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Feds Eye Medicaid Funding Changes

Patient in discussion with doctor at a desk.
Daylina Miller/WUSF
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 said Tuesday it is revamping rules that define how states can collect money to fund supplemental Medicaid payment programs. 

Supplemental payments have increased in the past several years, going from 9.4 percent of all other Medicaid payments in fiscal year 2010 to 17.5 percent in fiscal-year 2017. The Trump administration agreed in 2017 to authorize Florida to receive up to $1.5 billion annually in Medicaid supplemental payments for the Low Income Pool, or LIP, program.

The LIP program is closely watched in Tallahassee, as it has been an important source of additional funding for hospitals that serve large numbers of poor and uninsured patients.

The state has not traditionally contributed any general revenue to the LIP program. Instead, funding comes from counties and hospital taxing districts that send money to the state. Those local funds are used to draw down matching federal dollars.

How the proposed changes in federal rules will impact Florida isn’t clear. State Agency for Health Care Administration officials did not have an immediate comment Tuesday.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services, shared some details about the changes during a speech at the National Association of Medicaid Directors meeting in Washington.

“We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system,” Verma said. “Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”

Republicans have held out supplemental programs such as LIP as a way to help health-care providers offset the largest costs of uncompensated care. But former President Barack Obama’s administration maintained that using Medicaid funds to offer health insurance was a better use of the money.

After Florida refused to expand Medicaid eligibility in 2015, the Obama administration announced it would eliminate the state’s LIP program, which was funded at the time at a high of $2.1 billion. Then-Gov. Rick Scott, however, convinced the Trump administration in 2017 to extend the LIP program through 2022 at as much as $1.5 billion annually.

Justin Senior, chief executive officer of the Safety Net Hospital Alliance of Florida, said his association is reviewing the details of the proposed changes that have been released so far. The group represents public, teaching and children’s hospitals that provide care to many low-income and uninsured patients.

“Florida doesn’t really rely on elaborate taxation schemes, confusing public-private partnerships, or complex provider donations to come up with its state share,” Senior, a former Florida Medicaid director told The News Service of Florida. “Other states are much more aggressive about that type of thing.”

While Senior said the state doesn’t engage in elaborate taxation “schemes” to collect the necessary funding, the federal government has raised questions as to how money has been spent.

An audit issued this year by the U.S. Department of Health and Human Services Office of  Inspector General contended that Miami’s Jackson Memorial Hospital erroneously claimed $686 million in Medicaid costs, of which $412 million was paid by the federal government.

The majority of the alleged erroneous payments --- $347.5 million --- stemmed from claiming ineligible medical expenses for such things as providing non-emergency care to patients who did not legally reside in the United States and delivering outpatient care to prisoners, auditors said.