September 29, 2023

Audit says Florida owes $106M in Medicaid managed care rebates

(The Center Square) — The U.S. Department of Health and Human Services released an audit report that says Florida did not refund more than $106 million in federal Medicaid managed care rebates.

Medicaid provides medical assistance to low-income individuals and individuals with disabilities and is jointly funded and administered by state and federal governments.

Although states have a considerable amount of flexibility in the operation of their Medicaid programs, states are also required to comply with federal requirements.

Medicaid-managed care organizations in Florida are required to calculate how much their pretax income exceeded thresholds annually. The state gets that portion of pretax income back in rebates.

A certified public accountant audits those calculations and the state determines the amount owed.

The Office of the Inspector General report states that from 2015-2020, the Sunshine State received $449 million in MCO rebates, with almost $300 million making up the federal government’s share.

According to the audit, although rebates had been accurately calculated, rebates were not reported from 2015 to 2019, totaling $174,035,023. After reviewing Florida’s general ledger activity, the OIG found that Florida had not refunded $106,153,061 back to the federal government.

The report also says Florida had not reported rebates between 2015 and 2019 because "Florida officials erroneously believed that they were not required to do so" due to the time being before a provision change in 2021.

The provision had been added to the Centers for Medicare and Medicaid Services' special terms and conditions on January 15, 2021 that required the Sunshine State to refund the federal share of rebates.

The report points out that, before January 2021, Florida had missed a step in preparing the required quarterly report, excluding any instructions to report and refund the federal share back to the federal government.

The OIG recommended that the Florida Agency for Health Care Administration — the state agency in charge of Medicaid — refund the $106 million in federal shares to the federal government.

In response to the audit, a written response from the secretary of Gov. Ron DeSantis through the health care agency said Florida did not owe the federal government because CMS did not require them to report rebates prior to January 2021.

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