Florida's governor has requested random audits of Medicaid managed-care contracts as the state's insurers press for higher rates.
Republican Gov. Rick Scott, in a letter to the state attorney general, said the random audits would occur in addition to audits of nearly 130 hospitals singled out by recent state inquiries. State health officials this summer asked hospitals and health plans to certify that contracts did not violate a cap on provider rates under Florida law. Medicaid managed care cannot pay provider rates more than 120% of Medicaid rates, by law.
The governor has urged Florida's health secretary to refer "any contracts where we find suspicion of fraud or abuse" to the state's attorney general. The state's Medicaid program covers roughly 3.5 million people, which is projected to grow to 3.7 million in the coming year.
The audits come in the first year of Florida's statewide expansion of Medicaid managed care and as insurers in the public program have pressed the state for higher rates next year. The state rejected the expansion of Medicaid under the Affordable Care Act and Scott was combative in talks this summer over federal aid for low-income patients.
Managed care contracts that exceed the provider rate limits could jeopardize health plan profits “which would cause them to come back to the agency for higher state rate payments,” Elizabeth Dudek, secretary of the Florida Agency for Health Care Administration, said in a letter in July.
Kindred Healthcare, which operates 10 Florida hospitals selected for an audit, did not respond to an interview request.
“Medicaid contracts are solely negotiated between the hospital and health plan, said Monica Corbett, a spokeswoman for the Florida Hospital Association. "The Florida Hospital Association (FHA) does not collect information related to these contracts or negotiations."
"Florida hospitals work to reduce costs and avoid harm, she said. "Over the last three years alone, our hospitals, working collaboratively, have prevented 27,500 cases of harm and saved nearly $170 million in costs by reducing avoidable readmissions and hospital acquired conditions.”
“Florida, like more than 35 states, has moved away from fragmented fee-for-service health care because the state understands that choice and innovation are better for beneficiaries and taxpayers," said Audrey Brown, the Florida Association of Health Plans' president and CEO. "We value our relationship with our State partners and will continue to work collaboratively with them to ensure that rates reflect the true cost of providing care and account for changes in state and federal policy."
Health plans are seeking a rate adjustment of $400 million and a rate increase next year of 12% "to reflect the true cost of providing care," she said.
Brown told the Miami Herald in July that the state's managed care plans were seeking more money for Medicaid patients because of high demand for medical care and high-priced pharmaceuticals. “This is not a sustainable business model,” Brown told the newspaper.
State regulators earlier this month announced a small batch of audits. The Florida Agency for Health Care Administration, which will conduct the audits, this year is operating on a smaller budget with fewer staff. The agency saw its budget reduced by $64.6 million from the prior year. The agency also lost 81 jobs.