For decades now, the Medicaid program has been providing health insurance for millions of the nation’s low-income families and seniors. At times, the program has been a source of controversy. At other times, it has received praise for the difference it makes in the lives of many American citizens. It is, however, a government program – and like all government programs, it’s only as effective and reliable as the bureaucracy that runs it. And, of course, that bureaucracy sometimes makes mistakes. Florida legislators were reminded of that this month as a health official served notice that a major payment error would cost the state an additional $75.1 million.
An Unexpected Dilemma
The error is being blamed on a programming error that occurred in 2013. That error resulted in the state’s managed-care plans receiving payments that were well below that required for the treatment of disabled program recipients. The problem apparently went unnoticed for two years, resulting in roughly $185 million in underpayments made to those plans. The state and federal government are both responsible for ensuring that those underpayments are corrected. Florida is charged with repaying the $75.1 million, while the federal government repays the remaining amount.
As with any program, mistakes do happen. Plans and providers sometimes receive less in payments than they should, and corrective measures are then taken to ensure that the payment amount is as required. This error creates a problem that goes far beyond those minor issues, however, since the underpayments were the result of an ongoing problem that went unresolved for so long. While bureaucracies are necessary for effective governance, they can be prone to error – and programming errors can result in problems that are often difficult to contain.
To make matters worse, lawmakers are being asked to appropriate the extra funds just as the legislature is confronted with budgets that are tighter than anyone would prefer. In fact, members of the Florida House were expected to look for budget reductions in the leadup to the March 7 start of the new legislative session. Those efforts are now being called into question, as the already-tight budget will now be stressed with yet another unexpected obligation.
How We Got Here
The problem was the results of an error in the system for classifying people with disabilities, and occurred during programming. The information about disabled Medicaid recipients was provided to Medicaid by two different sources. The Social Security Administration provided details for most of those disabled recipients, but there was a second group of disabled individuals whose information was provided by the Department of Children and Families. The programming error was related to that second group, who were all improperly classified.
Florida’s current Medicaid system requires enrollment in managed care plans like HMOs for most program recipients. The program then pays out certain defined amounts known as capitation payments to those managed-care groups, based on the classifications. In this case, the programming error resulted in Medicaid paying out $400 per month for each payment rather than the $1,000 that their classification required. The underpayments persisted for two years until the agency stumbled across the problem last year and corrected the programming to reflect the proper rates.
Why the Problem Wasn’t Caught Earlier
It might seem that this is a problem that someone should have noticed long before the bill grew to such an enormous size. After all, the Agency for Health Care Administration went to great lengths to ensure that there were plenty of protections in place to ensure that those plans and providers weren’t overpaid. Oddly enough, the agency gave little thrift to guarding against underpayments. Why? No one apparently saw underpayments as a potential problem, due to the low number of beneficiaries.
The managed-care plans failed to notice the underpayments as well. Again, officials cite the size of the affected beneficiary group as a reason why the problem went unnoticed for so long. It’s likely that the public should be gratified that this problem was discovered at all, since it could have possibly continued for years longer than it did.
Will it Impact You?
Of course, most Florida residents should wonder how this problem could impact their lives. The most direct impact will be on the state’s upcoming budgets. This unexpected bill will place new pressures on legislators who were already going to struggle to cut costs in the state budget. To achieve those goals now, they’ll have to be even more creative or seek new revenues – something that may not sit as well with the public.
The Medicaid program is dependent upon the state meeting its share of program costs, so there is no option to avoid paying the bill. One way or another, the state’s bill will be paid. The only question is the impact that payment will have on taxpayers, the budget, and the state’s Medicaid program going forward. If Floridians ever needed their legislators to step up with creative solutions to the state’s financial concerns, that time is now.
With the new legislative set to begin in just over a month, residents in the state won’t have long to wait either. The budget was already going to be a hot topic over the coming months, and this new debt only ensures that the spotlight shines even brighter on the fiscal decisions the state’s elected officials make. Unfortunately, Floridians have little choice but to wait and see what their lawmakers come up with to resolve this problem.
Get Estate and Medicaid Planning Assistance Today
At Robert J. Kulas, P.A., Medicaid & Estate Planning Attorneys, we’re proud to serve our friends and neighbors in the surrounding area with the estate planning and elder law help they need. Our experienced team can assist you with comprehensive legacy planning, incapacity planning, and retirement and business guidance. We also offer premiere Medicaid planning assistance to clients in the area, helping you to ensure that you have the right plan in place to secure the program benefits you may someday need to cover the rising costs of nursing home care. To learn more about how out team can provide these and other benefits to you and your family, contact us online or call us today at (772) 398-0720.
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