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Reform clause to cost FL $300M

By Christine Jordan Sexton
5/1/2009 © Health News Florida

Attempts to expand the Medicaid reform pilot beyond five counties have been soundly defeated by the Legislature in the last two years. But there’s a price to pay for that: $300 million. 

A little-noticed clause in the deal Florida reached with the federal government for its Medicaid waiver says that if the program isn’t expanded statewide by 2010-11, then Florida will receive $300 million less for a hospital fund called the Low Income Pool. 

The Agency for Health Care Administration will ask the federal government to relax the requirement.“It may be something we have to work with the federal government on,” said Tom Arnold, chief of staff for AHCA and one of the main architects of the Medicaid reform initiative. 

Several key lawmakers – including Sen. Durell Peaden, a Crestview Republican in charge of the Senate health care budget committee and Rep. Juan Zapata, a Miami Republican who oversees part of health care spending in the House, have said this session that lawmakers will not expand the pilot project beyond its current configuration. 

The Low Income Pool (LIP) is a $1 billion pot of money available to the state for treating the uninsured. The money comes from the federal government and several Florida counties.
The LIP Council makes recommendations to the Legislature on how the money should be spent. Generally, lawmakers follow that blueprint. 

While the $300 million hit won’t impact the state until next year, the news about the impending shortfall has triggered a behind-the-scenes battle over this year’s funding recommendations, which are being hammered out by House and Senate budget conferees today and throughout the weekend. 

Florida’s larger teaching hospitals want to hold back some of the money in reserve until next year to cushion the blow. Others, however, want the state to spend the full billion now. 

Because of the federal stimulus, LIP has $250 million more this year than the Legislature had originally anticipated. Florida’s larger teaching hospitals would like to put the extra $250 million in reserve to cover next year's shortfall. Others, though, want the state to spend it now.
Rep. Kevin Ambler, chair of the House health spending committee, predicted that it will be up to Speaker Larry Cretul and Senate President Jeff Atwater because the effects are so great. "It will probably be one of the final decisions made," he said.

Another outstanding LIP issue is whether the state should spend $250,000 on a consultant to study the council. Senate budget conferee Sen. Don Gaetz, a Republican from Niceville, said the money is a good investment considering there will be less LIP funds next year. Gaetz has been highly critical of the LIP Council and this year helped pass a bill (CS/HB 285) that changes its membership. 

Gaetz said the drop in LIP funds makes it all the more necessary to make sure the money is spent wisely. “There’s a tightening of the belt that is going to go on so the need to do the allocations properly is a pretty strong need,’’ he said. 

The Medicaid reform pilot, championed by former Gov. Jeb Bush, requires patients in Broward, Duval, Baker, Nassau, and Clay counties to enroll in a Medicaid HMO or managed care plan administered by a hospital. 

Under Reform, plans can flex the benefits to meet patient needs but they have a dollar cap, as in commercial. In traditional Medicaid, the benefits are defined by the government but have no dollar limit. The project has been controversial; it’s unclear whether it’s saving the state money, and patient surveys indicate satisfaction has decreased. 

State Rep. Ed Homan, an orthopedic surgeon from Tampa and a Republican, said Medicaid Reform promised improvements that haven’t been delivered.
“It’s turning out to be maybe a risk they shouldn’t have taken,’’ said Homan.