Florida Expansion of Medicaid Managed Care Slowed
October 2, 2011
Florida’s efforts to expand a Medicaid managed care (MMC) pilot program hit a snag when federal officials pointed out that the proposal lacked a provision requiring a medical loss ratio threshold.
A medical loss ratio requirement stipulates that a certain percentage of funds be spent on patient care, with the remainder going to administration.
Florida lawmakers, who passed the statewide MMC provision last spring, heard of the medical loss ratio requirement at a recent briefing by state Medicaid officials. The proposed Florida expansion includes a profit-sharing provision to control costs.
Officials with the Center for Medicare and Medicaid Services want to see a medical loss ratio of 85/15, meaning that private managed care plans would need to spend at least 85 percent of funds on the provision of medical care. They also want assurance that quality of care and program transparency be maintained in an expansion of MMC.
An MMC pilot program has operated in five Florida counties without a medical loss ratio requirement. The waiver under which the pilot program operates expired in June, but extensions have been granted while the expansion request is pending.
Lack of a medical loss ratio requirement in the pilot program could endanger Florida receiving additional extensions.
State officials say they hope to receive some decision on the expansion from CMS by the end of October.
Senator Joe Negron, chief author of Florida’s Medicaid changes, characterized the relationship between the state and Washington D.C. as “dysfunctional” and accused federal officials of commandeering the state budget with their requirements.
Sen. Negron also complained that Texas was not being required to include a medical loss ratio threshold in their request to expand MMC.
Critics of the Florida expansion, including some members of the Legislature, say that the pilot program has never been closely examined to determine if it saved money or delivered acceptable access to care. Expanding it to the entire state without better supporting data would be a mistake.
Patient advocates and some healthcare analysts say a loss ratio requirement is necessary to prevent managed care companies from pocketing dollars that should go to providing patient care.
Health plan companies, on the other hand, prefer an arrangement commonly referred to as an achieved savings rebate, where the health plans retain up to five percent profit resulting from savings. Any additional savings are shared with the state.
Another issue dogging approval of the MMC expansion is Washington’s plan to reduce payments under Florida’s Low Income Pool (LIP), that state’s version of the disproportionate share hospital program (DSH). Under the LIP, hospitals that treat more Medicaid and low income patients receive additional funding.
The Affordable Care Act included a phase-out of DSH funding in anticipation of expanded Medicaid coverage. Federal officials have indicated that distribution of those funds may cease in December 2013, six months earlier than anticipated.
Florida officials were counting on LIP funds to lessen the impact of lowered Medicaid payments to hospitals.