Florida between a rock and hard place on Medicaid

Florida's hospitals stand to lose up to $1.3 billion in federal funds to shore up its Medicaid program after a supplemental fund used to leverage those payments is set to terminate later this year.

A new study by Navigant Consulting casts doubts on the ability of safety-net hospitals in Florida--and Jackson Health System specifically--to continue serving Medicaid patients once its Low Income Pool (LIP) program ends on June 30. The average reimbursement for Medicaid care would be about 62 percent of the actual cost of delivering it, according to the Navigant report.

The LIP program has been in place for the past decade, but is jeopardized due to Florida transitioning its entire Medicaid population into managed care. A supplemental Medicaid fund such as LIP is not designed to work with a population that is not primarily fee-for-service. 

The issue in Florida is not uncommon in other states, although they have engineered other forms of suppemental funds intended to increase federal payments, such as a bed tax on hospitals, or a tax on insurers. Florida also uses a limited bed tax, according to the Miami Herald.

"You could put a tax on the HMOs. You could put an increase on the current tax on hospitals," Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, the state's public hospital lobby, told the newspaper.

Another option is to simply expand Medicaid under the Affordable Care Act (ACA). This would capture as much as $66 billion in federal funding for the Medicaid program over the next decade. Jackson Health would gain $570 million a year alone, according to the Sarasota Herald-Tribune.

Expanding Medicid would also mean the state would mitigate the loss of $22.6 billion in dispropotionate share hospital (DSH) funds that expired under the ACA. Several other states controlled by the GOP have expanded Medicaid under waivers obtained from the Centers for Medicare & Medicaid Services.

"We're seeing a lot more willingness from them to be flexible," Jennifer Fennell, a spokeswoman for the Healthy Florida Works coalition, a group of hospitals and businesses trying to craft a plan that would be palatable to lawmakers, told the Herald-Tribune.

To learn more:
- read the Miami Herald article  
- check out the Sarasota Herald-Tribune article 
- here's the Navigant report (.pdf)