accept a demand to expand  Medicaid in order to avoid a sudden cutoff of the Low Income Pool. It's unclear if that will happen.

"We believe the jury is still out with that. I believe there are some bureaucrats in Washington who don't want to cut Florida off abruptly, I think there are other bureaucrats in Washington would like to punish us for not expanding Medicaid the way they want us to expand it," he said.

Mark Delegal is an attorney with Holland and Knight. He represents the hospitals that will be hurt most if the Low Income Pool disappears. He feels certain an agreement will be reached, at least on that.

"It's absolutely essential, Florida deserves it, Florida's relied on it for 25 years in some fashion," Delagal said. "To pull it out and eliminate it would not be sustainable for many, many hospitals."  

Special correspondent Carol Gentry is part ofWUSFin Tampa. Health News Florida receives support from the Corporation for Public Broadcasting. 

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