After being targeted for potential cuts, state now says HMOs need more money for long-term care

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Medicaid HMOs participating in the long term care “managed care” program  should get paid more, actuaries working for the state health care agency determined.

Agency for Health Care Administration Medicaid officials on Wednesday shared information with HMO lobbyists prepared by Mercer Health Benefits actuaries that showed a proposed  statewide average 11.3 percent increase in capitation rates for the Medicaid patients who need  nursing facility services. Actuaries proposed a statewide average 4.1 percent increase for home and community based services.

There are more than 91,000 Floridians enrolled in the managed long term care program.

Managed care plans are paid a single capitation rate which is set after the nursing facility component and home and community based component are blended. That blended rate is applied to a plans’ case mix–or patient load–and then adjusted by county.

The proposed increases to the capitation rates for 2014-15 follow a recommendation from the agency in October to cut the HMO’s capitation rates by 4.19 percent. The proposed cuts were included on a list of cuts the state identified could be taken in case of a budget shortfall. The 4.19 percent reduction to long term care HMOs would save  about $132 million.

AHCA Deputy Secretary Justin Senior said the agency recommended cutting the HMO rates because that’s where the majority of the Medicaid dollars are spent. “The vast majority of our budget” is capitation rates for HMOs.

HMOs are the prime health care providers responsible for Medicaid under a shift to managed care that was approved by legislators and signed into law by Gov. Rick Scott back in 2011. Long term care was targeted first for the new statewide managed care program followed by traditional medical assistance.

The proposed capitation increases unveiled on Wednesday are for services the plans provide during the second year of their managed care contracts, or between September 2014 and August 2015. The percent of increase reflects the proposed 2014-15 capitation rates compared to the rates the plans were paid their first contract  year, or  2013-14.  The plans signed five-year contracts with the state.

Meanwhile, many factors, including a different case mix of patients and cost increases are contributing to the proposed capitation rate increases. Senior said the number of enrollees needing the nursing facilities was less than originally anticipated but that they required more care.

“Quite a bit” of the proposed capitation increase stems also from higher nursing facility costs. Managed care plans participating in the statewide Medicaid managed care program are required  to pay the fee schedules that nursing homes and hospices charge. “Rates jumped significantly on July 1.”

Despite the proposed increases in capitation rates, Senior said the statewide Medicaid managed long term care program still is saving the state money.

“Under the old fee-for-service system, it still would have been more expensive,” he said.

The proposed increases in capitation rates for 2014-15 are not finalized. The public can comment on them until November 30. Additionally, the Centers for Medicare and Medicaid Services also must approve the proposed increases in capitation rates. Any capitation rate increases for the first year of the program also would require CMS approval, Senior said.