State moves quickly to resolve Medicaid managed care legal challenges

TALLAHASSEE, FLA. 11/30/21-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

Florida Medicaid officials are moving quickly to try to resolve legal challenges to the state’s round of Medicaid managed care contracts that are worth billions. 

The Agency for Health Care Administration (AHCA) referred legal complaints filed by ImagineCare, AmeriHealth Caritas and Sentara to the state Division of Administrative Hearings (DOAH) on July 26, days before a statutory deadline to do so.

A state administrative Judge has not been assigned to any of the cases.

Florida administrative law requires that a hearing be held within 30 days, meaning that a trial must start by Aug. 26.

AHCA referred the cases to DOAH after Florida’s top economists questioned the startup date for the newly announced Medicaid contracts. Medicaid officials targeted a Sept. 1 startup date for a multiphase rollout and a Jan. 1, 2025, date for statewide implementation.

The ongoing legal dispute is already causing a bit of a conundrum for economists trying to come up with forecasts that will be used to develop the state’s three-year financial outlook.

Economists met last week to determine Medicaid expenditures for the current fiscal year, including the rates paid to Medicaid managed care plans. Because federal law requires managed care plans to be paid actuarially sound rates, Florida contracts with Milliman to analyze the experience and set the rates.

Milliman actuaries presented state economists with two sets of draft rates to consider for the current 2024-25 fiscal year: one set of rates for the existing contracts and another for the new contracts. AHCA Deputy Secretary for Health Care Finance and Data Tom Wallace recommended that the two sets of rates be blended, using the rates for the existing contracts from October through January and the new rates for the remainder of the year.

Amy Baker, Florida’s chief economist and a member of the Social Services Estimating Conference, was uncomfortable with the recommendation.

“I just don’t know if I feel comfortable that I have enough information yet — nobody’s fault — on when this is going to be clarified when we go live (with the new contracts),” Baker said. “We would have to assume that everything gets basically clarified somewhat timely to prove to be true.”

Baker initially recommended that the economists use the pre-invitation to negotiate (ITN) enrollment rates for the entire year and alter them the next time they meet in the Fall. 

But Wallace said AHCA’s recommendation to use the pre-ITN rates through January was responsible. “We know at some point here it definitely should happen. We just don’t know exactly when that is,” Wallace said.

Baker then recommended that economists use pre-ITN rates for 50% of the year and post-ITN rates for the remainder of the year. And she again pushed Wallace about the potential impact of the challenges.

“Can it happen? Could there be a delay that affected all of your contracts?” she asked.

Wallace responded: “I guess potentially it could happen. I don’t really have an idea at this point where it’s going to land.”

The economists ultimately agreed with Baker’s recommendation to blend the pre- and post-ITN rates equally, with each being in effect for half the year.

In addition to being challenged in state administrative court, AHCA’s decisions to award Medicaid contracts also are being challenged in Leon County Circuit Court. And the number of litigants involved in that case continues to grow.

The South Florida Community Care Network, which operates as Community Care Plan (CCP), filed a motion to intervene in the legal challenge on behalf of the state. CCP is owned by two Broward County hospital taxing districts, one of which is run by Shane Strum, the former Chief of Staff to Gov. Ron DeSantis.

CCP is the second managed care plan to intervene on behalf of the state. Florida Community Care (FCC) filed a motion to intervene in ImagineCare’s lawsuit to prevent AHCA Secretary Jason Weida from executing new multiyear Medicaid managed care contracts until its underlying administrative complaint has been resolved. 

The lawsuit has been assigned to Leon County Circuit Court Judge Angela Dempsey.

ImagineCare is a type of health plan known as a provider service network (PSN) and is a joint venture of Spark Pediatrics and CareSource. FCC and CCP also are PSNs.

Florida officially launched the Medicaid re-procurement in April 2023 with the release of a massive ITN. AHCA published its initial decision nearly a year later announcing its intent to award contracts to its intent to award new contracts with FCC, Humana Medical Plan, Simply Healthcare Plans, CCP and Sunshine State Health Plan.

Seven plans, including FCC, had notified the state of their plans to challenge the April decision. Some are objecting because they weren’t awarded contracts in the regions they were vying for, while others are protesting that they were left out completely.

After months of negotiations with some of the plans AHCA published a second decision in July. Four of the seven plans dropped their legal challenges but three did not.

ImagineCare and Sentara were hoping the state would offer them six-year contracts to provide Medicaid services to beneficiaries enrolled in Florida’s mandatory Medicaid managed care program. Florida requires most Medicaid enrollees, from the cradle to the grave, to enroll in a managed care program to receive their health benefits.

AmeriHealth Caritas already is contracted with the state to provide services but was not offered a new contract.