Florida officials warn the state and Jackson Memorial Hospital, which treats tens of thousands of poor patients each year, could face devastating consequences if the state is forced to pay back the money. | Mark Wilson/Getty Images Health Care Exclusive: HHS auditor may call on Florida Medicaid to repay $436M

The HHS inspector general could soon call on Florida to refund the federal government $436 million in Medicaid funds that were improperly paid to the country’s largest public hospital, according to a draft report obtained by POLITICO.

The independent auditor’s office forthcoming report could provide a politically awkward moment for top Florida Republicans closely allied with President Donald Trump. Florida officials warn the state and Jackson Memorial Hospital, which treats tens of thousands of poor patients each year, could face devastating consequences if the state is forced to pay back the money.


Florida’s Medicaid program between 2010 and 2014 wrongly paid hundreds of millions to Jackson Memorial that weren’t allowed under the terms of a program designed to reimburse hospitals for treating low-income people, according to the report. Auditors found that Florida incorrectly claimed costs for certain care for undocumented immigrants and prisoners who received outpatient care, and the hospital omitted or underreported Medicare and Medicaid payments.

State officials, who are supposed to monitor program spending, failed to establish policies to "identify and correct instances in which hospitals overstated their cost limits," the inspector general's report said. It also said the state failed to refund the federal government for $64 million in overpayments that the hospital had reported.

If ordered to recoup the funding, the state may have to turn to the hospital itself.

Jackson Memorial receives more money than any other Florida hospital under the program, known as the Low-Income Pool. Between 2010 and 2014, Florida providers received $5.1 billion in LIP funds, including $1.8 billion that went to Jackson Memorial, according to the report. The figure was nearly four times higher than payments to the hospital receiving the second-highest amount of LIP funds.

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A spokesperson for the HHS inspector general’s office confirmed the office is working on a report about payments to Jackson Memorial but declined to elaborate further. It's not clear when a final report will be issued.

The draft report obtained by POLITICO is dated from May, but the LIP payments have been under review much longer. Florida Gov. Ron DeSantis’ top health official Mary Mayhew, who previously ran the Trump administration’s Medicaid office for a brief time, warned DeSantis in February that Jackson Memorial could face danger from the pending audit.

“Any recoupment by the federal government will severely harm Jackson Memorial Hospital, and, most importantly, the Medicaid and uninsured patients that rely on Jackson Memorial for life-saving care,” she wrote in a memo that described the report's high-level conclusions.

A spokesperson for the Florida Agency for Health Care Administration said Mayhew was generally familiar with Florida's Low-Income Pool while at CMS but "not intimately familiar with the issues raised by the HHS Inspector General’s report" at that time. She also hasn't had discussions with HHS leadership or the White House about LIP payments to Jackson Memorial, the spokesperson said.

According to the February memo, Jackson Memorial has 22 percent of all licensed hospital beds in Florida’s Miami-Dade County, and it treats more than 74,000 Medicaid patients annually. The hospital did not respond to a request for comment.

Florida’s LIP program, which began in 2006, is jointly financed by federal and state dollars. It has been a source of controversy in recent years amid the state’s refusal to expand Medicaid under the Affordable Care Act to nearly 800,000 people.

The Obama administration sought to scale back LIP funding in 2015, preferring that states instead expand Medicaid. That prompted a lawsuit from then-Gov. Rick Scott, who claimed the administration’s move was illegally coercive. The suit was unsuccessful, but the Trump administration in 2017 boosted the state’s LIP funding by nearly $1 billion.

Seven other states, led by both Republicans and Democrats, currently have similar programs to help reimburse hospitals, according to CMS. The inspector general’s draft report only examines LIP funding in Florida over a five-year period ending in 2014. It is unclear if the office will review spending for other years.

Jackson Memorial disagreed with many of the report's findings, according to documents reviewed by POLITICO. The hospital said the findings were “largely inaccurate, are based on erroneous assumptions, and misconstrue or mischaracterize documentation provided in the course of the audit.”

"Massive refunds and recoupments based on years of uncertainty will only harm the state of Florida, the citizens of Miami-Dade County, the hospital, and, most importantly, the Medicaid and uninsured patients that rely on the Jackson Health system,” Jackson’s executive vice president Mark Knight wrote to the inspector general.