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FL Medicaid Plans Seek Raise From State Amid Losses

Jul 27, 2015
Originally published on July 27, 2015 8:53 am

Insurers participating in Florida's new Medicaid managed care program say they've lost $542 million through 2014 and want the state to raise their rates. But after losing major federal funding for hospitals, Gov. Rick Scott doesn't want to use any more state money for the Medicaid program.

Scott and the insurers are locked in intense negotiations that could undermine the fledgling program that gives federal funds to private health insurance companies to oversee medical care for poor and disabled people instead of reimbursing doctors and hospitals for each service.

After federal hospitals funds were cut, lawmakers took $400 from the state budget to bump up Medicaid reimbursement rates. That put Scott on the defensive against hospitals, with the Republican governor and former CEO of a for-profit hospital chain, convening a commission to sift through financial data, including CEO salaries, bonuses and lobbying expenses, for hospitals that receive public funds. Scott's administration has also been circulating documents to show that hospitals aren't as in a bad financial shape as they maintain.

Insurance companies want a $400 million raise and a 12 percent increase for rates that would go into effect September 1.

"We are losing a significant amount of money" in the Medicaid managed care program, Molina's President David Pollack told the hospital commission Thursday at a meeting in Miami.

Molina was spending about 81 percent on services before the state privatized the program last year, but Pollack said they're now spending 97 percent, leaving a razor thin margin for profit "that is not sustainable."

Another insurer, Preferred Medical Plan, has stopped taking new enrollees, saying the decision was "precipitated by the well-publicized issue of the insufficient current Medicaid rates under" managed care, according to a statement from the company.

Insurers say they need the raise to break even, and will continue hemorrhaging money at the state's proposed 6.4 percent increase. They blame higher than expected utilization rates and a pent up demand among the new enrollees, along with expensive drugs costs for the losses.

United reported more than $237 million in losses, with Sunshine State Health Plan and WellCare of Florida losing $85 million and $57 million respectively, according to an analysis by state insurance regulators.

"There are substantial losses across the board for all the plans," said Audrey Brown, president of the trade group Florida Association of Health Plans.

But state health officials say losses will shrink as the program grows and their patients get healthier. They've also warned that a rate hike would undo the 5 percent savings the program has generated. They criticized insurance companies for not negotiating lower rates with hospitals, noting managed care was not intended to be a windfall for hospitals.

"We were very surprised by the amount of increase (insurance companies) were saying they needed and even more surprised that we had plans who were contracting with hospitals between 120 and 200 percent of Medicaid rates," said Florida Agency for Health Care Administration Secretary Elizabeth Dudek. The agency said reimbursement rates should be around 105 percent.

Scott's top health officials last week asked insurers to prove their rates aren't at or above 120 percent and threatened to take unspecified action against insurers that didn't comply.

The state requires insurers to include certain hospitals, like children's hospitals, on their plans to ensure patient access. That gives certain hospitals extra leverage to demand higher rates, according to insurers. At the same time, hospitals say the Medicaid reimbursement rate is very low and that 120 percent reimbursement rates still doesn't cover their total cost.

Scott and fellow Republicans lobbied hard for Medicaid managed care. Scott said it would ensure that the more than 3 million recipients would receive better care and also save the state money, warning the roughly $23 billion a year Medicaid bill was consuming the state budget.

"We're just trying to understand where the money needs to go and if there other efficiencies of how to get there," Dudek said.

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