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Central Health Board of Managers Supports Creation of LPPF (Local Provider Participation Fund) in Travis County

(Austin, TX) – To bring home federal dollars to fund unreimbursed costs of hospital care, the Central Health Board of Managers approved a resolution supporting legislation to create a Local Provider Participation Fund (LPPF) in Travis County.

LPPFs are financial structures administered by public entities like Central Health, Travis County’s healthcare district, that allow private hospitals to continue accessing federal matching funds to pay for care provided to people who don’t have insurance and cannot afford to pay.

If approved by the legislature, House Bill 3649/Senate Bill 1350, filed during the current legislative session, would permit Central Health to establish and administer an LPPF within Travis County.

Safety-net hospitals in Travis County incur significant unreimbursed costs while caring for uninsured and Medicaid patients – many of the people Central Health serves. An LPPF would allow hospitals in Travis County to receive federal funding to pay for health care services for people with low income and no insurance. Under an LPPF, private hospitals would agree to pay into a fund administered by Central Health. The local funds would be combined, or matched, with federal dollars then re-distributed by the state and federal government to area safety-net hospitals.

“This is a strategy to draw down funding for health care without using additional local tax dollars,” said Mike Geeslin, Central Health CEO and President. “If the legislature creates an LPPF in Travis County, local hospitals will continue to receive these federal funds for caring for people in our community who need health care but aren’t covered by insurance.”

Next steps
Two bills have been filed, one in the House Chamber (HB 3649) by State Rep. Gina Hinojosa (Dist. 49), and the other in the Senate Chamber (SB1350) by State Sen. Kirk Watson (Dist. 14). The legislation is still in the early stages of the legislative process.

The House bill was heard last week and is pending a vote in House County Affairs. The Senate companion bill has not yet been posted for a Senate committee hearing.

What is a Local Provider Participation Fund (LPPF)?

  • A local funding source to help reimburse hospitals for uncompensated care (the cost of unreimbursed charity care), and other specified state and federal funding programs.
  • Financed through a mandatory payment assessed on private hospitals by a local government entity. Central Health would administer the LPPF in Travis County.
  • Travis County hospitals would agree to be assessed a uniform payment rate not to exceed 6 percent of their net patient revenues.
  • Hospitals are not allowed to charge a patient surcharge to cover the payments to the LPPF.
  • LPPFs must be approved by the Texas Legislature. Local taxes are not paid into the LPPF.
  • The LPPF funds are used as the local match to draw down federal funds.
  • LPPFs were traditionally used by counties that did not have hospital districts to generate local tax dollars for federal matching payments. Now, hospital districts in Texas are also using LPPFs to generate local revenue to draw down Federal dollars.
  • LPPFs must comply with federal health care and tax regulations.