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Medicaid HMO rates up; Dade hit

By Jim Saunders
9/29/2010 Health News Florida

Medicaid HMOs in much of Florida will receive average rate increases of almost 2 percent this week, after a numbers-crunching dispute between the industry and the state Agency for Health Care Administration.

The rates will take effect Friday, a month after they were originally scheduled to be in place. Actual rate changes will vary widely in different parts of the state, with health plans in Miami-Dade County seeing decreases of more than 4.5 percent.

"If your business is concentrated in that area, the net effect is it is a big hit down there,'' said Michael Garner, president of the Florida Association of Health Plans, an industry group that has been involved in rate talks with AHCA.

The average increase in what are known as "non-reform" counties, including Miami-Dade, will be 1.55 percent, according to AHCA. HMOs in five counties that take part in the state's Medicaid "reform" pilot will see a 4 percent increase.

Garner said the hike in the reform counties --- Broward, Duval, Baker, Clay and Nassau --- comes after long-running arguments that plans in those areas have not had adequate rates. The pilot program, which was pushed through by former Gov. Jeb Bush, requires most Medicaid beneficiaries in those counties to enroll in managed-care plans.

The rate changes will be applied retroactively to Sept. 1, but their approval was delayed because of an actuarial dispute between the health plans and AHCA. Garner said the industry initially disagreed with AHCA on about 15 issues before ultimately resolving all but a few.

One major health plan, Amerigroup, appeared relatively satisfied with the outcome during a Sept. 17 investor meeting that was webcast. Officials said they expected Amerigroup's overall rates to increase about 2.9 percent in Florida --- an increase they at least partly attributed to being selective about the locations and types of business they conduct in the state.

But Garner said his association will request that AHCA reinstate a working group that has studied rate-making in the past to take up disputed actuarial issues.

A complicated set of factors goes into setting rates. Those factors include cost trends in the fee-for-service Medicaid system, financial data from the health plans and the different types of beneficiaries being served.

In the fee-for-service system, the state pays doctors and other medical providers directly for care they have given to Medicaid beneficiaries. That is the more-traditional alternative to managed care.

Garner said state lawmakers this year mandated a 4.5 percent rate cut in Miami-Dade because of concerns about widespread fraud in the fee-for-service system in the county. Such fraud could inflate HMO rates, as those rates are partly based on costs in the fee-for-service system.

Garner said rate cuts in Miami-Dade will wind up closer to 6 percent because of other factors on top of the legislative change.

Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida.org.