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Scott's LIP plan would cut $214 million from hospitals, most in South Florida

Gov. Rick Scott released details of his latest proposal to draw down $2.3 billion in federal Low Income Pool funds on Thursday. While the formula is higher than previously announced, it does not use any state dollars to backfill the loss but it cuts reimbursements to hospitals by $214 million.

Hardest hit are hospitals that do the bulk of the state's charity care. Among those facing the deepest cuts are: Jackson Memorial (-$34.5 million), Broward General (-$22.3 million), Shands in Gainesville (-$34.5 million), Shands in Jacksonville (-$36.5 million) and All Children's Hospital in St. Petersburg (-$12.9 million.)

Under the plan, announced by the Agency for Health Care Administration in a letter to the federal government on Tuesday, the state would not lose $1 billion in federal health care money as previously suggested but the money would be offset by local hospitals and local governments, which would raise $900 million in financing to draw down $1.2 billion in federal Low Income Pool funds. The financing arrangements are known as intergovernmental transfers. 

As a return on their investment, hospitals would be rewarded a 10 percent profit -- a cost to the program of about $100 million. The state would then use the $1 billion promised by the federal government in Low Income Pool funding to reimburse teaching hospitals and increase patient reimbursement rates.

But instead of sending the money to the hospitals, the funds would follow the patient under the state's Medicaid managed care program. It's not exactly Medicaid expansion, but it's not Medicaid dismantlement either. It also doesn't keep hospitals whole.

The result: some hospitals would see a net increase in revenues while others  - like those that do the bulk of the charity care -- will take big hits. The federal government has indicated that Florida's reimbursement rates for Medicaid services is unacceptably low, after lawmakers cut rates for several years during the recession. 

Scott's office also announced that while hospitals may be facing cuts, they also are making profits. To underscore this point, the governor's Commission on Healthcare and Hospital Funding will launch a "Spotlight Transparency Tour" beginning June 4 in Tallahassee. 

The tour will continue to Tampa on June 17, continue to Jacksonville June 29 and end in Miami July 13. The commission will compare the hospitals in those regions and "how to make them more transparent and efficient for the taxpayers that support them."

During each stop, the Commission will invite the lowest and highest performing hospitals to present detailed information on their costs, profits and patient outcomes, the governor's office said.

Many questions remain about the governor's proposal. Such as: does this require federal approval and another round of public hearings? Will the feds approve it? Will the hospitals accept it? (For example, what incentive is there for local governments to keep raise the money from their taxing districts to go to Medicaid managed care companies without some assurance that those dollars would return to their local hospitals?)

Here's the detail on the proposal.