HB 1875

1
A bill to be entitled
2An act relating to Medicaid; providing waiver authority to
3the Agency for Health Care Administration; specifying
4demonstration pilot project sites; providing requirements
5for managed care pilot projects; providing for
6implementation of demonstration pilot projects; providing
7definitions; requiring the agency to develop a capitated
8system of care; requiring managed care plans to include
9mandatory Medicaid services and behavioral health and
10pharmacy services; requiring a managed care plan to have a
11certificate of authority from the agency before operating
12under the waiver; providing for certification
13requirements, including financial solvency,
14infrastructure, network capacity, and recipient access to
15be established in consultation with Office of Insurance
16Regulation; providing for contracts for administrative
17functions, and requirements; providing for cost sharing by
18recipients, and requirements; providing for continuance of
19the MediPass program, under certain circumstances;
20requiring the agency to develop an encounter data system;
21requiring plans and providers to report data; requiring
22the agency to have an accountability system; requiring
23plans to have quality assurance systems; requiring plans
24to have quality improvement systems; requiring certain
25entities certified to operate a managed care plan to
26comply with ss. 641.3155 and 641.513, F.S.; providing for
27agency to establish and provide for funding of
28catastrophic coverage for recipients who exceed a plan's
29risk capacity; providing for a threshold to access to
30catastrophic coverage; requiring plans to continue to
31provide services to recipients receiving catastrophic
32coverage; providing for agency to develop a rate setting
33and risk adjustment system based on set premiums, health
34status, and other factors and actuarial analysis and
35requirements for the system; providing for applicability
36and enforcement; granting rulemaking authority to the
37agency; requiring legislative authority to implement the
38waiver; providing for future review and repeal of the act;
39amending s. 409.912, F.S.; deleting requirement for
40competitive bidding for provider service networks and
41preserving hospital networks; providing an effective date.
42
43Be It Enacted by the Legislature of the State of Florida:
44
45     Section 1.  Medicaid reform; pilot projects.--
46     (1)  WAIVER AUTHORITY.--Notwithstanding any other law to
47the contrary, the Agency for Health Care Administration is
48authorized to seek an experimental, pilot, or demonstration
49project waiver, pursuant to s. 1115 of the Social Security Act,
50to reform Florida's Medicaid program pursuant to this section in
51the urban and rural demonstration sites of Broward, Baker, Clay,
52Duval, and Nassau counties. This waiver authority is contingent
53on federal approval to preserve the upper-payment-limit funding
54mechanism for hospitals, including a guarantee of a reasonable
55growth factor, a methodology to allow the use of a portion of
56these funds to serve as a risk pool for pilot project sites,
57provisions to preserve the state's ability to use
58intergovernmental transfers, and provisions to protect the
59disproportionate share program authorized under chapter 409,
60Florida Statutes.
61     (2)  MANAGED CARE PILOT PROJECTS.--The agency shall include
62in the federal waiver request the authority to establish managed
63care pilot projects in at least one urban and one rural area.
64The waiver request shall include:
65     (a)  Standards related to minimum network provider
66qualifications.
67     (b)  A reimbursement methodology that recognizes risk
68factors from both a client perspective and a provider
69perspective.
70     (c)  Policies and guidelines for phasing financial risk for
71approved pilots over a 3-year period. The policies and
72guidelines shall include an option to pay fee-for-service rates,
73which may include a savings settlement option, for at least 2
74years. This model may be converted to a risk-adjusted capitated
75rate in the third year of operation.
76     (d)  Provisions related to stop-loss requirements and the
77transfer of excess cost to catastrophic coverage that
78accommodates risks associated with the development of the pilot
79projects.
80     (e)  Descriptions of a process to be used by the Social
81Service Estimating Conference to determine and validate the rate
82of growth of the per-member costs of providing Medicaid services
83under the managed care initiative.
84     (f)  Requirements for an encounter data system that
85provides data related to patient services from the beginning of
86the pilot projects.
87     (g)  The location and justification for the pilot project
88sites.
89     (h)  Descriptions of target populations to be served which
90shall be limited to the Temporary Assistance for Needy Families
91and the Supplemental Security Income eligibility groups.
92     (i)  Descriptions of the eligibility assignment processes
93that will be used to facilitate client choice and ensure that
94pilot projects have adequate enrollment levels. These processes
95shall ensure that pilot sites have sufficient levels of
96enrollment to conduct a valid test of the managed care pilot
97project model within a 2-year timeframe.
98     (j)  Descriptions of the evaluation methodology and
99standards that will be used to assess the success of the pilot
100projects.
101     (3)  IMPLEMENTATION OF PILOT PROJECTS.--For the purpose of
102implementing the demonstration pilot projects, individuals
103enrolled from the Temporary Assistance for Needy Families and
104Supplemental Security Income eligibility groups shall only be
105from the MediPass and Medicaid fee-for-service programs.
106     (4)  DEFINITIONS.--As used in this section, the term:
107     (a)  "Administrator" means an administrator as defined in
108s. 626.88, Florida Statutes.
109     (b)  "Agency" means the Agency for Health Care
110Administration.
111     (c)  "Catastrophic coverage" means coverage for services
112provided to a Medicaid recipient after that recipient has
113received services with an aggregate cost, based on Medicaid
114reimbursement rates, which exceeds a threshold specified by the
115agency.
116     (d)  "Managed care plan" means a health maintenance
117organization authorized under part I of chapter 641, Florida
118Statutes; an entity under part II or part III of chapter 641,
119chapter 627, chapter 636, or s. 409.912, Florida Statutes; a
120licensed mental health provider under chapter 394, Florida
121Statutes; a licensed substance abuse provider under chapter 397,
122Florida Statutes; a certified administrator under chapter 626,
123Florida Statutes; or a hospital under chapter 395, Florida
124Statutes, certified by the agency to operate as a managed care
125plan; a local government provider of services to the elderly
126under chapter 410 or chapter 430, Florida Statutes; a provider
127of developmental disabilities services under chapter 393,
128Florida Statutes; the Children's Medical Services network under
129chapter 391, Florida Statutes; a network of licensed health care
130providers under a board of county commissioners; or a certified
131state contractor approved by the agency.
132     (e)  "Plan benefits" means the mandatory services specified
133in s. 409.905, Florida Statutes; behavioral health services
134specified in s. 409.906(8), Florida Statutes; pharmacy services
135specified in s. 409.906(20), Florida Statutes; and other
136services including, but not limited to, Medicaid optional
137services specified in s. 409.906, Florida Statutes, for which a
138plan is receiving a risk adjusted capitation rate. Optional
139benefits may include any supplemental coverage offered to
140attract recipients and provide needed care. Mandatory and
141optional services may vary in amount, duration, and scope. In
142all instances, the agency shall ensure that plan benefits
143include those services that are medically necessary, based on
144historical Medicaid utilization.
145     (f)  "Provider service network" means a network established
146or organized and operated by a health care provider, or a group
147of affiliated health care providers, that provides a substantial
148proportion of the health care items and services under a
149contract directly through the provider or an affiliated group of
150providers and that may make arrangements with physicians or
151other health care professionals, health care institutions, or
152any combination of such individuals or institutions to assume
153all or part of the financial risk on a prospective basis for the
154provision of basic health services by the physicians or other
155health care professionals or through the institutions. The
156health care providers shall have a controlling interest in the
157governing body of the provider service network organization, as
158authorized by s. 409.912, Florida Statutes.
159     (5)  PLANS.--
160     (a)  The agency shall develop a capitated system of care
161that promotes choice and competition.
162     (b)  Plan benefits shall include the mandatory services
163specified in s. 409.905, Florida Statutes; behavioral health
164services specified in s. 409.906(8), Florida Statutes; pharmacy
165services specified in s. 409.906(20), Florida Statutes; and
166other services including, but not limited to, Medicaid optional
167services specified in s. 409.906, Florida Statutes, for which a
168plan is receiving a risk-adjusted capitation rate. Optional
169benefits may include any supplemental coverage offered to
170attract recipients and provide needed care.
171     (6)  CERTIFICATION.--Before any entity may operate a
172managed care plan under the waiver, it shall obtain a
173certificate of operation from the agency.
174     (a)  Any entity operating under part I of chapter 641,
175Florida Statutes, shall be in compliance with that part in order
176to obtain a certificate.
177     (b)  Any entity in operation must be in compliance with the
178requirements and standards developed by the agency. The agency,
179in consultation with the Office of Insurance Regulation, shall
180establish certification requirements. Any pilot or demonstration
181project authorized by the state under this section must include
182any federally qualified health center that serves the geographic
183area within the boundaries of that pilot or demonstration
184project. The certification process shall, at a minimum, take
185into account the following requirements:
186     1.  The entity has sufficient financial solvency to be
187placed at risk for the basic plan benefits under ss. 409.905,
188409.906(8), and 409.906(20), Florida Statutes, and other covered
189services.
190     2.  The entity has sufficient service network capacity to
191meet the need of members under ss. 409.905, 409.906(8), and
192409.906(20), Florida Statutes, and other covered services.
193     3.  The entity's primary care providers are geographically
194accessible to the recipient.
195     4.  The entity has the capacity to provide a wellness or
196disease management program.
197     5.  The entity shall provide for ambulance service in
198accordance with ss. 409.908(13)(d) and 409.9128, Florida
199Statutes.
200     6.  The entity has the infrastructure to manage financial
201transactions, recordkeeping, data collection, and other
202administrative functions.
203     7.  The entity, if not a fully indemnified insurance
204program under chapter 624, chapter 627, chapter 636, or chapter
205641, Florida Statues, meets the financial solvency requirements
206specified in chapter 624, Florida Statutes, as determined by the
207agency in consultation with the Office of Insurance Regulation.
208     (c)  The agency may contract with administrators to provide
209plan benefits to recipients using the Medicaid fee-for-service
210system, the MediPass system, or a network of providers approved
211by the agency.
212     1.  The agency may develop administrative rates that
213encourage quality management of benefits.
214     2.  All groups served under contracts with administrators
215shall be covered by sufficient stop-loss coverage as defined in
216s. 627.6482, Florida Statutes, to provide recipients with
217catastrophic coverage as required by this section.
218     (d)  The agency may contract with administrators licensed
219under s. 626.88, Florida Statutes, to provide enhanced benefits
220to recipients.
221     (e)  The agency has the authority to contract with entities
222not otherwise licensed as an insurer or risk-bearing entity
223under chapter 627 or chapter 641, Florida Statutes, as long as
224these entities meet standards defined by the agency to qualify
225as state certified contractors.
226     (f)  Each entity certified by the agency shall submit to
227the agency any financial, programmatic, encounter data, or other
228information required by the agency to determine the actual
229services provided and cost of administering the plan.
230     (7)  COST SHARING.--
231     (a)  For recipients enrolled in a Medicaid managed care
232plan, the agency may continue cost-sharing requirements as
233currently defined in s. 409.9081, Florida Statutes, or as
234approved under a waiver granted from the federal Centers for
235Medicare and Medicaid Services. Such approved cost-sharing
236requirements may include provisions requiring recipients to pay:
237     1.  An enrollment fee;
238     2.  A deductible;
239     3.  Coinsurance or a portion of the plan premium; or
240     4.  Progressively higher percentages of the cost of the
241medical assistance by families with higher levels of income.
242     (b)  For recipients who opt out of Medicaid, cost sharing
243shall be governed by the policy of the plan in which the
244individual enrolls.
245     (c)  If the private insurance or employer-sponsored
246coverage requires that the cost-sharing provisions imposed under
247paragraph (a) include requirements that recipients pay a portion
248of the plan premium, the agency shall specify the manner in
249which the premium is paid. The agency may require that the
250premium be paid to the agency, an organization operating part of
251the medical assistance program, or the managed care plan.
252     (d)  Cost-sharing provisions adopted under this section may
253be determined based on the maximum level authorized under an
254approved federal waiver.
255     (8)  MEDIPASS.--The MediPass program shall be continued and
256improved until such time that the pilot or demonstration waiver
257proves that the Medicaid reform works statewide in both urban
258and rural counties.
259     (9)  ENCOUNTER DATA SYSTEM.--The agency shall develop an
260encounter data reporting system and ensure that the data
261reported is accurate and complete. All providers and plans are
262required to report to the agency encounter data that includes
263the diagnosis, services received by recipients, and other
264information as required by the agency.
265     (10)  ACCOUNTABILITY.--In performing the duties under this
266section, the agency shall adopt standards for measuring
267performance and meeting federally required audit standards and
268require plans to submit data necessary for monitoring
269performance and ensuring accountability according to these
270standards. The standards shall consider clinical and functional
271health outcomes, consumer satisfaction, access to primary care
272and preventive services, and other critical elements of plan
273performance identified by the agency including, but not limited
274to:
275     (a)  Health Plan Employer Data and Information Set.
276     (b)  Member satisfaction.
277     (c)  Provider satisfaction.
278     (d)  Report cards on plan performance and best practices.
279     (e)  Quarterly reports in compliance with the prompt pay
280requirements in ss. 627.623 and 641.3155, Florida Statutes.
281     (11)  QUALITY ASSURANCE.--The agency shall require the
282plans certified by the agency to establish a quality assurance
283system incorporating the provisions of s. 409.912(27), Florida
284Statutes, and any standards, rules, and guidelines developed by
285the agency. The agency shall establish standards for plan
286compliance including, but not limited to, quality assurance and
287performance improvement standards, peer or professional review
288standards, grievance policies, and program integrity policies.
289     (12)  QUALITY IMPROVEMENT.--The agency shall require the
290plans certified by the agency to establish a quality improvement
291system to improve the quality and effectiveness of care by
292identifying causes of system of care problems and improving
293health outcomes.
294     (13)  STATUTORY COMPLIANCE.--Any entity certified under
295this section shall comply with ss. 641.3155 and 641.513, Florida
296Statutes.
297     (14)  CATASTROPHIC COVERAGE.--
298     (a)  The agency may establish a fund for purposes of
299covering services under catastrophic coverage. The catastrophic
300coverage fund shall provide for payment of medically necessary
301care for recipients who are enrolled in a plan that is not
302responsible for catastrophic care and whose care has exceeded a
303predetermined monetary threshold. The agency may establish an
304aggregate maximum level of coverage in the catastrophic fund.
305     (b)  The agency shall develop policies and procedures to
306allow a plan to utilize the catastrophic coverage for a Medicaid
307recipient in the plan who has reached the catastrophic coverage
308threshold.
309     (c)  A recipient participating in a plan may be included in
310catastrophic coverage at a cost threshold determined by the
311agency based on actuarial analysis.
312     (d)  If a plan does not cover the catastrophic component,
313placement of the recipient in the catastrophic coverage shall
314not release the plan from providing other plan benefits or from
315the case management of the recipient's care, except when the
316agency determines it is in the best interest of the recipient to
317release the managed care plan from these obligations.
318     (e)  The agency shall establish or contract for an
319administrative structure to manage the catastrophic coverage
320function.
321     (15)  RATE SETTING AND RISK ADJUSTMENT.--The agency may
322develop a rate setting and risk adjustment system to include:
323     (a)  Rate setting and risk adjustment mechanisms that may
324be based on:
325     1.  A clinical diagnostic classification system that is
326established in consultation with plans, providers, and the
327federal Centers for Medicare and Medicaid Services.
328     2.  Categorical groups that have separate risks or
329capitation rates based on actuarially sound methodologies.
330     3.  Funding established by the General Appropriations Act
331as well as eligibility group, geography, gender, age, and health
332status.
333     4.  Minimum premium plans as defined in s. 627.6482,
334Florida Statutes.
335     (b)  Any such rate setting and risk adjustment systems
336shall include:
337     1.  Criteria to adjust risk.
338     2.  Validation of the rates and risk adjustments.
339     3.  Minimum medical loss ratios which must be determined by
340an actuarial study. Medical loss ratios are subject to an annual
341audit. Failure to comply with the minimum medical loss ratios
342shall be grounds for fines, reductions in capitated payments in
343the current fiscal year, or contract termination.
344     (c)  Rates shall be established in consultation with an
345actuary and the federal Centers for Medicare and Medicaid
346Services and supported by actuarial analysis.
347     (16)  APPLICABILITY OF OTHER LAW.--The Legislature
348authorizes the Agency for Health Care Administration to apply
349and enforce any provision of law not referenced in this section
350to ensure the safety, quality, and integrity of the waiver.
351     (17)  RULEMAKING.--The Agency for Health Care
352Administration is authorized to adopt rules to implement the
353provisions of this section.
354     (18)  IMPLEMENTATION.--Upon approval of a waiver by the
355Centers for Medicare and Medicaid Services, the Agency for
356Health Care Administration shall report the provisions and
357structure of the approved waiver and any deviations from this
358section to the Legislature. The agency shall implement the
359waiver after authority to implement the waiver is granted by the
360Legislature.
361     (19)  REVIEW AND REPEAL.--This section shall stand repealed
362on July 1, 2010, unless reviewed and saved from repeal through
363reenactment by the Legislature.
364     Section 2.  Paragraph (d) of subsection (4) of section
365409.912, Florida Statutes, is amended to read:
366     409.912  Cost-effective purchasing of health care.--The
367agency shall purchase goods and services for Medicaid recipients
368in the most cost-effective manner consistent with the delivery
369of quality medical care. To ensure that medical services are
370effectively utilized, the agency may, in any case, require a
371confirmation or second physician's opinion of the correct
372diagnosis for purposes of authorizing future services under the
373Medicaid program. This section does not restrict access to
374emergency services or poststabilization care services as defined
375in 42 C.F.R. part 438.114. Such confirmation or second opinion
376shall be rendered in a manner approved by the agency. The agency
377shall maximize the use of prepaid per capita and prepaid
378aggregate fixed-sum basis services when appropriate and other
379alternative service delivery and reimbursement methodologies,
380including competitive bidding pursuant to s. 287.057, designed
381to facilitate the cost-effective purchase of a case-managed
382continuum of care. The agency shall also require providers to
383minimize the exposure of recipients to the need for acute
384inpatient, custodial, and other institutional care and the
385inappropriate or unnecessary use of high-cost services. The
386agency may mandate prior authorization, drug therapy management,
387or disease management participation for certain populations of
388Medicaid beneficiaries, certain drug classes, or particular
389drugs to prevent fraud, abuse, overuse, and possible dangerous
390drug interactions. The Pharmaceutical and Therapeutics Committee
391shall make recommendations to the agency on drugs for which
392prior authorization is required. The agency shall inform the
393Pharmaceutical and Therapeutics Committee of its decisions
394regarding drugs subject to prior authorization. The agency is
395authorized to limit the entities it contracts with or enrolls as
396Medicaid providers by developing a provider network through
397provider credentialing. The agency may limit its network based
398on the assessment of beneficiary access to care, provider
399availability, provider quality standards, time and distance
400standards for access to care, the cultural competence of the
401provider network, demographic characteristics of Medicaid
402beneficiaries, practice and provider-to-beneficiary standards,
403appointment wait times, beneficiary use of services, provider
404turnover, provider profiling, provider licensure history,
405previous program integrity investigations and findings, peer
406review, provider Medicaid policy and billing compliance records,
407clinical and medical record audits, and other factors. Providers
408shall not be entitled to enrollment in the Medicaid provider
409network. The agency is authorized to seek federal waivers
410necessary to implement this policy.
411     (4)  The agency may contract with:
412     (d)  A provider service network may be reimbursed on a fee-
413for-service or prepaid basis. A provider service network which
414is reimbursed by the agency on a prepaid basis shall be exempt
415from parts I and III of chapter 641, but must meet appropriate
416financial reserve, quality assurance, and patient rights
417requirements as established by the agency. The agency shall
418award contracts on a competitive bid basis and shall select
419bidders based upon price and quality of care. Medicaid
420recipients assigned to a demonstration project shall be chosen
421equally from those who would otherwise have been assigned to
422prepaid plans and MediPass. The agency is authorized to seek
423federal Medicaid waivers as necessary to implement the
424provisions of this section. Any contract previously awarded to a
425provider service network operated by a hospital pursuant to this
426subsection shall remain in effect, regardless of any contractual
427provisions to the contrary.
428     Section 3.  This act shall take effect July 1, 2005.


CODING: Words stricken are deletions; words underlined are additions.