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Does Fla's Medicaid revamp run afoul of federal law?

By Lynn Hatter

Tallahassee, FL – A plan to take a five county Medicaid Managed Care program statewide may be in trouble. Lawmakers touted the expansion as a way to curb the rising cost of the program, but as Lynn Hatter reports, at least one part of that plan seems to be causing federal health officials some heartburn: charging beneficiaries co-pays and premiums.

Medicaid is the state-federal partnership that provides health insurance for low-income people, and in Florida, the majority of those 2.9 million recipients are women and children. As part of a plan to privatize many of the state's Medicaid services, the state plans to charge 10-dollar per-person monthly premiums and a 100-dollar non-emergency room co-pays. But those extra charges may pose serious problems.

"These are families with very low incomes. We found, that 800-thousand children and their parents would be likely to lose coverage if this premium went into effect."

Joan Alker is with Georgetown University, and has been tracking the state's progress in transitioning 2.9 million people into Medicaid managed care statewide. She says states CAN have some Medicaid charges, and some do, but Florida is taking it a step further by allowing private companies to charge premiums and co-pays to people below the poverty line.

"The most similar experience we can look at is Oregon. With respect to adults below poverty, Oregon instituted premiums in 2003 and over the next few years enrollment for adults dropped precipitously from 104-thousand, to 24-thousand."

The extra payments would generate about 370 million in Medicaid savings, or, if people left Medicaid, that could save even more money too. But state Medicaid Director Justin Senior says, the federal government is not buying it.

"A lot of our initial conversations with the federal government have centered on whether those provisions are maintenance of effort violations."

The Maintenance of Effort provision is part of the 2010 federal health overhaul. It says states can't change the rules for who is eligible for Medicaid. And according to Senior, the planned co-pays and premiums, at first blush, seem to do that.

"If a state does so, it risks forfeiting all of the federal participation in the Medicaid program. And the initial determination appears to be that they probably are Maintenance of Effort violations and may not be approved."

Billions of dollars in federal support are at risk. If it's found that Florida isn't following the rules the federal government will drop its 15-billion dollar share of the cost of the program. But Florida isn't backing down from its plan just yet. State lawmakers approved the changes in May as part of a broader Medicaid overhaul steering almost all Medicaid beneficiaries into managed care plans. The state would hand over the program's funding to private insurance companies.

Governor Rick Scott says the state can't afford the Medicaid program in its current form and also says Florida needs a federal waiver to make Medicaid work.

"We began last year by passing major Medicaid reform. But after months of dealing with the federal government, we still have not received approval for our Medicaid waiver. In order to fund education and ensure our state is in a position to continue to create jobs, we must control costs."

To that end, the Governor is proposing to cut the program by two-billion dollars even as Florida continues to negotiate with the federal government.

* Lynn Hatter's report was produced as part of "Health Care in the States," a special project of WFSU, NPR and Kaiser Health News.