Low Income Pool Audits – A Florida Hospital Faces Disaster – More May Be Hit

The Low Income Pool or “LIP” is a funding pool designed to support health care providers that provide uncompensated care to Florida residents who are uninsured or underinsured.  There are multiple states with similar programs.

CMS approved the LIP in 2005 as part of a section 1115 demonstration project (usually referred to as a waiver) allowing Florida to change how it delivers Medicaid benefits in parts of the state, from fee-for-service to managed care. 

During the transition to the new system, the LIP was created to help safety-net hospitals, county health departments, and federally qualified health centers that treat Florida residents who are uninsured or underinsured. 

Complicating the issues is Florida’s refusal to expand Medicaid.  In 2015 CMS slashed LIP funding from $2 billion to $600 million a year under former Governor and current Senator Rick Scott.

What is CMS’ position on the LIP? CMS stated in an April 14, 2015 letter to Florida officials that it will apply three key principles when considering the LIP’s future:

• Uncompensated care pool funding cannot be used to pay for health care for people whom the state could have covered through a Medicaid expansion.
• Medicaid payments should be used to support services provided to Medicaid beneficiaries and low-income uninsured individuals.
• Provider payment rates should be sufficient to ensure adequate provider participation in Medicaid, access to care for beneficiaries, and care coordination by managed care plans.

Healthcare providers participating in the LIP submit lists of claims for which they have provided uncompensated care. Using the ratio of each provider’s total uncompensated care, Florida pays each provider from the LIP and CMS funds the lion’s share of the payments in Federal matching payments.  Oddly, Medicare allocates “Uncompensated Care” payments under essentially the same formula paying what appears to be duplicate payments from the Medicare program. 

Jackson Health System may have wrongly included some amounts for ineligible patients and received hundreds of millions of dollars in Medicaid funds that Florida will have to refund to the federal government. According to a forthcoming audit by the U.S. Department of Health and Human Services cited in a story first reported by POLITICO:

“Auditors found that Florida incorrectly claimed costs for certain care for undocumented immigrants and prisoners who received outpatient care, and the hospital omitted or underreported Medicare and Medicaid payments.”

Politico says a draft of the HHS inspector general audit found that Florida’s Medicaid program between 2010 and 2014 wrongly paid Jackson Health $436 million.

Thrown into this mix, under the current administration there has been an assault on the ACA and Florida is backing an appeal making its way to the Supreme Court to strike the ACA entirely.  All the arguments against the LIP become null and void if the ACA is struck down. 

In closing, this case highlights the complexity of simply striking down the ACA, giving the US a healthcare “Brexit with no deal” of its own.

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