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Feds OK $2.2B for Hospitals, Med Schools

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Medicaid.gov

Florida Medicaid received word Friday evening that federal officials have authorized a $2 billion hospital fund for indigent care starting July 1 and an extra $200 million for the state’s medical schools.

Justin Senior, Florida’s Medicaid director, said the Centers for Medicaid and Medicare Services okayed $2.2 billion for the “Low Income Pool (LIP),” which is used to support “safety-net” hospitals and clinics that treat a lot of Medicaid patients. The LIP is a combination of local and state funds that draw down federal match.

The letter to the state Agency for Health Care Administration, parent agency for Florida Medicaid, was from Cindy Mann, director of the federal Medicaid program. It sounded as though this would be the last year for which CMS will authorize LIP spending. In the eyes of the federal government, Florida would not need to prop up the hospitals if the state accepted Medicaid expansion money offered to the state through the Affordable Care Act.

For state officials, this is good news in several ways:

--It’s more than double the $1-billion extension Florida Medicaid officials had hoped for after their original request of $4.5 billion ran into trouble.

--The authorization arrived in time for state budget writers to process and include it as they try to wrap the the spending plan for the fiscal year July 1, 2014 through June 30, 2015. Budget negotiators have to come up with an agreement by April 29.

--The funds include $200 million for the state’s medical schools to support teaching of students and residents. This will plug a gap that would have been left by changes in federal spending under the Affordable Care Act.

Senior said the money is needed because Florida is “undertaking a very significant shift in the way we deliver our Medicaid services.”

The Low-Income Pool creates a “glidepath and more evolutionary process for hospitals to adjust” to the Statewide Medicaid Managed Care Program, which will no longer pay hospitals directly.

Instead, the state will pay for-profit HMOs and non-profit networks on a monthly basis to cover all costs for their Medicaid enrollees – a system that discourages inpatient care.

It also may make it harder for medical schools to support faculty physician groups because so much of their doctors’ time is spent in training in addition to patient care.

The state started the shift to total managed care last fall with patients who needed long-term care,  because they are the costliest and most in need of programs that provide alternatives to nursing-home and hospital care.

Next month, the rest of the Medicaid enrollees – mostly children and mothers – will be asked to choose plans, region by region. Those who don’t choose on their own will be assigned to a plan.