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Health News Florida

Appeals Court Backs State On Medicaid Contract

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An appeals court has overturned a circuit judge’s ruling that the state Agency for Health Care Administration improperly awarded a Medicaid managed-care contract in Southwest Florida.

A panel of the 1st District Court of Appeal on Monday backed the agency’s decision to award a contract in 2018 to Molina Healthcare of Florida Inc., rejecting arguments by another health plan, Best Care Assurance LLC.

Then-Leon County Circuit Judge Karen Gievers last year ruled against the contract with Molina, finding that AHCA exceeded a limit on the number of health plans that state law allows to serve Medicaid beneficiaries in Charlotte, Collier, DeSoto, Glades, Hendry, Lee and Sarasota counties.

But the appeals court, in a 13-page decision, rejected Gievers’ ruling and upheld an administrative order issued by the agency. Best Care Assurance, which received a Medicaid managed-care contract in the region, argued, in part, that it would be damaged economically if a contract was awarded to Molina.

In upholding the administrative order, however, the appeals court said Best Care Assurance did not meet a legal test for standing because state Medicaid managed-care laws “do not authorize or command AHCA to consider the economic impact of competing health plans.”

Florida lawmakers in 2011 approved an overhaul of the Medicaid system that has led to most beneficiaries enrolling in managed-care plans. With an initial set of contracts poised to expire, AHCA went through a lengthy procurement process that led in April 2018 to awarding varying numbers of new contracts in 11 regions of the state.

Best Care Assurance, which is affiliated with the Lee Health system, was one of four plans awarded contracts to serve patients in what is known as Medicaid Region 8 in Southwest Florida. Molina was not one of the four plans and filed a protest. It ultimately reached a settlement with agency officials that included it receiving a contract in the region.

But Best Care Assurance filed an administrative challenge and the lawsuit, arguing that state law imposes a limit of four managed-care plans in the region to provide “managed medical assistance” services --- the services provided to most Medicaid beneficiaries. The other plans initially selected to provide such services in the region were Humana Medical Plan, Inc., Sunshine State Health Plan, Inc. and WellCare of Florida, Inc.

In defending the decision to award a contract to Molina in Region 8, AHCA pointed, in part, to a section of state law aimed at encouraging managed-care plans to seek contracts in two regions of Northwest Florida. That section allows the agency to award what are known as “bonus” contracts in other regions to managed-care plans that are awarded contracts in the Northwest Florida regions.

AHCA awarded a contract to Humana in Northwest Florida and said that Humana’s contract in Southwest Florida’s Region 8 was considered a bonus contract. AHCA attorneys contended the Humana bonus contract should not be counted toward the limit in Region 8, effectively freeing up a spot for Molina.

Gievers, who has stepped down as a judge, ruled in January 2019 there is “no exception or qualification to the unquestionable statutory cap of ‘no more than four’ (plans) for Region 8.”

“Under Florida law … AHCA lacks the authority to ignore clear, unambiguous statutes such as the one providing the statutory cap of four contracts for Region 8,” she wrote.

But the appeals court said Gievers erred in ruling for Best Care Assurance because the plan had not “exhausted its administrative remedies” before taking the dispute to circuit court.

In upholding the administrative order, the appeals court went further, finding that AHCA did not violate state law by awarding the contract to Molina.

“Because the circuit court erred in ruling in favor of Best Care when Best Care had not exhausted its administrative remedies, we reverse the circuit court’s final judgment and remand with instructions to enter a final judgment in favor of AHCA and Molina,” said Monday’s decision, written by Judge Thomas Winokur and joined by Judges Joseph Lewis and M. Kemmerly Thomas. “In addition, because Best Care failed to establish standing to challenge AHCA’s contract award to Molina, we affirm AHCA’s final order on the issue of standing. Moreover, even assuming Best Care had standing, on the merits, we find that AHCA did not violate (a section of state law) when it awarded a fifth contract in Region 8.”