Friday, April 10, 2015

Health Care Law: Federal Judge Rules Florida Medicaid Program Violates U.S. Laws

By Amy Nath

In an unpublished decision in the final days of 2014, the United States District Court for the Southern District of Florida found that Florida’s health care system for needy and disabled children violated several federal laws.

The action in Florida Pediatric Society v. Dudek, Doc. No. 1294, No. 1:05-23037-CIV (S.D. Fla. Dec. 31, 2014),
was initiated in 2005 by the Florida Pediatric Society, the Florida Association of Pediatric Dentists, and on behalf of several children in the Medicaid program by their parents or legal guardians. The defendants included the Florida Agency for Healthcare Administration (AHCA), the Florida Department of Children and Families (DCF), and the Department of Health (DOH). AHCA is the agency responsible for providing oversight of Florida’s Medicaid program and is authorized to make payments for Medicaid-covered goods and services; DCF is responsible for making Medicaid eligibility determinations; and DOH administers Florida’s Children’s Medical Services program, which is responsible for ensuring that certain Medicaid patients with special health care needs receive Medicaid services.

Among its findings, the court stated that these agencies violated federal law because Florida’s Medicaid program had not compensated primary care physicians or specialists at competitive rates as compared with rates paid by Medicare or private insurance payors. Id. at 144.  The federal Medicaid statutes require that medical assistance be furnished with reasonable promptness to all Medicaid-eligible individuals (the “Reasonable Promptness” provision). 42 U.S.C. 
§ 1396a(a)(8) (2015). Such medical assistance includes “early and periodic screening, diagnostic, and treatment services” (EPSDT Services) for Medicaid-eligible individuals younger than 21. 42 U.S.C. § 1396d(a)(4)(B) (2015). The court reasoned that the state’s structure for setting physician reimbursement failed to account for statutorily mandated factors, including sufficient compensation to assure an adequate supply of Medicaid physicians to meet the EPSDT Services requirement. Florida Pediatric Soc'y, Doc. No. 1294 at 144.

Other factors the court relied upon to find an improper deprivation of rights to EPSDT Services included violations (often the result of bureaucratic error) of continuous Medicaid eligibility requirements and the failure of AHCA and DCF to promptly work together to ensure that when appropriate, newborns of Medicaid-eligible mothers were also Medicaid-eligible. Id. at 145. The court explained that failure in this “baby of” process resulted in delayed activation of the child’s Medicaid number, which in turn delayed the child’s receipt of EPSDT Services (and violated the Reasonable Promptness provision) or his or her provider’s receipt of payment. Id. at 74-75, 145.

The court also found that Florida’s physician reimbursement-setting practice resulted in artificially low Medicaid rates for certain physician services without consideration of physician-incurred costs or what is needed for sufficiently competitive rates to attract providers. Id. at 144. In support of its finding, the court pointed to AHCA’s process for determining Florida Medicaid rates for certain services; to achieve budget neutrality, AHCA used a conversion factor to convert Medicare’s reimbursement rates to lower rates for use in the Florida Medicaid program. Id. at 59, 143.

The defendants raised mootness points in response to the plaintiffs’ arguments, and as of the submission date for this article, a hearing is pending for further briefing with the parties on these points. Id. at 153. The discussions on Medicaid expansion in Florida, as well as Medicaid physician reimbursement under the Affordable Care Act, continue in 2015. It will be interesting to see how these discussions are colored by the points raised in the Florida Pediatric Society case.