Mental health plan, state settle legal plan

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After months of legal battling about whether it spent enough money on patient care, a Medicaid mental-health plan will not have to pay back about $4 million to the state, according to a settlement agreement, reports Jim Saunders of the News Service of Florida.

Florida Health Partners Inc., which provides mental-health services to Medicaid beneficiaries in a large part of Central Florida, filed administrative challenges last year after the state Agency for Health Care Administration said the plan had not complied in 2006 with what is known as a “medical loss ratio.”

The plan and AHCA finalized a settlement agreement April 17 that says, in part, the agency “shall not seek any funds” from Florida Health Partners or a related mental-health plan in North Florida, based on they way they calculated the medical-loss ratio.

AHCA spokeswoman Michelle Dahnke said in an e-mail the agency would not provide additional comment about the settlement agreement. Philip Blank, an attorney for Florida Health Partners, could not be reached Monday afternoon.

Medical-loss ratios, thresholds on the amount of premium that must be spent on patient care, are a controversial issue in the insurance industry — and have drawn heavy debate as Florida seeks to transform its Medicaid system into a statewide managed-care program.

Supporters argue the ratios are needed to make sure managed-care plans spend enough premium dollars on patient care, instead of funneling money to administrative expenses and profits. But critics say the ratios are unwieldy, at least in part because it is sometimes difficult to separate medical care and other expenses.

The state uses an 80 percent medical-loss ratio for plans, such Florida Health Partners, that serve mental-health patients. If the plans don’t spend 80 percent or more of their Medicaid premium dollars on medical care, they have to refund money to the state.

Florida Health Partners and the affiliated plan, North Florida Behavioral Health Partners, operate in various counties. They are joint ventures between ValueOptions, a national managed-care company, and local mental-health and substance-abuse providers, according to company websites.

The long-running disputes in the state Division of Administrative Hearings centered on contracts that Florida Health Partners had to serve Medicaid beneficiaries in two multi-county regions. One of those regions includes Brevard, Orange, Osceola and Seminole counties; the other includes Hardee, Highlands, Hillsborough, Manatee and Polk counties.

AHCA notified Florida Health Partners last August that audits showed the health plan owed about $4 million in medical-loss ratio refunds for 2006. Outside auditors, who were from a Jacksonville firm, calculated the ratio in one of the regions as low as 66 percent.

The outside auditors wrote, however, that contracts between AHCA and the health plan “did not clearly define the medical expenses to be included in the (medical loss ratio) calculation.” They considered five possible ways of calculating it.

Florida Health Partners aggressively fought the allegations. After filing the initial challenges last year, Florida Health Partners filed a potentially broader case in March that alleged AHCA was using a method to calculate the ratio that had never been approved in state law or in an administrative rule.

The health plan also took issue with the outside auditors’ conclusions that contracts did not clearly define how the ratio would be calculated, saying it had followed guidelines from the state Office of Insurance Regulation.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including,,, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.