The mother of all contracts: A seismic change in the Medicaid program could be coming

The mother of all contracts: A seismic change in the Medicaid program could be coming

Florida’s gigantic health care agency is moving forward with one of the largest and most expensive contracts in the state. And it’s going to be quite an undertaking.

The Agency for Healthcare Administration will eventually be tasked with awarding new six-year contracts to a handful of managed care companies, making them responsible for the healthcare of more than 4.24 million residents .

Rarely released state data shows that current contracts for Medicaid are worth billions to the managed care companies currently operating in the system. And those who have been deeply involved in past deals say it’s a very complicated process to navigate.

The data suggests that managed care plans with Medicaid contracts could be paid nearly $100 billion over the six-year period covered by the next round of contracts.

Managed care plans reported receiving more than $65 billion in Medicaid premiums in the first four years of the current contract, according to Managed care reports produced by the Florida Office of Insurance Regulation (OIR). Nearly $20 billion of that bounty was collected in 2021 alone, according to Florida Politics data analysis.

No managed care plan reported more Medicaid premiums in 2021 than the Sunshine Health plan. More than 83% of the Sunshine Health Plan premium for the year came from Medicaid. The Sunshine Health Plan was also one of the highest-grossing managed care plans in 2021, reporting a profit of $537 million, according to state data.

To ensure that managed care plans do not incentivize benefits for care, the law limits how much benefits plans can earn from Medicaid before having to return a portion of the benefits to the state. The AHCA calculates what is called the “Achievement Savings Rebate” (ASR) each year.

The state has not finalized ASR amounts for 2021, according to the AHCA.

But in 2020, when managed care plans collected $16.4 billion in Medicaid premiums, contract plans brought in nearly $275 million in total to the state, according to a document prepared by the Bureau of Medicaid Finance. . The $275 million figure more than doubles the $129.9 million in ASR managed care plans returned to the state in 2019.

2020 marked the start of the pandemic and also included a three-month stoppage for “optional” medical care. And when the economy reopened, people continued to put off seeking health care.

Managed care plans file financial statements and enrollment reports with the National Association of Insurance Commissioners (NAIC). The Florida OIR compiles unaudited reported data from NAIC filings to assemble quarterly reports. Reports provide details on the amount of premiums collected broken down by insurance, assets, liabilities and capital for each managed care plan.

Florida Politics analyzed quarterly reports from managed care plans between 2018 and 2021 while reviewing data released by the OIR for the first quarter of calendar year 2022.

Between January and March of this year, managed care plans reported collecting $6.17 billion in Medicaid premiums. That’s $1.5 billion more than plans were bringing in for the first quarter of 2021.

Preparing to solicit offers

Meanwhile, those who have worked on Medicaid procurements say a lot happens in the process before actual auction requests are issued.

Before Melanie Brown Woofter headed the Florida Behavioral Health Association, she was office manager of AHCA’s Medicaid Managed Care Unit.

In this capacity, Brown-Woofter was part of the “team” that helped develop the procurement documents used for the 2014 contracts.

She also worked on the Medicaid contracts that Florida used in the precursor to the statewide mandatory managed care program: a five-county managed care pilot program.

In other words, she’s been there, done that.

“They should at least turn the corner to see the finish line for the drafting of the document and the issuance of the supply,” Brown-Woofter said when asked what was going on behind the doors of the OH THAT.

Brown-Woofter recalls that a team of agency staff was assembled with people from various Medicaid offices — from managed care to finance to quality and project management. The team, which also included staff from the agency’s general counsel’s office, met for more than a year on procurement.

“When we looked at it as a process, it went from requirements and quality measures that we’re going to have (in contracts) all the way through to implementation,” she said. “It was well thought out.”

It should have been. At the time, the agency was required to make a Medicaid managed care supply in every region of the state. That meant 11 different purchases, each of which could be challenged by health care plans that hadn’t won the lucrative Medicaid deals. (Note: This year’s legislature changed the law to allow only one statewide procurement. It also reduced the number of managed care regions from 11 to eight.)

Ultimately, 16 Medicaid-managed care plans had contracts in 2014 to provide care for the state’s poor, elderly, and disabled population. And it was done without any significant litigation.

“It was just very, very rewarding,” Brown-Woofter said.

While the first supply had been in the works for more than a year, Brown-Woofter said the contracts used borrowed heavily from contracts used in a Medicaid Reform managed care pilot program that initially operated in Broward and Duval counties in 2006. and expanded the following years to also include Nassau, Clay and Baker counties.

“It was a great learning opportunity,” Brown-Woofter said, noting that the Medicaid reform pilot project gave the agency a first look at contracting between managed care plans and healthcare providers. health and “the sore spots that came out of it. Similar to today’s mandatory program, the five-county pilot also required recipients to choose a managed care plan — those who didn’t were assigned a plan. The agency learned that the approach sometimes results in a family’s medical home bifurcating, with a parent assigned to one plan and their child or children to another.

“Sometimes it’s easier for families to just have one plan to go,” Brown-Woofter said. The agency was able to change the posting policy to provide families with more choices, she said.

Additionally, the Medicaid reform pilot project has allowed the agency to learn whether managed care would benefit people with serious mental illness.

From there, the Medicaid managed care specialty plan was born, Brown-Woofter said. In 2014, the state signed Medicaid contracts with managed care plans that provided treatment for serious mental illnesses, HIV and AIDS, and medically complex pediatric conditions. The state also had a Medicaid contract with a managed care plan that provided health care for children who were in state custody.

When the state began working on the second market in 2016, it also applied lessons learned from experience, said Justin SeniorCEO of Safety Net Hospital Alliance of Florida.

Prior to leading the state hospital association, Senior was director of Medicaid in Florida and also served as secretary of the AHCA. Senior said the agency has certain goals with the second supply, including expediting and encouraging alternative payment arrangements between managed care plans and their contracted providers. Alternative payment methods allow plans to pay providers a lump sum for managing a patient’s care. Financial incentives can be given for positive results.

Alternative payment methods replace a fee-for-service reimbursement where providers submit invoices to the managed care plan with codes for the services provided. The reimbursement arrangement encourages visits, Senior said, and results.

The AHCA also wanted Medicaid managed care plans to reduce potentially preventable hospital events by 22 percent; hospital admissions/readmissions by 21% and emergency room visits by 14%.

“They’re going to be looking at that right now to figure out – ‘do we want to emphasize that in the next contract? Do we want to score this in a way that our top performers get more points than our worst? ” Senior said of the 2018 contract requirements. ”That’s the kind of thing you have to think about here. You need to get the health plans most likely to help you achieve the outcome you want.

Equitable health care for all?

Tallahassee Lawyer Anne Swerlick concerned that the state is taking steps to address health equity issues when developing new contracts. Swerlick in the 2022 legislative session championed a bill requiring Medicaid managed care plans, beginning in calendar year 2026, to stratify some of the data it is required to report to the state. by age, gender, race, ethnicity, primary language and disability determination.

But, at the Georgetown University Health Policy Institute Center for Children and Families virtual conference this summer, Swerlick said Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services, that the agency did not mention health equity in the Medicaid information request it issued earlier this summer. The RFI was issued to help provide guidance to the AHCA as it worked on procurement.

“There was not a single mention in this RFI of health equity or health disparities or any sign of a commitment from the state to use this as an opportunity to address these issues. We were pretty disappointed with that,” Swerlick said.

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