Florida and Jackson Health may have to refund $436 million in Medicaid funds, report says

Jul. 26--Miami-Dade's public hospital network, Jackson Health System, may have wrongly 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.

A draft of the HHS inspector general audit found that Florida's Medicaid program between 2010 and 2014 wrongly paid Jackson Health $436 million that was not allowed under the terms of the Low Income Pool or LIP program that reimburses hospitals for care delivered to low-income and uninsured persons, POLITICO reported.

Federal auditors found that Florida failed to monitor spending of LIP funds, and that Jackson Health erroneously claimed costs for care for undocumented immigrants and prisoners who received outpatient care, according to the report. They also said the state failed to refund the federal government for $64 million in overpayments that the hospital had reported.

Florida's Agency for Health Care Administration, which oversees the state's Medicaid program and distribution of LIP funds, did not comment on the HHS inspector general's audit.

The time period in question dates back to the Obama administration and its efforts to reduce Florida's LIP funding in 2015 in an attempt to persuade the state to expand eligibility for Medicaid, the public health insurance program for low-income and disabled people, as prescribed under the Affordable Care Act.

Florida's LIP funding that year was reduced from nearly $2 billion to $600 million a year. Former Florida Gov. Rick Scott filed a lawsuit against the Obama administration's efforts to reduce LIP funding, calling it illegally coercive. The state did not prevail, but in 2017 the Trump administration restored Florida's LIP funding to about $1.1 billion a year.

Florida also challenged the federal government's audit methodology for LIP, claiming that it was illegal and that HHS never properly informed the state of its intention. That case is still pending.

Jackson Health administrators said they had no comment on the POLITICO report because of the pending litigation.

House Speaker José Oliva, a Miami Lakes Republican, was dismissive of the forthcoming report, calling it "a routine accounting dispute." But he was also critical of the LIP program, which is funded by federal and state dollars.

"Disagreements between providers and Washington bureaucrats happen nearly every day, especially in the healthcare arena," Oliva said in a written statement. He added that the audit demonstrates that "delivering health services in this country is far too bureaucratic, far too complicated and far too costly."

Jackson Health, one of the largest safety net hospital systems in the nation, received about $110 million in LIP funding in 2018 -- a fraction of its nearly $2 billion annual budget. Jackson Health also receives about $450 million a year in taxpayer support from Miami-Dade.

Public dollars sent to Jackson Health are intended to help the hospital system deliver medical care to tens of thousands of low-income and uninsured patients each year through three hospitals -- in Miami, North Miami Beach and South Miami-Dade, and a network of community clinics and urgent care centers. Jackson Health also provides healthcare to inmates of Miami-Dade's jails and operates nursing homes.

Jackson Health treats more than 74,000 Medicaid patients a year and is the primary provider of medical care to the uninsured in Miami-Dade.

Florida Sen. Jose Javier Rodriguez, a Miami Democrat, called the hospital system "a gem" of the community and said Jackson Health could not afford to repay $436 million to the federal government without destabilizing its mission to serve all Miami-Dade residents regardless of their ability to pay.

"The impact to our community would be huge in terms of access to public healthcare," Rodriguez said.

The HHS inspector general has yet to issue a final report on the LIP funds. An agency spokeswoman declined to comment on the audit on Friday because the report is still in draft form.

Once the inspector general issues a final report, though, a final resolution will take a considerable amount of time. If HHS demands a refund, then Florida can challenge the action, first in an administrative hearing and then in federal court.

In addition, Florida's challenge of the federal government's audit methodology for the LIP funds has yet to be resolved.

The audit methodology for LIP stems from a 2010 rule issued by the Obama administration for a different Medicaid program called Disproportionate Share Hospital or DSH, which also provides funding to certain hospitals that treat large numbers of indigent patients.

The rule reduced hospital funding for patients who were "dual eligibles," or those who qualify for Medicaid and Medicare, the public health insurance program for the elderly. Hospitals around the country challenged the rule as unconstitutional, and the federal courts agreed, finding that the rule was not properly announced with the necessary notice and comment period.

Florida has challenged the federal government's LIP audit methodology on the same grounds. According to the POLITICO report, federal regulators have given Jackson Health administrators an opportunity to respond to the draft audit, and they disagreed with the findings, calling them "largely inaccurate," and "based on erroneous assumptions."

If Florida and Jackson Health do not prevail and the federal government compels them to refund the Medicaid funds, the consequences would be grave.

In 2018, the hospital system provided about $382.6 million in charity care, also known as free or reduced-cost care, and spent $47 million on medical care for county jail inmates, said Jennifer Piedra, a spokeswoman. Jackson Health also spent about $16 million on primary care clinics and an additional $12 million operating nursing homes.

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