It was an issue that threatened the bottom lines of Florida's safety net hospitals, who are now breathing a sigh of relief.
The federal government had accused them of receiving $267 million in Medicaid payments erroneously over the past eight years and wanted to recoup the dollars immediately. Hospitals asked for a compromise that would have spread the penalty over three years to soften the blow and give them time to finalize audits and possibly dispute the charges.
The hospitals got even better news Thursday. In a letter granting a three-year renewal of the state's Medicaid managed care program, the U.S. Department of Health and Human Services said it will slow down on the repayment issue and focus only on part of the disputed funds.
For now, the federal government will only go after hospitals for $104 million that audits show was overpaid through the Low Income Pool (LIP) fund for the first three years of the program. Hospitals will also be allowed to file appeals and challenge the amounts before any money is recouped.
The remaining $163 million is off the table for now, although HHS said it will continue to review LIP payments for the other five years of the program that have already passed to determine if additional money has been overpaid.
The difference for individual hospitals is significant. Tampa General Hospital now faces a maximum penalty of $5.2 million instead of $13.3 million. The stakes were even higher at Jackson Memorial Hospital in Miami that initially was told it would be out $47 million but now is only facing an $18.3 million penalty.
The state Agency for Health Care Administration that oversees the Medicaid program did not mention the overpayment issue in its news release praising the renewal of the managed care program. Instead, it focused on the anticipated savings the state believes the continued privatization of Medicaid will have over the next three years.
The statewide rollout of the Medicaid managed care program is just winding down, but the state says about 3 million people will be enrolled.
"I am delighted that the state can move forward with this important program," AHCA Secretary Liz Dudek said. "Our staff has worked tirelessly on this approval and we appreciate the federal government cooperating with us to create a managed care system that works best for our state."