Health Care

Florida Gov. Scott will not drop suit until feds decide on LIP proposal

Governor Rick Scott speaks to the press after meeting with U.S. Health and Human Services Sec. Sylvia Burwell in May to discuss his funding request for a hospital payment program set to expire June 30. Scott is suing Burwell and HHS alleging unconstitutional coercion because federal regulators will not renew a $2 billion a year hospital funding program.
Governor Rick Scott speaks to the press after meeting with U.S. Health and Human Services Sec. Sylvia Burwell in May to discuss his funding request for a hospital payment program set to expire June 30. Scott is suing Burwell and HHS alleging unconstitutional coercion because federal regulators will not renew a $2 billion a year hospital funding program. Getty Images

Florida Gov. Rick Scott will not drop his lawsuit against the federal government until the Obama administration makes a decision on the Legislature’s proposal for $2 billion in shared spending next year for hospital payments and a raise in Medicaid rates, according to a notice filed in the case this week.

Scott filed the notice Tuesday to withdraw a prior request that the U.S. District Court in Pensacola compel the Department of Health and Human Services to continue a hospital funding program that’s set to expire on June 30, leaving the state with a budget hole.

The Legislature’s budget proposal reduces the threat of immediate harm to Florida hospitals and patients, according to the legal notice. But Scott wants a decision on the state’s proposal before he withdraws the suit alleging that federal regulators are unconstitutionally coercing Florida to adopt Medicaid expansion by withholding a decision on the hospital payment program known as the Low Income Pool, or LIP.

In response to the governor’s filing, Chief U.S. District Judge M. Casey Rodgers canceled a hearing previously set for Friday, and she ordered the federal government to file a response to Scott’s legal complaint by July 8.

Ben Wakana, HHS press secretary, said the department had no comment on Wednesday’s court order.

For the year that ends June 30, the LIP program will have provided nearly $2.1 billion in combined federal, state and local taxes to reimburse Florida hospitals for treating uninsured and under-insured patients on Medicaid, and for graduate medical education.

For the coming year, though, federal regulators reduced Florida’s LIP program to $1 billion in total — largely because the Obama administration will not allow the state to continue using the hospital reimbursement program as a substitute for Medicaid expansion.

But the Obama administration also offered Florida alternatives that would allow the state to receive additional federal funds for healthcare — either by expanding eligibility for Medicaid to nearly all low-income adults, or by increasing reimbursement rates for hospitals that accept Medicaid.

Florida’s Legislature chose the latter, adopting a budget that commits $400 million a year in recurring general revenues to increase Medicaid rates for hospitals primarily but also for some physicians.

That $400 million in state funds will draw an additional $600 million in matching federal money to bump up Medicaid rates. Another $400 million in state and local taxes combined will draw down another $600 million in federal money for hospital payments. Combined, both programs will generate about $2 billion in healthcare funding for Florida.

Florida and federal health officials continue to work toward a resolution on healthcare funding, but time is running out. Lawmakers are in the final days of a special session after disagreement over healthcare funding derailed their regular session that ended in May.

State government will be partially shut down if a new budget is not in place by July 1. House and Senate leaders said they expect lawmakers to vote on a budget this Friday.

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