As many as half of the managed-care plans providing Medicaid services to Floridians were losing money midway through the year. But key players say they are not worried.
Medicaid is the largest single expense in Florida’s more-than $80 billion budget, and Gov. Rick Scott in 2011 signed a dramatic restructuring that shifted millions of patients into HMOs and other types of managed-care plans.
The News Service of Florida obtained a copy of an Agency for Health Care Administration draft document showing unaudited financial data for 14 plans currently participating in the program.
Seven of the companies --- including Molina Healthcare, Prestige Health Choice, UnitedHealthcare and Sunshine Health Plan --- were losing millions of dollars in the early part of the year. In the aggregate, the industry posted a $73 million loss on the “managed medical assistance” program --- the largest part of Medicaid managed care --- between January and June.
In a statement, Agency for Health Care Administration Secretary Justin Senior dismissed the chart his agency circulated, noting that Florida’s program has been profitable. Senior said that, in the aggregate, the industry made $188.6 million in profits in the managed medical-assistance program alone in 2016. According to Senior, profits soared to $449.9 million for the same program in 2017, though that figure doesn’t include profits for health plans associated with the company Amerigroup.
“The Agency (for Health Care Administration) is confident in the financial viability of the Medicaid health plans, and when 2018 is complete and audited, we expect plans to show a positive margin once again,” Senior said.
Senior said the managed-care industry is conservative when reporting unaudited financial data to the state, and “occasionally” mid-year unaudited reports have shown projected losses. But when the audited financial data is submitted, Senior said, the “picture tends to improve dramatically, and the plans have generally shown profits.”
Audrey Brown, president and CEO of the Florida Association of Health Plans, also downplayed the information. “Using the first two quarters of a year to assess the financial condition of Medicaid health plans does not work due to the seasonal nature of claims,” she said.
The unaudited financial data for the first part of the year shows that Sunshine Health Plan had a $46 million deficit, while Prestige had a $38.4 million deficit. United had a $15.48 million deficit and Molina had an $11.6 million deficit.
State law requires that managed-care plans get paid an actuarially sound rate, and the state agrees each year to adjust payments to the Medicaid health plans to ensure they are paid properly. The state last year reduced the amount it paid on average to Medicaid HMOs by 3.7 percent.
Despite the expressions of confidence about the financial situation of the health plans, correspondence between the industry, AHCA leaders and the Milliman actuarial firm, which works for the state, involved questions about payments to the plans.
On June 1, the state notified the health plans that they would be required to start making enhanced payments to hospitals and that enhanced hospital rates would need to be retroactively applied to payments made between April and June.
Brown sent a letter to Senior on June 22 advising him that her association had hired its own actuarial firm to conduct a review. Brown said in the letter that the actuary discovered, among other things, a “mathematical calculation error.” In all the health plans, argued that as much as $173 million was shifted away from the plans to the hospitals.
Association officials met with Medicaid director Beth Kidder, according to another one of Brown’s letters, but was told that even with the enhanced payments to the hospitals “the rates were still within the range of actuarial soundness.”
The Florida Association of Health Plans took the state to administrative court this summer over the issue of hospital payments but ultimately dropped the challenge.
That wasn’t the first time there has been disagreement between the health plans and the state over such issues. The state acknowledged in the summer of 2016 that it had erroneously underpaid the plans by $433 million between 2014, when the statewide Medicaid managed-care program went into effect, and spring 2016 when the error was caught.
The reported losses for the first half of 2018 dovetail with a dip in overall enrollment in the Medicaid program. More than 4 million people were enrolled in July 2017, but economists now predict there will be nearly 125,000 fewer people in the program by July 2019.