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Is it really a $1 billion budget hole? Scott/AHCA and Senate disagree

Tensions continued to mount Tuesday between Gov. Rick Scott and the Senate as the governor blasted a Senate compromise and the governor’s Agency for Health Care administration issued a letter to the federal government suggesting that the state would not lose the $1 billion in federal money to reimburse hospitals for serving the uninsured under the low income pool as legislators previously suggested.

Agency for Health Care Administration deputy director Justin Senior sent a letter to the federal Department of Health and Human Services suggesting that “there is no need to infuse additional state general revenue to maintain current Medicaid hospital funding levels” in the 2015-16 budget year because local governments could draw down matching funds to offset the $1 billion not coming to the state.

He quotes the May 21 letter from the Centers for Medicare and Medicaid Services which suggests that the state will get $1 billion and notes that "this level of funding for the LIP coupled with the options the state may elect at its discretion described in this letter would enable Florida to retain Medicaid investment in the state at or above the current $2.16 billion level of LIP funding.”

Senior concludes: "Based on this communication and our subsequent clarifying conversations, we understand that the renewed LIP will provide us with enough money to maintain current Medicaid program funding levels."  Download Wachino 526

He then attached a funding proposal that assumes local governments will draw down another $906 million and therefore eliminating the need for legislators to fill the funding gap for hospitals with general revenue funds.  Download Proposal

Senate President Andy Gardiner's response: not so fast.

He called the approach “shortsighted and only kicks the can down the road” because it fails to address the reforms the federal government wants the state to adopt in order to provide insurance to the uninsured.

“The plan proposed by AHCA relies on a particular premise—it assumes that CMS will approve a LIP plan or distribution model that devotes all or most of the LIP spending authority to incentivizing IGT [Inter-governmental transfers] donations and does not advance any of the reforms required for compliance with CMS principles,'' Gardiner said in a statement. "This assumption must be verified by CMS before the Legislature acts on this proposal.

“Using LIP exclusively as a financing mechanism in FY 2015-16 appears to minimize the amount of general revenue needed in rates or other provider payments for the coming year, but that approach is shortsighted and only kicks the can down the road, pushing the general revenue need to subsequent budget years.

“Any proposed spending plan should be a multi-year plan that establishes a foundation for comprehensive solutions. Specifically, the LIP cap declines by another $400 million in the next year and distribution of LIP payments must align with uncompensated care costs in the second year. Additionally, stricter guidelines on distribution of LIP payments take effect in the next year.

"“We believe any proposal must also be accompanied by a full LIP model in order to evaluate the specific impacts.”

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