The agency that oversees Florida’s Medicaid programs has failed in its bid to dismiss a lawsuit brought by the state’s largest pediatric care provider, which argues recent rate-setting changes have substantially shortchanged the pediatric care system.
W. David Watkins, an administrative law judge in Tallahassee, rejected arguments by the state’s Agency for Health Care Administration (AHCA) in its motion to dismiss the lawsuit filed by Pediatric Associates, which provides services to more than 300,000 Florida children. Watkins’ Aug. 26 decision concluded that the AHCA’s decision to revamp its rules on per-patient funding rates caused financial harm to Pediatric Associates.
The rule changes attempted to fund specialized applied behavior analysis (ABA) services, which benefit children diagnosed with autism spectrum disorder, through the broader pediatric funding system for Medicaid recipients. But the new rate-setting regime governing managed-care organizations (MCOs) cut funding for general pediatric services, according to the court decision.
“Pediatric Associates adequately alleges that AHCA’s 15% to 30% reduction in pediatric capitation rates predictably results in reduced provider payments in a managed-care setting where MCOs must pay for all covered services from these fixed capitation payments,” Watkins said.
The judge affirmed that Pediatric Associates had standing to bring its complaint even though the AHCA’s modified medical rates affect the petitioner only indirectly since they apply to MCOs.
“... The fact that Pediatric Associates’ financial harm flows through MCO intermediaries does not defeat standing, especially at this stage, because Pediatric Associates need only allege that its injury predictably results from the challenged rules,” Watkins stated.
Pediatric Associates’ arguments that the AHCA’s rule changes were an invalid exercise in delegated legislative authority and not properly adopted were sufficient at this stage of the litigation, the judge said.
In addition, the petitioner’s arguments adequately allege that the AHCA unlawfully delegated its authority on rulemaking to its actuarial services vendor, Milliman Inc., according to Watkins.
The AHCA declined to comment on the pending litigation. But Pediatric Associates expressed satisfaction that the judge is allowing its case to proceed in full.
“(The Division of Administrative Hearings) rejected all of AHCA’s arguments for dismissing the case and ruled that Pediatric Associates has the right to challenge them, pointing to the agency’s own acknowledgment that its funding changes could predictably cause harm,” a statement from Pediatric Associates mailed to the Florida Record says. “AHCA’s flawed rate-setting methodology that led to our lawsuit has already drained millions in funding from Florida’s pediatric care system.”
The medical services provider said it would continue to work to assure that more than two million children statewide have access to regular pediatric care through Medicaid.
“... We continue to urge AHCA to correct these actuarial errors and resolve this crisis for Florida families,” the statement says.
Pediatric Associates also alleged in its petition that AHCA included cost data in the rate changes that “was tainted by ABA fraud and thus overstated the costs of ABA services,” Watkins’ opinion stated. In addition, the new rules are “actuarially unsound” since they don’t provide adequate funding to allow the petitioner to maintain the needed medical-care network, according to the opinion.
