Medicaid managed care plans return $1B in ‘excessive profits’ over 4-year span
Tom Wallace, Medicaid director for the Florida Agency for Health Care Administration, speaks during the House Health Care Appropriations Subcommittee, Tuesday at the Capitol in Tallahassee. COLIN HACKLEY PHOTO

State-contracted plans returned $326.3M in excessive profits in 2022, the most since Florida has relied on managed care plans to deliver care.

According to state officials, Medicaid managed care plans returned $1 billion in “excessive profits” made from treating the poor, elderly and disabled between 2019 and 2022.

In 2022, the Medicaid managed care plans that contract with the Agency for Health Care Administration (AHCA) and the Department of Health returned $326.3 million in excessive profits. That’s the largest amount over the four-year period covered during the presentation made to a House health care spending panel by Tom Wallace, Medicaid deputy secretary for health care finance and data.

The Children’s Medical Services plan, administered by Sunshine Health Plan, returned $77.3 million to the state in 2022, more than any other managed care plan, according to the presentation. Humana Medical Plan and Clear Health Alliance/Simply Health Care Plan returned roughly $47.9 and $47.8 million, respectively, in 2022.

In all, Medicaid managed care plans returned $316.3 million in 2021, $274.8 million in 2020, and $129.2 million in 2019, which is when the state entered into the current round of Medicaid managed care contracts.

Before that, the managed care plans returned to the state less than $46 million in the previous three-year period combined according to a legislative analysis of the program.

Wallace attributed the large dollar amounts to the COVID-19 public health emergency which caused the state’s Medicaid program to balloon to more than 5 million enrollees. Wallace said the managed care plans are paid a monthly premium regardless if the people enrolled in them seek care.

Medicaid is a safety net program funded through state and federal dollars though states have control over much of their operating programs. Florida has a Medicaid managed care mandate, which means most of those beneficiaries are enrolled in managed care plans that have contracts with the state.

While Florida has flexibility over its Medicaid program, it does need to abide by some federal rules and standards, including a requirement that Medicaid managed care plans be paid actuarially sound rates. To that end, AHCA, which houses the Medicaid program, contracts with Milliman to help determine the rates.

Wallace told members of the House Appropriations Subcommittee on Health and Human Services that Milliman builds in a 2% profit into the rates it sets. Florida law allows Medicaid managed care plans to keep all profits of up to at least 5% profit.

To prevent plans from making excessive profits, the law allows managed care plans to keep half the revenue above the allowable threshold and up to 10%, but they must return the other half to the state. All profits above 10% of revenue must be refunded to the state.

In an attempt to incentivize managed care plans to meet agency-defined quality measures, Florida law does allow managed care plans to keep an additional 1% profit (or up to 6%) before having to return funds to the state. But Wallace said that none of the currently contracted managed care plans have attained the quality of care benchmarks required to keep the extra 1% profit.

Christine Jordan Sexton

Tallahassee-based health care reporter who focuses on health care policy and the politics behind it. Medicaid, health insurance, workers’ compensation, and business and professional regulation are just a few of the things that keep me busy.


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