Low Income Pool Genevieve Carroll, Agency for Health Care Administration, Medicaid Program Analysis January 18, – Medicaid Reform

Medicaid Reform Waiver: Low Income Pool (LIP) Low Income Pool Definition “A Low Income Pool (LIP) will be established to ensure continued government support for the provision of health care services to Medicaid, underinsured and uninsured populations. The low-income pool consists of a capped annual allotment of $1 billion total computable for each year of the 5-year demonstration period.”

Medicaid Reform Waiver: Low Income Pool (LIP) Medicaid Reform is authorized as an 1115 Waiver for a demonstration period of 5 year. The LIP can operate ONLY under the authority of the implemented waiver. Implementation is still subject to legislative approval. Federal funds are provided via the waiver under the technical terminology Costs Not Otherwise Matchable (CNOM). Upon implementation of the LIP the state will submit a State Plan Amendment to CMS to terminate the current inpatient hospital UPL program.

UPL Program The hospital inpatient upper payment limit (UPL) program (Title 42 Section CFR) was first approved by CMS in Florida during State Fiscal Year (SFY) The initial distributions through the UPL program were $144M with approximately 5 local government entities contributing the state share. Currently the distributions are approximately $1B with approximately 24 local government entities contributing the state share.

UPL Programs The hospital UPL payments include:  Trauma Hospitals  Family Practice Teaching Hospitals  GME Teaching Hospitals  Rural Hospitals  Primary Care Hospitals  Specialty Children’s Hospitals  Reimbursement at Medicaid Cost to qualifying hospitals

UPL/LIP Comparison UPL Balance available dependent upon the annual UPL calculation LIP $1B available each year $300M (of $1B) available pursuant to certain general requirements $700M (of $1B) available each year, and any unspent funds can be rolled forward for payments in the following year

UPL/LIP Comparison UPL Available for payments to hospitals ONLY LIP Available for payments to ANY Medicaid provider Primary payments projected to continue to hospitals given the amount of current expenditures on uncompensated care

UPL/LIP Comparison UPL Payment based upon services provided to Medicaid recipients ONLY LIP Payment based upon services provided to Medicaid recipients, the underinsured, or the uninsured

UPL/LIP Comparison UPL 100% of payments based upon a calculation derived from Medicaid services to Medicaid recipients LIP Payment based upon services provided to Medicaid recipients, the underinsured, or the uninsured $100M (of the $1B) may be paid based upon a methodology other than Medicaid, underinsured, or uninsured individuals

UPL/LIP Comparison UPL Funding arrangements pursuant to the Social Security Act Title 42 Section CRF LIP Funding arrangements pursuant to the Social Security Act and CMS approval

UPL/LIP Comparison UPL Each hospital limited in total Medicaid payments, generally defined as the cost of Medicaid services and uncompensated care (includes regular Medicaid and DSH payments) LIP Each provider limited to the combined costs of providing Medicaid services and uncompensated care (includes regular Medicaid and DSH payments)

Funding Availability of the $1B dependent upon qualified state share IGTs may continue as the primary funding source IGTs subject to federal requirements

Terms and Conditions Major references within the waiver: Annual Report Requirement: 23 Low Income Pool: Budget Neutrality: 114 Rollover quantification: 120

Annual Report Requirement (#23) “Beginning with the annual report for demonstration year four, the State must include a section that provides qualitative and quantitative data that describes the impact the Low Income Pool had on the rate of uninsurance in Florida starting with the implementation of the demonstration.” Discussion: uninsurance!?!

Low Income Pool (#91-99) “…continued government support for the provision of health care services…” “…Medicaid, underinsured, and uninsured…” “…capped annual allotment of $1 billion…” “…for each year of the 5-year demonstration…”

Low Income Pool “…available upon implementation of Florida Medicaid Reform…” “…no later than July 1, 2006…”

Low Income Pool “…for CMS approval a Reimbursement and Funding Methodology document for the LIP expenditures and LIP parameters defining State authorized expenditures…”

Low Income Pool “…may be used for health care expenditures (medical care costs or premiums) that would be within the definition of medical assistance in Section 1905(a) of the Act.” “…incurred by the State, by hospitals, clinics, or by other provider types for uncompensated medical care costs of medical services…” “…for the uninsured, Medicaid shortfall…may include premium payments, payments for provider access systems…and insurance products for such services provided to otherwise uninsured individuals, as agreed upon by the State and CMS.”

Low Income Pool “Up to 10 percent of the capped annual allotment…may be used for hospital expenditures other than payments to providers for the provision of health care services to an uninsured or underinsured individual.” “…such as capacity building and infrastructure, hospital trauma services, hospital neonatal services, rural hospital services, pediatric hospital services, teaching or specialty hospital services, or safety net providers.”

Low Income Pool “Hospital cost expenditures from the LIP will be paid at cost…” “To ensure services are paid at cost, CMS and the State will agree upon cost-reporting strategies and define them…” “At least 120 days prior to the demonstration implementation the State must submit for CMS approval the source of non-Federal share…The State shall not have access to these funds until the source of non-Federal share has been approved by CMS…”

Milestones (# ) Pre-Implementation  Reimbursement and Funding Methodology  SPA terminating inpatient UPL  Reinstatement of inpatient UPL not prohibited  No other hospital UPL programs during demonstration  Limit Title XIX hospital payments to cost  Approval of funding sources

Budget Neutrality (#114, 120) $1B annual cap $5B demonstration period cap Unexpended funds from the restricted amount may not be carried forward Unrestricted funds may be rolled forward Summary for 5 year period in #120.

Updates/Discussion  Reimbursement and Funding Methodology  Limit Title XIX hospital payments to cost  Approval of funding sources ________________________