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Feds Wary Of State's LIP Plan

hospital workers in hospital
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

The federal Centers for Medicare & Medicaid Services is wary of approving a state proposal for helping fund hospitals without knowing more about Florida's plan for the future, an official said Friday.

The statement came as the two sides try to work out an agreement on how to fund hospitals under a program known as the Low Income Pool, or LIP. Funding for the program will decline to $1 billion in the 2015-16 budget year, which begins July 1.

LIP includes $2.2 billion in the current year. The state has proposed offsetting the loss of funds by using some local money to boost the Medicaid rates paid to providers like hospitals. Local money currently helps bankroll LIP.

"We have not heard from the state on their proposal for 2016-17 when the LIP is reduced further to $600 million in spending authority (roughly $360 million federal funds, $240 million state funds)," the official, communicating on background, wrote in an email.

"Knowing that the state has a viable plan for 2016-17 is critical for CMS before signing off on transitional funding for 2015-16."

The official also indicated that the federal government wasn't sure local sources, such as hospital districts, would continue to provide all the funding they currently give the state without assurances of getting a return on their investment, something that is a key part of LIP.

A spokesman for the U.S. Department of Health and Human Services, which includes CMS, said the agency was still looking at the proposal submitted by the state Agency for Health Care Administration, which answers to Gov. Rick Scott.

"CMS continues to be engaged with Florida regarding the state's LIP proposal and the May 26 letter but has not communicated approval," spokesman Ben Wakana said, referring to a May 26 letter from state Medicaid director Justin Senior.

"CMS is reviewing the proposal and public comments, and working to understand the implications of the letter as well as the viability and sustainability of the proposed funding mechanism."

LIP funding will be a key issue as state lawmakers begin a special session Monday to negotiate a budget for the upcoming fiscal year. Jackie Schutz, a Scott spokeswoman, fired back at federal officials late Friday.

"Without HHS finalizing an agreement in principal on this federal health-care funding for the poor, we will fail to have a budget that keeps Florida's economy growing,'' Schutz said in a prepared statement.