MENTAL HEALTH PLAN, AHCA BATTLE OVER MEDICAL LOSS RATIO 

By JIM SAUNDERS
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, Sept. 27, 2011….Contending that not enough money was spent on patient care, the state Agency for Health Care Administration is trying to recoup $4 million from a firm that manages Medicaid mental-health services.

Tampa-based Florida Health Partners Inc. challenged the agency in cases filed last week in the state Division of Administrative Hearings.

The dispute centers on whether Florida Health Partners in 2006 met a requirement that it spend 80 percent of the money it received --- known as a "medical loss ratio" --- on caring for Medicaid patients.

AHCA contends that the firm fell substantially below the 80 percent threshold in the Tampa and Orlando areas. Under state law, Medicaid mental-health firms have to pay back the difference if they spend less than 80 percent.

Florida Health Partners attorney F. Philip Blank could not be reached for comment Tuesday. But in documents filed Friday, he indicated the firm will challenge the way AHCA calculated the medical loss ratio.

"AHCA may not, as a matter of law, unilaterally establish the method to calculate the (medical loss ratio),'' Blank wrote. "As a matter of fact, the method used by AHCA to arrive at its calculation is incorrect and, in turn, results in an incorrect amount of claim for reimbursement.''

AHCA declined to comment about Blank's assertions.

The dispute comes amid a broader debate about the use of medical loss ratios in Florida. The federal government has made clear it will require Florida to include an 85 percent ratio in a Medicaid managed-care pilot program --- a move that angers some Republican lawmakers.

AHCA is negotiating a three-year extension of that pilot program, which requires most Medicaid beneficiaries in Broward, Duval, Clay, Baker and Nassau counties to enroll in managed-care plans. Federal officials also have signaled they could require a medical-loss ratio in a proposal that lawmakers approved this spring to create a statewide Medicaid managed-care program.

Under managed care, health plans receive a set amount of money each month to provide services to each beneficiary. Medical-loss ratio supporters argue that safeguards are needed to make sure health plans spend the money on patient care instead of diverting it to administrative costs or profits.

But critics say the ratios can be arbitrary, in part, because of disagreements about what should be counted as a patient care. Republican lawmakers have pushed an alternative that would require managed-care plans to share profits above 5 percent with the state.

Despite those arguments, the state already requires mental-health contractors such as Florida Health Partners to comply with the 80 percent medical-loss ratio.

AHCA notified the firm in August that it would seek repayment of $2.8 million for failure to meet the required ratio in a five-county area around Tampa and $1.2 million for failure to meet it in a four-county area around Orlando.

Audits found that Florida Health Partners had a 66 percent medical-loss ratio in 2006 in the Tampa area and a 72.6 percent ratio in the Orlando area. The firm contended that its ratios were 88 and 87 percent in the areas, according to the audits.

The audits described five methods, with widely different results, that could be used to calculate the medical-loss ratios. The outside auditors from the Jacksonville firm Buttner Hammock & Co., said the contracts between AHCA and Florida Health Partners "did not clearly define the medical expenses to be included" in the calculations.

Auditors said in the Orlando-area report that they used a method that AHCA concluded was the best way to measure the medical-loss ratio.

The audits also give a glimpse of the complexity of how health plans are structured financially. Florida Health Partners is partly owned by mental-health agencies and partly by another company, ValueOptions.

Florida Health Partners contracts with the agencies to provide care to patients, while ValueOptions gets paid for such things as administrative and management services, according to the audits.