Florida health officials said Wednesday they would give insurers a 7.7 percent rate increase in the fledgling Medicaid managed care program, in what has been a contentious battle between Gov. Rick Scott, the insurers and hospitals.
The Republican governor lobbied hard to get federal approval for the statewide managed care program, which launched last year. He promised it would save money and improve health care for more than 3 million low-income and disabled Floridians. But now that the program seems in desperate need of additional funding, Scott has been blaming the insurance companies and hospitals.
Health insurers have lost $542 million through 2014 and said they can't afford further losses. They asked for a $400 million raise and a 12 percent rate increase from the state. Scott's administration had warned that any increase could negate the roughly 5 percent savings the program has generated and had previously countered with a 6.4 percent increase.
The governor strongly opposes pumping any additional state funds into the Medicaid program and wasn't happy when state lawmakers invested $400 million earlier this year in order to help hospitals that were losing other types of federal aid.
The Agency for Health Care Administration said the 7.7 percent increase takes into account the recent legislative hospital rate increase, pharmacy trends including new drugs now on the market and other changes. Scott's office did not immediately comment Wednesday.
As the state and insurers have been locked in rate negotiations, Scott has repeatedly spoken out and taken action against them, including requiring that insurance company and hospitals send their contracts with each other to the states to ensure they are complying with the law. The governor had alleged that the reason the Medicaid program wasn't saving more money was because insurers were negotiating hospital rates that were too high.
Earlier this week, Scott announced his administration would conduct random audits on hospitals. Scott has been adversarial against hospitals that receive public funds after the federal government announced deep cuts in hospital funding earlier this year. Scott, who formerly ran a chain of for-profit hospitals, has tried to show that the hospitals aren't as bad off financially as they maintain. He has also created a commission to examine hospitals' finances.
Insurers say higher than expected usage rates, pent-up demand among Medicaid enrollees and expensive drugs costs contributed to the losses. It's unclear what impact the lower than requested rates will have on the market. It's unlikely that insurers will drop out as there are stiff penalties for leaving, but experts say it could contribute to more market consolidation.
The Florida Association of Health Plan said the rates are a result of a collaborative dialogue between the health plans and the state.
"This a step in the right direction and the plans look forward to continuing this dialogue with the state to ensure our shared goals of providing quality health care while respecting every dollar of taxpayer funding," said CEO Audrey Brown.
Officials estimated nearly 4.2 million will be enrolled in the Medicaid program in 2016-2017, about a four percent increase from the previous year.
