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Lower LIP Funding Sets Stage For Session Debate

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TALLAHASSEE (NSF) – Florida can anticipate about $1 billion in funding for a health-care program at the center of a state budget standoff, a high-ranking federal official wrote in a letter Thursday, giving lawmakers a better idea of what to expect when they begin a special session next month.

The estimate provided in the letter from Vikki Wachino, director of the federal Centers for Medicare & Medicaid Services, would mark a reduction of about $1.2 billion in the program, which is known as the Low Income Pool, during the budget year that begins July 1. Funding for LIP would then likely fall to about $600 million in later years, Wachino wrote.

The letter also provides a list of options Florida could use to offset the drop in LIP, which sends money to hospitals and other medical providers that care for large numbers of low-income patients. Wachino suggested that the state boost the rates it pays hospitals for treating Medicaid patients.

"We note that this ($1 billion) 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," she wrote.

The federal decision on LIP would extend the program past its current June 30 expiration date and could provide the Legislature with a way out of the budget impasse. Lawmakers are expected to begin a special session June 1 to resolve the spending plan.

But cutting funding for the program could also harden some divisions at the Capitol. Senate leaders have pushed for the state to offset the loss of LIP funds by using federal Medicaid expansion money to help lower-income Floridians purchase private insurance --- an idea adamantly opposed by House Republican leaders and Gov. Rick Scott.

If the state has to instead offset the loss by backfilling the hole with tax revenues, that could eat into funding for other priorities, like public education and tax cuts.

"I think it confirms the magnitude of the potential backfill number to make the system whole, and I think it sends a very strong message about the expiration of LIP over time," Senate Appropriations Chairman Tom Lee, R-Brandon, said of the federal letter.

Lee and Senate President Andy Gardiner, R-Orlando, argued that the size of the cut in LIP backs the chamber's insistence on expanding health-care coverage.

"While the letter from CMS outlines a number of policy alternatives, none of these options will allow Florida to maximize both state and federal taxpayer dollars in a more effective manner than by reducing the number of uninsured Floridians seeking basic health care in hospital emergency rooms," Gardiner wrote in a memo to senators. "Clearly, a conservative free-market expansion of health care coverage is the most fiscally responsible approach."

But Scott and the House have opposed expanding Medicaid in any form. The disagreement between the House and Senate on the issue in part caused the impasse that saw lawmakers adjourn the regular annual session without a budget in place.

House Speaker Steve Crisafulli, R-Merritt Island, told his members in a memo that the House was still reviewing Wachino's letter and would provide a more thorough response later.

"Until then, I believe the clear indication before the special session is Florida will receive a significant level of LIP funds, which will help us in our efforts to finish the budget by the July 1 deadline," he wrote.

House Appropriations Chairman Richard Corcoran, R-Land O' Lakes, indicated late Thursday he favored a plan that would use state money to make the hospitals whole. The House had pitched a similar idea near the end of the regular session, when lawmakers were unsure what the final size of the LIP program might be.

"Now, the great news is that we're able to do that with finality," Corcoran said.

Speaking to reporters at Taylor County's Perry Primary School, where he was visiting, Scott seemed to once again rule out the idea of a state Medicaid expansion plan.

"The Senate's plan would cost our taxpayers $5 billion over the first 10 years," Scott said. "If you look at history, health-care programs in almost every case cost way more than what people thought in the beginning."

Scott also said he hadn't decided whether to drop a lawsuit against the U.S. Department of Health and Human Services, which includes the Centers for Medicare & Medicaid Services, to bar the agency from considering whether the state has expanded Medicaid while weighing a decision on LIP.

Attorneys for the two sides agreed Thursday to extend until June 1 a deadline for federal officials to respond to Scott's request for an injunction in the lawsuit.

In her letter, Wachino tried to emphasize that while LIP and a coverage expansion are related, whether Florida expanded Medicaid wasn't a factor in the federal government's decision.

"Regardless of whether a state expands, uncompensated care pool funding should not pay for costs that would be covered in a Medicaid expansion," she wrote. "Therefore, the state's expansion decision does not affect the size of the LIP itself."

House Minority Leader Mark Pafford, D-West Palm Beach, applauded the agency for its decision in the face of the lawsuit.

"Despite Gov. Scott's lack of planning, hostile public relations campaign and frivolous litigation, CMS has acted in the best interests of taxpayers and the people of Florida," Pafford said.

The News Service of Florida's Brandon Larrabee contributed to this report.

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