Medicaid managed medical, dental and children’s plans targeted for October rate reductions

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Starting in October, most Medicaid managed care plans are going to get paid less for providing health care services to the millions of people in Florida who rely on the safety net program for their care.

Medicaid managed medical assistance plans are likely to see a 4.5% rate reduction beginning in October. Managed dental plans are set to see an 8.7% reduction. Managed long-term care plans are likely to see an 8.4% hike in reimbursement rates Florida Medicaid Director Tom Wallace said.

The rate reductions for managed medical assistance, dental and children’s medical services — which is slated for 3.1% decrease in October — are being driven by reductions in health care utilization caused by the COVID-19 pandemic. The increase in the rates for managed long term care plans is mostly attributable to the Legislature’s requirement that long-term care providers increase wages for workers.

“These are draft final rates so there is a potential they might change,” Wallace told members of the Social Services Estimating Conference, which includes economists from the Governor’s Office as well as the Legislature. Wallace said though that he doesn’t expect to see any significant changes between the draft rates and the final rates.

Managed care plans must be paid actuarially sound rates as required by federal law. To that end, the Agency for Health Care Administration, which houses the Medicaid program, contracts with Milliman to help determine the rates.

Milliman principal and consulting actuary Andrew Gaffner told economists it has been “one of the most challenging rate-setting environments” he’s been involved in during his 25-year career as an actuary. That’s mostly due to the uncertainty surrounding the public health emergency (PHE) and how long it will remain in effect.

Milliman’s estimates assume that the PHE will expire no later than January 2023.

The public health emergency brings with it a 6.2% increase in the amount of federal funds for the program, which reduces the amount of state tax dollars needed to keep it running. However, states are banned from removing people from the Medicaid program so long as the public health emergency remains in effect.

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.

The COVID-19 pandemic and the subsequent PHE has caused enrollment in Florida’s Medicaid program to balloon to more than 5.1 million people by the end of June, state data show. Most beneficiaries are enrolled in managed medical care plans.

Economists now predict that enrollment will reach 5.3 million by the end of June 2023.

While enrollment in the Medicaid program, and managed care plans, is at an all-time high due to the PHE, utilization rates have dropped. Gaffner said those enrolled in the program due to the PHE restrictions don’t take advantage of the benefits the way traditional Medicaid enrollees do.

So while enrollment is up, he said, utilization rates are down, which is the driving factor behind the rate reductions.

“The sooner it ends,” Gaffner said of the public health emergency, “the more of a rate increase we’ll likely have.”

The PHE currently is expected to expire in October. But due to federal rules, the state will continue to receive additional funds, and keep people on the program, through Dec. 31.

However, POLITICO reported that the administration of President Joe Biden is planning to extend the PHE beyond October. The administration has said it would give states 60 days advance notice before allowing the PHE to expire. If it sticks to the commitment, the administration will have to make an announcement by Aug. 15.

If the PHE expires, Florida would continue to receive additional funding, and be required to maintain enrollees, through March 2023. That’s three months longer than what lawmakers anticipated when crafting the state Fiscal Year 2022-23 budget.

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