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Tennessee, Kansas Get Warning: Expand Medicaid or Risk Hospital Funds

Government puts squeeze on uncompensated care pools

Tennessee and Kansas have joined the list of states that have been warned by the Obama administration that failing to expand Medicaid under the Patient Protection and Affordable Care Act could jeopardize special funding to pay hospitals and doctors for treating the poor, according a report from Kaiser Health News.

The Centers for Medicare & Medicaid Services confirmed April 21 that it gave officials in those states the same message delivered to Texas and Florida about the risk to funding for so-called “uncompensated care pools” — Medicaid money that helps pay the cost of care for the uninsured.

The letter to Florida officials last week drew the ire of Republican Gov. Rick Scott, who said the federal government should not link the $1.3 billion in uncompensated care funding with the state’s decision not to expand Medicaid. He has threatened a lawsuit against the Obama administration if it cuts off the funding, which is set to expire June 30.

The Texas funding is scheduled to end in September 2016. Officials there have also expressed indignation at what they perceive to be coercive pressure and talked about joining Scott’s lawsuit.

Kansas Medicaid officials said they received about $45 million this year in federal funding for their state’s uncompensated care program, which began in 2013 and is slated to continue through 2017.

Tennessee Medicaid spokeswoman Kelly Gunderson said her state received more than $750 million in federal funding to cover uncompensated care.

The first message was delivered in an April 14 letter from Vikki Wachino, acting director of the Center for Medicaid and CHIP [Children’s Health Insurance Program] Services, to Florida Medicaid officials. She said that expanding Medicaid coverage is a better way to help residents obtain access to health care than an “overreliance on supplemental payments” to providers through a program called the Low Income Pool (LIP).

“Medicaid expansion would reduce uncompensated care in the state, and therefore have an impact on the [Low-Income Pool], which is why the state’s expansion status is an important consideration in our approach regarding extending the LIP beyond June,” she wrote.

CMS spokesman Aaron Albright said April 21 that the Obama administration wants to apply similar principles to all the states that receive such funding, whether or not they expanded Medicaid.

“We’ve been in contact with those states that have uncompensated care pools and reiterated that we look forward to an ongoing dialogue to develop a solution that works for patients, hospitals, and the taxpayer,” he said. “We told states that our letter to Florida articulates key principles CMS will use in considering proposals regarding uncompensated care pool programs in their states, but that discussions with each state will also take into account state-specific circumstances.”

CMS officials confirmed that they have also reached out to states that expanded Medicaid about the future criteria for the funding, including California, Massachusetts, Arizona, Hawaii, and New Mexico.

Each state has negotiated its own program with the federal government to pay providers for treating the uninsured. But the programs differ in scope, funding, and the length of time remaining.

Arizona Medicaid spokeswoman Monica Higuera Coury said her state, which expanded Medicaid, was also told that the special funding would begin to be phased out this year. Arizona receives a maximum $137 million a year to offset uncompensated care costs at Phoenix Children’s Hospital.

Some experts were surprised that the Obama administration linked Medicaid expansion to the special funding because of the potential legal issues.

“No one would be shocked to hear that states don’t need the money because uncompensated care has dropped, but saying you are taking away this money because you are not expanding is trickier,” said Charlene Frizzera, a senior advisor at consulting firm Leavitt Partners. “People are shocked that CMS has done that.”

But Joan Alker, executive director of Georgetown University’s Center for Children and Families, said the administration was simply acting as a steward of taxpayer money.

“I wouldn’t call it hardball, but rather responsible policy and fiscal oversight to ensure that federal tax dollars are spent in the most effective way,” she said. “When coverage is available to reduce the number of uninsured people and states refuse those funds, why should the federal government provide them with unauthorized funding to put a Band-Aid on it?”

Source: Kaiser Health News; April 21, 2015.

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