Rick Scott says feds are 'walking away' from funding Florida's Low Income Pool program

Florida simply can’t trust the federal government to follow through on expanding Medicaid because Washington has already abandoned funding a current statewide health care program, Gov. Rick Scott says.

Scott is pointing to the state’s loss of federal money for safety net hospitals called the Low Income Pool. The Centers for Medicare and Medicaid Services made it crystal clear in February 2015 that some $1.3 billion in Florida’s LIP funding won’t be renewed after June 30. That left a billion-dollar hole in Scott’s proposed budget, which assumed that LIP money would be available.

"The same federal government that offers some money for a program is walking away from another health care program," Scott said during an April 9 stop in Sarasota. "How can you feel comfortable picking up another federal program when they are walking away from an existing program?"

The Florida House and Senate are currently debating a potential state solution to Medicaid expansion, but this claim deals with the specifics of this LIP funding -- namely what it is, how it’s funded and when Washington told Florida they’d be doing without. The issue sounds confusing, but don’t worry, PolitiFact Florida will nurse you through it.

Washington gets out of the pool

LIP money is part of a special agreement between Florida and Washington called a Section 1115 waiver, and was approved to deal with a burgeoning number of uninsured adults who could not pay their medical bills. (Some other states have their own 1115 programs to deal with different issues.)

The money mostly goes to safety net hospitals and clinics that treat uninsured and underinsured patients to reimburse some of their expenses. The LIP fund gets about $1.3 billion, but the entire 1115 waiver program includes other supplemental programs that together total about $2.2 billion in federal matching funds. Only the LIP money is at stake here.

These waivers are designed essentially as policy experiments. A state has a problem not covered by Medicaid and comes to Washington to help fund a possible solution. Programs approved by the feds have a five-year time limit, and are subsequently renewed in three-year intervals or allowed to expire.

Leighton Ku, director of the Center for Health Policy Research at George Washington University, said these waiver programs allow states to "substantially modify their Medicaid policies and finances, provided that the purposes still serve the underlying purpose of Medicaid and do not cost the federal government more than it would have spent otherwise."

The LIP started in 2005 and was renewed until 2013. But when it came time to negotiate another extension for 2014 and beyond, Florida upped the funding request to a whopping $4.5 billion to expand the program. This was after the state refused some $51 billion in Medicaid expansion money over 10 years under the Affordable Care Act, to expand that program to anyone making up to about 133 percent of the poverty level, as the Obama administration wanted. The U.S. Supreme Court in 2012 ruled states had a choice whether to take the money or not.

On April 11, 2014, the Centers for Medicare and Medicaid Services told the state they were approving the LIP portion of the program for only one more year instead of the usual three-year extension. CMS required Florida to report how well the Medicaid system was working and suggest reforms, and asked the state to improve the system to work without federal LIP payments. The agency did not specifically mention expanding the program per the Affordable Care Act.

Joan Alker, executive director of the Center for Children and Families at the Georgetown University Health Policy Institute, said the federal government had been concerned that the LIP program had problems keeping track of how the money was being spent or how rates were being set, shown in part by a 2012 General Accounting Office report on transparency. There also were questions about how Florida was matching federal funds, an issue with Medicaid even before the LIP program. The one-year extension in 2014 was notice that the federal government wanted Florida to overhaul LIP.

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Now fast forward to 2015: Scott released his budget proposal in January assuming that LIP funding, which was set to expire June 30, would be available. But in February, Eliot Fishman, director of the Children and Adults Health Programs Group in the Center for Medicaid and CHIP Services, told an Orlando health care conference audience that there was "no way" the program would continue "in its present form."

Fishman’s pronouncement threw Tallahassee into an uproar, as discussions about a $1 billion surplus suddenly turned to big gaps in the budget. On March 4, Scott sent a letter to President Barack Obama saying the state needed the money to help the uninsured, but the funding was "not associated with Medicaid expansion in any way."

Scott has opposed the Medicaid expansion for relying on tax dollars and for requiring the state to assume 10 percent of the larger program’s cost by 2020. He recently earned a Full Flop on our Flip-O-Meter after a short time of supporting the expansion during his re-election campaign. Some have suggested Washington is withholding LIP money to strongarm Florida into the expansion, a move many doctors oppose because of Medicaid payment limits, among other problems.

In many ways, LIP isn’t associated with Medicaid expansion, Alker said, given that LIP started while Jeb Bush was governor and George W. Bush was president. But an expanded Medicaid would cover many of those patients, or use preventive care to keep them out of the hospital to begin with, she said.

Washington and Lee University professor Timothy Jost added that money for the Medicaid expansion was guaranteed by law in the Affordable Care Act, something not true about the program that created LIP, which is doled out as discretionary spending. (Jost supports the health care law.)

Of course, it’s technically possible the federal government could change the law to do away with whatever program they like, including Medicaid. But that would require both houses of Congress and the president to agree on the terms, something "that isn’t likely to happen anytime soon," Jost said.

Now Florida faces a tough set of choices: Find a new source of LIP funding, end the program altogether or negotiate with CMS to either revamp the program or get another extension, possibly for as short as one month. Florida also could decide to cover those patients by expanding Medicaid. With the Legislature still in session, experts said the result is anyone’s guess. But Alker said Scott was being disingenuous for blaming Washington for an issue they warned him was looming.

"The LIP doesn’t fix the fundamental problem," Alker said. "The LIP is just a Band-Aid for the high rate of uninsured."

Our ruling

Scott said, "The same federal government that offers some money for a program is walking away from another health care program."

He was contrasting Medicaid expansion with how the federal government set an end date for funding for the Low Income Pool, a program that helps pay hospitals that served uninsured patients.

The federal government did say it would stop paying for the program, so Scott has a point about losing LIP money. But possible brinkmanship about Medicaid expansion aside, Washington gave plenty of notice it was going to let the experimental LIP program expire. CMS told Florida in April 2014 that it was no longer going to fund the current version of LIP after one more year.

Several experts said Florida had time to evaluate the program, make changes and address funding. They also raised the point that federal LIP funding is discretionary, while Medicaid money is guaranteed by law, which is unlikely to change anytime soon.

We rate the statement Half True.