Tennessee was recently added to the list of states that have been warned by the Obama administration that failing to expand Medicaid under the Affordable Care Act could jeopardize special funding to pay providers for treating the poor. 

The first warning was delivered to Florida Medicaid officials in an April 14 letter from Vikki Wachino, acting director of the Center for Medicaid and CHIP Services.  She said that expanding Medicaid coverage is a better way to help residents get access to healthcare than an “overreliance on supplemental payments” to providers through a program called the Low-Income Pool, or LIP. A similar message was delivered to Texas where certain uncompensated funding is set to end in September 2016.

According to Ms. Wachino, “Medicaid expansion would reduce uncompensated care in the state, and therefore have an impact on the [Low-Income Pool], which is why the state’s expansion status is an important consideration in our approach regarding extending the LIP beyond June,” she wrote. In response, Florida Gov. Rick Scott said that the federal government should not link the $1.3 billion in uncompensated care funding with Florida’s decision not to expand Medicaid.  Florida Gov. Rick Scott filed a lawsuit on April 28, 2015 against the Obama administration, saying they are coercing the state to expand Medicaid in order for Florida to get $1 billion in federal hospital funds.

According to Kaiser Health News, CMS officials confirmed on April 22, 2015 that it gave officials in Tennessee the same message delivered to Texas and Florida about the risk to funding for so-called “uncompensated care pools” — Medicaid money that helps pay the cost of care for the uninsured. 

Not surprisingly, responses to the ominous warnings delivered to Tennessee, Florida, Texas, Kansas and other states vary on either side of the political aisle. It’s worth noting, however, that Arizona – which did in fact expand Medicaid – received a similar notification that the special funding would be phased out this year.