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Feds announce 'agreement in principle' and approve Florida's LIP model

The federal government has given preliminary approval to the funding formula prepared by state lawmakers regarding the Low Income Pool, putting an end to the long-awaited conclusion over the future of federal money paid to hospitals for charity care. 

In a letter to the Agency for Health Care Administration, the Centers for Medicare and Medicaid told the state that they negotiations with state officials and legislative leaders have led to an agreement that the federal government will give Florida $1 billion this year, $600 million next year and expect that the money follow patient care, not be a substitute for Medicaid expansion.  Download 6_23_15 Lettter to Florida (2)

 “CMS reached an agreement in principle with Florida on the size, duration, and distribution of funds of the state’s Low Income Pool that reflects our best assessment of the appropriate contours for the Florida LIP,'' said Ben Wakana, press secretary for CMS. "As stated previously, CMS will approve a LIP amendment only after the federal comment period concludes.”

The elements of the agreement were first detailed in the April 14 letter to the state from CMS including 1) uncompensated care pool funding should not pay for costs that would be covered in a Medicaid expansion, 2) Medicaid payments should support services provided to Medicaid beneficiaries and low-income uninsured individuals, and 3) provider payment should promote provider participation and access, and should support plans in managing and coordinating care.

The agreement also acknowledges that the state budget directs $400 million in general revenue to increase Medicaid provider rates for hospitals to offset the cuts from the reduction in federal LIP funds.