Florida House Eyes Changes to Medicaid-Managed Care

Florida House Speaker Jose Oliva and his allies have loudly contended during the past two years that there’s too much government interference in health care, leading to monopolies and rising costs. 

Despite that mantra, House Republicans have tucked into a budget bill mandates that would increase the role of government in Medicaid contracts negotiated between managed-care plans and providers.

House budget writers included in a budget “conforming” bill (HB 5201) a requirement that “essential” providers contract with all Medicaid managed-care plans in their regions or lose access to hundreds of millions of dollars in Medicaid supplemental payments.

The mandate would affect some of the largest hospitals in the state, including Jackson Health System in Miami, Memorial Healthcare System and Broward Health in Broward County, Tampa General Hospital and Lee Health in the Fort Myers area, as well as faculty medical plans at the University of Florida, the University of South Florida and the University of Miami, according to the Safety Net Hospital Alliance of Florida.

“We are looking at the bill closely and trying to understand what the specific concerns are,” Justin Senior, chief executive officer of the Safety Net Hospital Alliance of Florida, told The News Service of Florida.

Senior said his association is worried that the proposal is overly broad and could lead to a chain of events. For instance, if a managed-care plan terminated a hospital from a contract,  Senior said, “it looks to us like it would eliminate the hospital's ability to participate in the  LIP,” an acronym for the Low Income Pool, a program that provides supplemental money to hospitals to help compensate them for charity care.

He also worries that the move could have drastic repercussions on how the state finances its Medicaid supplemental payments, including the $900 million-plus Low Income Pool.

The state doesn’t contribute general-revenue tax dollars to help fund the Low Income Pool. Instead, Florida relies on transfers from local governments to draw down federal money.  In the current fiscal year, local governments provide more than $300 million to fund LIP. The majority of that came from Jackson Health System.

If Jackson didn’t want to enter an agreement with a Medicaid managed-care plan and lost its ability to tap into LIP funds, Senior said, it could also choose to stop contributing funds to help finance the program. And if that were to happen, it could adversely affect all providers that receive LIP funds, Senior said.

LIP funding “is like Janga,” Senior said, referring to the popular block game.  Jackson Health System, he said, is the block that keeps the funding together.

And while the mandatory contracting language only applies to Medicaid, Senior said it could impact negotiations with health plans for other lines of business such as commercial health insurance coverage or Medicare.

The mandatory contracting language comes after a contracting dispute last year between Centene Health Plan, which operates in the Medicaid program as Sunshine Health, and Shands Healthcare.

Sunshine Health Plan dropped UF Health Shands Hospital in Gainesville, UF Health Jacksonville hospital and all physicians in the health system’s network from its provider panel after failing to negotiate managed-care contracts in two of the state’s Medicaid regions.

The parties subsequently reached a settlement in November 2019 that returned the health system --- and its physicians --- to the network.

The new House proposal comes at a time when Oliva and other House leaders have focused on reducing regulations in health care in favor of a more free-market system.

Oliva last year pushed through legislation that eliminated the state’s “certificate of need” regulatory program for new hospitals and tertiary health care services, such as organ transplants.

The so-called CON process was designed, at least in part, to avoid a duplication of services that proponents of the regulations contend drives up costs. But Oliva argued that the regulations were “monopolistic.”

House Health Care Appropriations Chairwoman MaryLynn Magar, R-Tequesta, defended the new proposal related to managed-care contracts.

“Government is having to contract, so we are doing this on behalf of the people,” said Magar, who also is House speaker pro tempore, making her a top lieutenant of Oliva.

The contracting mandate isn’t the only provision in the House’s budget that would affect the delivery of health care to poor, elderly and disabled people. Another provision in the conforming bill would help some newer Medicaid managed-care plans increase enrollment.

The change would help Lighthouse Health Plan in the Panhandle, Vivida Health in Southwest Florida and Miami Children’s Health Plan in Southeast Florida, all provider-sponsored networks that inked five-year contracts with the state in 2018.

Christie Spencer, chief executive officer of Lighthouse Health Plan, told the News Service that existing Medicaid law and policy give a competitive advantage to more-established managed-care plans. 

For instance, Spencer said an issue involves an algorithm the state uses to auto-assign Medicaid beneficiaries who haven’t voluntarily enrolled in managed-care plans. Spencer said the algorithm benefits more-established plans because it requires the state to re-enroll people in plans with which they had prior relationships. There also is a requirement that family members be enrolled into the same plans, which, she said, also helps established plans.

Spencer said Lighthouse Health Plan had estimated that it would have about 50,000 Medicaid members but now. But instead, the plan has about 30,000 members.

The House bill would change the law to allow the state “when temporarily necessary” to show preferential treatment in the assignment of Medicaid beneficiaries to managed care plans.

Spencer said the change is necessary if the state wants the Medicaid managed-care program, which requires most beneficiaries to enroll in managed care, to flourish.

“Favoritism is the way it is today because they are favoring the bigger plans that have been there longer,” she said.

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