Feds to state: Medical loss ratios are coming to Florida

The following article was published in The Florida Current on September 21, 2011:

 

Feds to state:  Medical Loss Ratios are Coming to Florida

 

By Christine Jordan Sexton

 

State officials told legislators on Wednesday that the federal government will require health maintenance organizations in five counties to follow medical loss ratios.

The move is angering Republican legislators since they specifically rejected the concept earlier this year when they adopted a statewide Medicaid managed care program. Medical loss ratios, which require that health plans spend a certain percentage on patient care, are a key component of the controversial federal health care reform.

Sen. Joe Negron, R-Stuart and chairman of the Senate health care budget committee, said he was frustrated with what he called a one-sided negotiation.

“Essentially the way this works we are beggars in ties,” Negron said. “They are dictating unilateral terms of surrender.”

Florida has been trying to get the federal government to sign off on the extension of a Medicaid pilot program now underway in Broward County and four Northeast Florida counties.

But acting Medicaid Director Justin Senior told members of the House Health and Human Services Committee that the Centers for Medicare and Medicaid Services is “pretty much done” discussing with Florida Medicaid officials whether medical loss ratios will be required and that managed care plans will be required to spend 85 percent of the premium dollar they receive on health care. He made a similar presentation to Negron’s committee in the Senate.

Senior said they will require the plans in the five pilot counties to adhere to the MLR but the federal government “won’t require us to implement it immediately.”

While Senior didn’t say when the MLR would be required, Agency for Health Care Administration spokeswoman Shelisha Coleman said in a follow up email that the state anticipates that the plans will have to meet the edict in 2012-13. 

“The agency will work with the stakeholders, including plans participating in the pilot, once final direction from CMS is received,” she wrote.

The pilot program is separate from the statewide Medicaid plan lawmakers signed off on earlier this year. But in that Medicaid overhaul – which would take effect in 2014 – lawmakers considered and then rejected medical loss rations. Instead legislators approved a shared savings plan championed by the health maintenance organizations that splits savings managed care plans are able to achieve between the plan and the state.

Negron said that terms mandated by the federal government are reasons why Florida should have the option of withdrawing from Medicaid. Negron floated a similar idea earlier this year but House Republicans refused to go along.

Senate Democratic Leader Nan Rich made sure to point out that many Democrats wanted medical loss ratios. She added that she did not share Negron’s point of view that Florida should consider withdrawing from a program where more than half the funding comes from the federal government.

“I would not want the federal government thinking everybody unanimously feels that it’s a legitimate option for us to want to opt out,” Rich said.

The state is currently negotiating with the federal government to extend its Medicaid 1115 waiver for another three years.  Florida has received five temporary extensions of the waiver as the federal government and state continue to negotiate the terms.

The waiver makes possible the pilot program launched by Gov Jeb Bush as well as a $1 billion pot of supplemental Medicaid funding called the Low Income Pool, which is used to help fund the health care costs of the underinsured and the uninsured.

While Senior said negotiations surrounding the MLR were “pretty much done,” he held out hope that the federal government may agree with Florida on the future of LIP.

 At issue is whether LIP expires in December 2013, which is what the federal government has signaled it wants  to occur, or whether it runs a full three years through June 2014, which is what Florida would like.

Senior told the House panel that the federal government is still considering whether to extend the low-income pool for the three year period and “we certainly urge them to do so.”

Florida officials have been negotiating the waiver renewal for more than one year. While it keeps the pilot program and LIP operational the waiver also is necessary for the state to embark on the new mandatory managed care program it hopes to launch for Medicaid patients in the coming years which requires all patients–from the cradle to the grave–to enroll in managed care plans.

Senior said that while the MLRs will be required for Medicaid managed care plans in Broward, Duval, Baker, Clay and Nassau counties, the state is hoping to alter the MLR requirements when it moves ahead with its new Medicaid experiment.

Florida Association of Health Plans President and Chief Executive Officer Michael Garner said his health plans are waiting to see the final waiver and the special terms and conditions the federal government requires before making any changes or reacting to the new MLR requirement. He said once the waiver is approved and the special terms and conditions are released the managed care industry will work with the Legislature and governor moving forward.

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