Scott wants Medicaid insurance, hospital contracts examined

FORT LAUDERDALE, Fla. (AP) – Gov. Rick Scott is targeting health insurers participating in the state Medicaid program, accusing them of negotiating hospital rates that are too high, which he says is the reason the new managed care program is not generating enough savings.

Scott instructed state health officials in a letter Monday to examine hospital contracts, warning that those with rates higher than 120 percent of the Medicaid cap will be subject to an “immediate corrective action plan” that could nullify the contracts and kick insurers out of the Medicaid program.

“Let’s never forget that all Medicaid payments are paid for by taxpayers of our state,” Scott wrote in the letter.

His administration recently asked insurers to prove that their contracts meet the state statute and ordered the Agency for Health Care Administration to audit all hospital and insurance company contracts that didn’t prove they were in compliance by Aug. 1. Hospital documents show that less than a dozen seemed to have contracts with rates higher than 120 percent.

Scott and the insurers are locked in intense negotiations that could undermine the fledgling program that gives federal funds to private health insurance companies to oversee medical care for poor and disabled people instead of reimbursing doctors and hospitals for each service.

After federal hospital funds were cut, lawmakers took $400 million from the state budget to bump up Medicaid reimbursement rates. That put Scott on the defensive against hospitals because he doesn’t want any more state revenue going into the Medicaid program.

But insurers have lost $542 million through 2014 and say they can’t sustain further losses. They’re asking the state for a $400 million raise and a 12 percent increase for rates that would go into effect Sept. 1. State health officials warn that a rate hike would undo the 5 percent savings the program has generated.

Hospital officials say the governor’s latest allegation – that the Medicaid program is not saving more money because of the hospital contract – is misdirected.

“The state has challenges controlling the cost of the program and they’ll eventually effectively figure out how to deal with that, but (saying hospitals are paid too much) is not the way,” Florida Hospital Association President Bruce Rueben said.

Insurers say higher than expected usage rates, pent-up demand among the more than 3 million Medicaid enrollees and expensive drugs costs contributed to the losses. The state requires insurers to include certain hospitals, like children’s hospitals, on their plans to ensure patient access. That gives some hospitals extra leverage to demand higher rates, according to insurers. At the same time, hospitals say, the Medicaid reimbursement rate is very low and 120 percent reimbursement rates still don’t cover their total cost.

“What we’re hearing from the hospitals is that they feel they are in compliance with the law,” Rueben said.