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Medicaid Programs Threatened by Potential Loss of Uncompensated Care Pool Funding

Nine states are under the gun

The announcement that Florida Gov. Rick Scott has filed a lawsuit against the Centers for Medicare & Medicaid Services over the federal funding of its uncompensated care pool underscores the seriousness of the situation for the four non-Medicaid expansion states that operate those pools, according to an article on the Hospitals and Health Networks Daily website.

The outlook for the matter being resolved without creating at least some financial upheaval for hospitals in those states appears dim at this point. And there is the potential for serious permanent disruption, the article says.

The CMS is in the process of, or is getting ready to, review the Medicaid waivers that created these pools, which were designed to cover care at “safety net” hospitals offering uncompensated services to vulnerable residents.

CMS officials outlined its reasoning for giving Florida’s pool, called a low income pool (LIP), a close review in a letter to the state’s Medicaid agency that predated the legislature’s ending its current session without changing its course on Medicaid expansion. The CMS letter argues that Medicaid would be the preferred avenue for funding the type of coverage for which LIP funds are used, and suggests that Medicaid expansion would be the way to go.

The implication is that the LIP waiver will not be renewed when it expires on June 30. That would result in a loss of $1.9 billion in health care revenue, according to the Center on Budget and Policy Priorities.

Florida’s governor, a former hospital executive, argues in the state’s suit that the CMS decision amounts to coercion to expand Medicaid, which was explicitly not allowed by the U.S. Supreme Court in 2012.

The four states with pools that did not expand Medicaid are Florida, Kansas, Tennessee, and Texas. Medicaid expansion states with uncompensated care pools are Arizona, California, Hawaii, Massachusetts, and New Mexico.

Representatives for hospitals in two of the states that didn’t expand Medicaid expressed concerns about the field’s ability to maintain care for patients without insurance in the absence of both the uncompensated care pool funding and Medicaid expansion by their respective states.

In Tennessee, the loss of roughly $500 million would result in the state putting limits on care and would affect graduate medical education. Craig Becker, president of the Tennessee Hospital Association, said the association expects their pool to be maintained to at least the date of its waiver expiration on June 30, 2016.

The result in Texas also would be far-reaching. The waiver that created that state’s more than $3 billion pool expires on September 30, 2016. Texas’ situation is exacerbated by its limited window for a possible Medicaid expansion because the Texas state legislature meets only every other year, this year ending June 1. Once it adjourns, it won't be back until January 2017.

In both Tennessee and Texas, the hope is that the pools will gain an extension after they are reviewed by the CMS.

Source: H&HN Daily; April 29, 2015.

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