MEDICAID COST SHIFT: LEGISLATIVE, JUDICIAL, AND ADMINISTRATIVE ISSUES. By Terrell K. Arline Bay County Attorney May 2012 1
Introduction. Florida counties contribute to the state’s costs of Medicaid. Since 1972, 1 counties have been required to pay for certain hospital, nursing home, intermediate care, and other services covered by Medicaid. 2 The 2012 legislative session changed the way the state recoups the counties’ payments. 3 What was formerly an invoice issued by the State Agency for Health Care Administration (AHCA) and paid by the counties, after a review at the local level for correctness, is now a direct diversion of state shared revenues by the Department of Revenue (DOR) to pay for prospective costs and retroactive costs going back to 2001. The new law transfers the risk of billing error from the state to the counties. This new approach to paying for shared Medicaid costs has already resulted in a circuit court suit brought by counties and FAC. The implementation of the law will result in potentially hundreds of formal administrative petitions filed by counties challenging AHCA’s charges, as well rule challenge proceedings. Finally, there are implications for counties existing and future debt that is tied directly or indirectly to state revenue shares dollars. 1 Chapter 72-225, Laws of Fla. 2 409.915, F.S formerly numbered 409.267, F.S. 3 SB 5301, codified in 2012-33 Laws of Fla. A copy of the law and hill is located on FAC’s Medicaid Unfunded Mandate Updates website. 2
A Short History of Medicaid Cost Share in Florida. Medicaid is a federal program originally enacted in 1965 under Title XIX of the Social Security Act. It is a means-tested program that covers health care costs of low income adults, their children, and people with certain disabilities. The Medicaid program is jointly funded by the state and federal governments and is managed by the states. The federal Centers for Medicare and Medicaid Services (CMS), a division of the U.S. Department of Health and Human Services, “monitor the state-run programs and establish requirements for service delivery, quality, funding, and eligibility standards.” 4 States must ensure they can fund their share of Medicaid expenditures for the care and services available under their state plan, which is approved by CMS. Florida has long had an approved plan, which has been amended many times over the years. 5 Medicaid serves approximately 3 million people in Florida over half of whom are 20 years of age or younger. Estimated expenditures for fiscal year 2011-2012 are approximately $20 billion. In Florida, counties contribute to the state’s share of the cost of the federal Medicaid program. 4 Medicaid.gov and Wikipedia on Medicaid. 5 The state plan is 592 pages and contained on AHCA’s website. 3
Annually the federal government pays approximately 56% of these costs and Florida pays approximately 44%. 6 The State Revenue Estimating Conference (REC) report entitled “Florida Tax Handbook 2012”, describes the history of the Medicaid cost share program stating: Chapter 72-225 created section 409.267, F.S., which required county participation in the cost of the following items provided under Medicaid: 35% of the cost of inpatient hospitalization in excess of 12 days; and 35% of the cost of nursing home or intermediate care facilities in excess of $170 per month. In 1975, a limitation of $55 per resident per month on the required reimbursements for services provided by nursing home and intermediate care facilities was enacted. In 1991, Section 409.267, F.S. was repealed and replaced with section 409.915, F.S. An exemption for county residents in the Medically Needy program component of Medicaid was also enacted at this time. In 1996, required reimbursements were extended to services provided to health maintenance organization members if the services would have been reimbursable in a fee-for-service setting. In 2001, the 12 day exclusion for inpatient hospital services was reduced to 10 days, and an exemption for the cost of adult lung transplant services was established. 7 Section 409.915, Fla. Stat. (2010) is entitled “ County contributions to Medicaid ”. The statute begins with recognition that the obligation for Medicaid payments rests with the State of Florida. The introduction states: 6 Complaint Alachua County et al. v. Elizabeth Dudek, et al. Case No. 37 2012 CA 001328. A copy of the complaint is located on FAC’s Medicaid Unfunded Mandate Updates website. 7 State Revenue Estimating Conference, “Florida Tax Handbook” (2012) at page 121. 4
Although the state is responsible for the full portion of the state share of the matching funds required for the Medicaid program, in order to acquire a certain portion of these funds, the state shall charge the counties for certain items of care and service as provided in this section. The new law left intact provisions setting forth the counties’ specific and limited obligations for Medicaid payments, which are as follows. (1) Each county shall participate in the following items of care and service: (a) For both health maintenance members and fee-for-service beneficiaries, payments for inpatient hospitalization in excess of 10 days, but not in excess of 45 days, with the exception of pregnant women and children whose income is in excess of the federal poverty level and who do not participate in the Medicaid medically needy program, and for adult lung transplant services. (b) For both health maintenance members and fee-for-service beneficiaries, payments for nursing home or intermediate facilities care in excess of $ 170 per month, with the exception of skilled nursing care for children under age 21. (2) A county's participation must be 35 percent of the total cost, or the applicable discounted cost paid by the state for Medicaid recipients enrolled in health maintenance organizations or prepaid health plans, of providing the items listed in subsection (1), except that the payments for items listed in paragraph (1)(b) may not exceed $ 55 per month per person. Section 409.915(3) Fla. Stat. (2010), focuses on which Medicaid recipient is covered by a county’s obligation to pay. Not the paragon of clarity, the statute states: 5
(3) Each county shall set aside sufficient funds to pay for items of care and service provided to the county's eligible recipients for which county contributions are required, regardless of where in the state the care or service is rendered. AHCA adopted Rule 59G-1.020 Fla. Admin. Code based this statutory provision. The rule provides that for “the purpose of the county financial participation in the Medicaid program, the county of residence for inpatient hospital care and nursing home care” is defined as follows: (1) A person is considered to be residing in a county when they establish or maintain a physical living arrangement, outside of a medical facility, which they or someone responsible for them, consider to be home. A visit to another county does not make a person a resident of that county, nor does a planned temporary living arrangement prior to admission in a medical facility. Except in unusual situations related to an extended visit, it makes no difference how long a person has been physically located in the county if they maintain a primary residence in another county, and intend to return to that county. In all instances the person’s intent to reside in a county is the determining factor, regardless of the length of time involved. (Emphasis added). (2) When an applicant has been admitted to a nursing home directly from a place of residence outside of the State of Florida, so that no Florida residency has been established, the certified county of residency will be considered as that county in which the nursing home is located. (3) In situations that are not clear cut, or otherwise unusually complicated, the determination of residency should be made on the basis of the preponderance of evidence. If a decision is not possible on this basis, the case should be referred to the Office of Social and Economic Services for determination. 6
AHCA’s deference to the individual Medicaid recipient’s “intent to reside in a county” as the “determining factor” has been problematic. One county notes instances where a commercial mall located across the street from a service provider was accepted by the agency as sufficient to establish an address for billing purposes. A rule challenge proceeding under Section 120.56, Fla. Stat. (2010), provides the process to test the validity of this rule, which was adopted in 1977 well before significant legislative changes were made to Chapter 120 to limit agencies rule making authority. While the counties’ share of the overall Medicaid payments is relatively small when compared with the total cost to the state, it is still a lot of money. According to the REC, counties’ reimbursement for hospital inpatient services is approximately 5-6%, for nursing home services it is 1- 2%; reimbursement for hospital inpatient services provided through health maintenance organizations is approximately 1.5-2%. 8 Counties pay a “per diem” cost established by AHCA for these services. 9 The counties’ payments are deposited into the General Revenue Fund. 8 State Revenue Estimating Conference, “Florida Tax Handbook” (2012), at page 120. 9 Agency for health Care Administration “County Billing Guidelines” update 5/1/2012. 7
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