Florida clash over Medicaid cost-shifting leads to rate increase

Community mental health providers in Florida have parlayed an investigation into their Medicaid accounting practices into a midyear $3.3 million rate increase effective April 1. Rates for the eight behavioral health codes involved had been largely untouched since Medicaid started paying for the services about 20 years ago. While the new rates don’t necessarily cover the complete costs of the services, they are "getting better," says a representative for Florida’s community mental health centers.

"Everyone recognized that maintaining a system of care could not be done on 1980 rates," says Randy Wilcox, director of governmental relations for the Florida Association for Community Mental Health.

The revision in the rates stems from an investigation last year into the centers’ practice of cost-shifting funds between Medicaid, which is administered by the Agency for Health Care Administration (AHCA), and programs funded by the state’s Department of Children and Families (DCF). DCF objected to the way in which providers were using state funds to supplement underfunded Medicaid services.

"All Medicaid providers do, everywhere, because historically in most states, Medicaid doesn’t pay everybody’s costs up to 100%," says Mr. Wilcox. "If [Medicaid] is not covering costs, either directly or indirectly, some other payer stream is offsetting that, either by making a profit in some other area of the agency or some other mechanism."

But DCF stuck to its guns against the cross-subsidization of funds, says Mr. Wilcox, implementing contract language more restrictive on the practice than even state and federal statutes. "That immediately raised the question relative to the adequacy of the rates," says Mr. Wilcox. "That’s an issue that’s been lying around and periodically gets raised, but has not gotten an awful lot of attention from AHCA. When the two funding streams had to be separated at the hip, then it became a major issue."

After about six months of wrangling, providers were able to get an unusual midyear budget amendment giving them a rate increase through the end of the fiscal year on June 30. On an annual basis, the increase would cost the state about $8.4 million and represent, with the federal Medicaid match, about $19.3 million in increased payments. Medicaid rates will come before legislators again during budget negotiations in the current legislative session.

To fund the increased Medicaid payments this year, state officials went back to the Department of Children and Families and agreed to transfer funds to Medicaid as needed. "In certain agencies, that did not do a lot of Medicaid business, that was problematic," says Mr. Wilcox.

"In one regard, it’s an advantageous shift for the state as a whole, because it allows the state to earn more federal participation in paying the cost of care. On the other hand, the services that those general revenue dollars support . . . supported things Medicaid doesn’t pay for, such as residential care and care to indigents who are not Medicaid eligible," he says.

State officials have discontinued the disputed language in DCF contracts in favor of references to existing federal and state statutes on the co-existence of Medicaid and non-Medicaid funding, says Mr. Wilcox. In addition, the agreement among state officials and mental providers calls for ongoing monitoring of the adequacy of Medicaid rates.

Contact Mr. Wilcox at (850) 224-6048. See related story, "Pennsylvania enacts huge increase in behavioral health Medicaid rates," State Health Watch, November 1999, p. 10.