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HHS supports Affordable Care Act waivers to shore up Medicaid, reduce premiums

Medicaid waiver is credit positive for Florida's not-for-profit, public hospitals because it helps them defray uncompensated care cost, Moody's says.

Susan Morse, Senior Editor

While the administration supports an end the Affordable Care Act and the program's Medicaid expansion, officials are providing funds to shore up Medicaid coverage and to offer residents in individual states relief from higher premiums.

The Department of Health and Human Services supports two sets of ACA waivers that provide funding to states, which in turn benefits hospitals.

[Also: Fitch: States will take the lead on Medicaid reform despite ACA repeal and replace failure]

In Florida, the Centers for Medicare and Medicaid Services recently approved a renewal of a Section 1115 waiver. Under the program, federal funding for Florida's low-income pool will increase from $607 million to $1.5 billion. Hospitals must put up matching funds through their local government or special taxing districts.

"This extension has a positive and direct impact on people's lives and their ability to access care," CMS Administrator Seema Verma said. "Florida's program offers an innovative and realistic pathway to tackling some of Medicaid's biggest challenges."

The 1115 waiver is credit positive for the state's not-for-profit and public hospitals because it will help them defray the cost of providing services to uninsured patients, Moody's said in a report released Monday. 

The largest beneficiaries include safety-net hospitals, children's hospitals and providers treating a high percentage of Medicaid, uninsured and underinsured patients. Hospitals are able to access funds for uncompensated care through the federally matched low-income pool.

Shands Jacksonville Medical Center and the Public Health Trust of Miami-Dade County in Florida are among the hospitals standing to benefit the most from the waiver extension because they treat a high percentage of low-income patients and because low-income pool funding accounts for the majority of their cash flow, according to Moody's.

Florida is one of 19 states that elected not to expand Medicaid under the Affordable Care Act.

Medicaid expansion also cut down on the amount of uncompensated care provided by hospitals as more people gained coverage. Thirty-one states and the District of Columbia adopted Medicaid expansion.

However, the new administration supports waivers, though the federal government is still picking up the tab for coverage.

Alaska will get $323 million over the next five years under a Section 1332 waiver of ACA requirements, according to Politico.

Section 1332 waivers allow states to design state-operated reinsurance programs or high-risk pools.

The Alaskan waiver puts downward pressure on premium increases in the state's individual market, according to Health and Human Services Secretary Tom Price. Without 1332, Alaskan consumers were looking at premium hikes of 40 percent.

[Also: Feds approve Alaska waiver to the Affordable Care Act for high-risk pool reinsurance program]

"State Innovation Waivers are just one step of many we are taking to inaugurate a new era of state flexibility and innovation in healthcare, and we look forward to more productive work with our state partners," Price said in July.

Four other states -- Oklahoma, Oregon, Minnesota and Iowa -- have submitted waiver applications. New Hampshire and Maine are considering similar programs, according to the Politico report.

Twitter: @SusanJMorse

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