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FL- Applications keep rolling in for Medicaid home and community based grants

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[ MM Curator Summary]: FL has received 359 applications for providers wanting the additional HCBS money from federal COVID relief funds.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


The Agency for Health Care Administration reports 359 applications have been submitted to the state as of Jan. 6 from home and community-based providers looking to tap into hundreds of millions in additional Medicaid dollars meant to fortify the delivery system that keeps people with developmental and intellectual disabilities out of institutions and in communities.

Nearly 70% of the applications were submitted by providers that want both stipend and retention payments. Sixty-four applications were submitted by providers that want retention payments only and another 30 applications were submitted by providers that are only seeking stipends.

Six applications were submitted by providers wanting to install delayed egress systems.

Twelve applications, AHCA told Florida Politics, were improperly filled out or didn’t have the correct information.

Florida Developmental Disabilities Council
Executive Director Valerie Breen told Florida Politics Friday the association is waiting for AHCA to develop a “Frequently Asked Questions” document that will help providers better understand how to fill out the applications.


Nevertheless, Breen said, “We are very encouraged that the application process has become available and people are applying.”

The state announced three different funding opportunities for providers that work with people with intellectual and developmental disabilities: $403.7 million for one-time stipends; $266.6 million for bonuses and incentives meant to grow and retain a workforce; and $12 million for delayed egress systems meant to thwart elopement from community group homes.

The Gov. Ron DeSantis administration quietly moved over the summer to take advantage of a 10% bump in federal Medicaid dollars available under the American Rescue Plan Act of 2021.

President Joe Biden’s administration approved Florida’s proposed request to tap into an additional $1.2 billion in September.

AHCA announced Dec. 17 the opening of a 60-day window for providers to apply for the funds. The state
is accepting applications through Feb. 14.


It’s not clear how much each individual provider will receive in grants, though egress grants cannot exceed $10,000. AHCA Chief of Staff Cody Farrill told lawmakers in November the agency couldn’t determine individual grant amounts until the state knew the level of interest by providers that want both stipend and retention payments.

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KS Democrats mull new plan for Medicaid, marijuana reform

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[ MM Curator Summary]: Kansas may expand Medicaid and let Kansas toke up without fear this year.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



KANSAS CITY, Mo. — Unable to maneuver through gridlock in the Kansas Legislature, Kansas House minority leaders will introduce constitutional amendments in hopes of putting the issues of Medicaid expansion and marijuana legalization to a statewide vote.

“Some people might think it’s kind of drastic to do a constitutional amendment, and it is,” Assistant House Democratic Leader Jason Probst said. “But the reason is that we’ve just had an absolute blockade.”

Voters in Missouri, Nebraska and Oklahoma have passed Medicaid expansion in recent years, but Republicans in Kansas have refused to even debate the issue in the legislature.

“We know that Kansas wants this,” Probst, who represents Hutchinson, said. “We know that they’ve wanted it for a long time. We have a lot of data that shows overwhelming support for it. Our rural hospitals have been screaming for it.

“We could have really used it during the pandemic, when a lot of people needed more health care and couldn’t afford it. The legislature and the Republican leadership has actively blocked it at every turn. I think it’s time to start turning these things over to Kansans and letting them decide.”

House Democratic Leader Tom Sawyer said Medicaid expansion would “provide about $1 billion” annually to Kansas.

“All of our surrounding states have Medicaid expansion,” Sawyer, who represents the Wichita area, said. “I think it’s time the voters have their say on it.”

It’s a similar story for marijuana reform.

Missouri and Oklahoma voters have passed medical marijuana laws, while the drug is legal in Colorado and has been decriminalized in Nebraska.

That leaves Kansas with some of the most strict marijuana laws in the U.S. despite growing public sentiment in favor of legalization.

“In my district, it’s been the No. 1 issue for about six or seven years now,” Sawyer said.

The Kansas House passed a medical marijuana bill in 2021, though it still prohibited smoking and vaping of marijuana, but it never gained traction in the Kansas Senate nor made it to Gov. Laura Kelly’s desk.

“I’m eager for people in Kansas to enjoy the same benefits that people have in other states,” Probst said. “We are an island. We are surrounded by states that provide for their residents the things that they want. Kansas, and the leadership in this building, has decided they know better than Kansans what they should have.”

House Democrats plan to continue to pursue more traditional legislative options for expanding Medicaid and legalizing marijuana, for both medical and recreational use, in Kansas, but the constitutional amendment path may offer new hope to move the issues forward.

The hope is that Republicans who have been reticent to buck party leadership and support Medicaid expansion or marijuana reform might be more willing to support giving the people of the state they represent the chance to weigh in on the issue.

The Democrats’ proposed amendments would not spell out any new policy, but it would make Medicaid expansion and/or marijuana reform a constitutional requirement, compelling legislative action on the issues.

If passed, voters in Kansas could have a chance to decide Medicaid expansion or marijuana legalization for themselves during the November general election.

Sawyer said it’s also possible the issue could be certified for the Aug. 2 primary, when an anti-abortion amendment already is scheduled for a vote.

“Certainly politically, it would make more sense or be more strategic to put it on the August primary,” Probst said.


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FL: Medicaid health plans, Florida Healthy Start don’t provide same services

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[ MM Curator Summary]: A recent audit suggests the two programs do not duplicate services, but the Medicaid agency disagrees.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



A look at the millions of dollars Florida is spending on health care and social services for pregnant women, infants and children shows little duplication and offers good news to those who support the programs.

A recently released report conducted by the Office of Program Policy and Government Accountability shows there’s not much overlap in care provided by state-contracted Medicaid managed care plans versus services offered by the Florida Healthy Start program.

“Overall, the report is extremely positive,” Catherine Timuta, chief executive officer of the Healthy Start MomCare Network, told Florida Politics Tuesday. “There weren’t any significant findings of duplication.”

OPPAGA began a review of the services the HealthyStart MomCare Network and statewide Medicaid managed care plans offer pregnant women to see if they were duplicating services and whether those services meet state and federal requirements.

To that end, OPPAGA researchers reviewed contracts between Medicaid-managed care plans and the Florida Association of Healthy Start Coalitions, which contracts with the plans on behalf of 33 local groups.

OPPAGA also reviewed Agency for Health Care Administration contracts, including one between AHCA and the Healthy Start MomCare Network, which holds contracts with the state on behalf of the 33 local Healthy Start Coalitions.

“These agreements show overlap between the entities in two areas: care coordination and data sharing,” the OPPAGA report notes.

Timuta noted, however, data sharing is mutually beneficial for the health plans and the coalitions, because it provides both entities with information on the enrollees and the services they receive.

To delve into the coordination of services, OPPAGA staff conducting the research also did follow up interviews with Healthy Start and representatives from Medicaid health plans to get additional details on the care coordination services provided. Eight of the nine health plans told OPPAGA there was no service duplication.

“While some services provided by health plans and Healthy Start may appear similar, Healthy Start and health plan staff reported that services provided via the two entities are largely distinct and complementary,” the report notes.

The Health plans and Healthy Start both provide home visits, but Healthy Start staff told OPPAGA researchers their program participants are visited at least once a month and are provided prenatal education, parenting education, interconception education, stress management education and screenings. The health plans told OPPAGA researchers home visits for health plans are short-term services and have a more medical focus.

AHCA, though, didn’t see things the same way.

According to the report, “AHCA staff reported that some services included in the AHCA-MomCare Network contract are also covered under the AHCA-health plan.”

However, the report notes that due to data limitations, the existence of duplication cannot be validated.

OPPAGA staff requested AHCA claims data in an attempt to verify whether service duplication is occurring. However, while Healthy Start services are contained in AHCA’s claims data, health plans reported that the services that may be considered comparable to Healthy Start (e.g., home visits and community referrals) are provided as part of care coordination, which is not a billed service and thus does not appear in the claims data,” the report notes. “Because data for services provided by health plans are not available in AHCA’s encounter data, claims data analysis cannot be used to validate whether there is service duplication between Healthy Start and the health plans.”

According to the report, OPPAGA requested agency staff to provide them with the procedure codes used by health plans to ascertain if there was a difference between social and medical service provisions, but the agency did not provide OPPAGA the information.

OPPAGA is the research arm of the Florida Legislature. It provides lawmakers with data, evaluative research, and objective analyses meant to inform policy decisions.

The report shows that in state fiscal year 2020-21, Medicaid health plans submitted data on 104,935 enrollees to the Florida Healthy Start, of which 66,191 matched a case in the Florida Healthy Start system.

Of those 66,191 women, about 73% of them, or 48,267, received at least one service. When asked about the women who didn’t receive services, Timuta, chief executive officer of the Healthy Start MomCare Network, said the program is voluntary.

The report comes as Florida lawmakers prepare to meet for the 2022 Legislative Session where work on the upcoming fiscal year 2022-2023 budget begins.

The 2021 Legislature appropriated $63.1 million to AHCA for Healthy Start services provided under the contract between AHCA and MomCare, a $21.9 million increase from the prior fiscal year. The funds covered a near $11 million deficit, which AHCA said was caused by COVID-19, and provided services to a growing number of women, infants, and children.

A review of Gov. Ron DeSantis’ proposed budget for fiscal year 2022-2023, though, shows the Governor is not recommending that the $21.9 million bump in funding be continued in the 2022-2023 budget, which lawmakers will work to create when they meet in Session in January.

Christine Jordan Sexton is a Tallahassee-based health care reporter who focuses on health care policy and the politics behind it. Medicaid, health insurance, workers’ compensation, and business and professional regulation are just a few of the things that keep me busy.

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California Would Expand Medicaid to People in U.S. Illegally Under Gavin Newsom Proposal

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[ MM Curator Summary]: CA continues to add coverage for non-citizens.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


Democratic governor says California should be first state to offer healthcare to all residents regardless of immigration status


California Democratic Gov. Gavin Newsom unveiled his proposed 2022-2023 state budget in Sacramento on Monday.

Photo: Rich Pedroncelli/Associated Press

California would become the first state to provide access to its Medicaid program to all low-income residents, regardless of immigration status, under a proposal unveiled Monday by Gov. Gavin Newsom.

The plan is part of a $286.4 billion budget plan the Democrat has proposed that also includes billions of dollars in investments for the state’s wildfire response, homelessness and drought assistance.

If the plan is approved by state legislators later this year, Mr. Newsom said, all low-income Californians would qualify for the state’s Medicaid program, known as Medi-Cal, starting January 2024.

California previously extended health coverage to children who entered the U.S. without legal authorization in 2016 and later expanded those benefits to young adults up to the age of 26. Last year, California became the first state in the nation to allow seniors aged 50 and over who aren’t citizens or legal residents to participate in the program.

Once fully implemented, the Medi-Cal expansion is expected to cost about $2.2 billion a year, Mr. Newsom said. The proposed spending is possible in part due to a $45.7 billion state budget surplus that is projected for the fiscal year that begins in July, due in part to growing receipts from high-income earners who pay a large share of state income and capital-gains taxes.

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“I’m confident that we can do that within the constraints of the budget,” Mr. Newsom said, when asked whether the outlays would be sustainable at a press conference on his budget proposal.

Angelica Salas, executive director of the Coalition for Human Immigrant Rights, an advocacy group, said the expansion is especially important at a time when the Covid-19 pandemic has disproportionately affected low-income immigrant communities.



Marie Waldron, leader of the State Assembly’s Republican minority, opposes the expansion because she says Medi-Cal is already failing to adequately serve the approximately 14 million people who currently use the program in a state with a population of 40 million. “Enrolling millions more into the system will do little but give people an expensive insurance card that doesn’t get them access to quality healthcare,” she said.

Republicans unsuccessfully opposed last year’s law that expanded Medi-Cal to senior citizens who entered the U.S. illegally.

Some Democrats, who have a large majority in both houses of California’s Legislature, have previously proposed expanding Medi-Cal to all residents regardless of immigration status. With Mr. Newsom’s support, the proposal now has a good chance of passing into law.

Some Democratic lawmakers are pushing for a statewide single payer healthcare system. They recently released a framework that would rely on new taxes on businesses, payroll and personal incomes for all but the lowest-income individuals.

Mr. Newsom declined to comment on that proposal Monday.

Write to Christine Mai-Duc at


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Sixth state settles with Medicaid contractor

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[ MM Curator Summary]: Centene will pay NH $21M for spread pricing allegations.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



New Hampshire became the sixth state to announce a settlement with a Medicaid managed-care company that Ohio first accused of ripping off taxpayers.

In a statement last week, New Hampshire Attorney General John M. Formella said that St. Louis-based Centene had agreed to pay the state $21.1 million to settle state claims that Centene overbilled the state’s Medicaid department by $2.4 million for prescription drugs between the beginning of 2016 and the end of 2021.

The funds will come from $1.3 billion Centene set aside for such disputes last year. Mississippi, Kansas, Arkansas and Illinois already have announced settlements totaling $154 million with the company.

As it has in agreements with other states, Centene admitted to no wrongdoing in its settlement with New Hampshire.

Ohio Attorney General Dave Yost in March sued the managed-care giant, accusing it of overbilling that state’s Medicaid program by tens of millions. Centene  swiftly settled in June, agreeing to pay Ohio more than $88 million and setting aside funds to pay 21 other states, which haven’t filed lawsuits in the matter.

Centene is the largest Medicaid managed-care company in the United States. In that capacity, it creates networks of patients and providers such as doctors and hospitals on behalf of the state. It also hired or used its own subsidiaries known as pharmacy benefit managers to facilitate drug transactions.

Disputes over the company’s conduct go back to 2018, when The Columbus Dispatch reported that pharmacy benefit managers owned by Centene and CVS appeared to be claiming they did duplicate work in 2017 for $20 million. Both companies denied that they were double-dipping at taxpayer expense.

New Hampshire began its probe after learning of the action in Ohio.

“The Department of Health and Human Services (“DHHS”) and the Department of Justice (“DOJ”) began a review of Centene’s provision of pharmacy benefit services after similar investigations in other states became public,” Formella’s statement said. “The review focused on concerns regarding Centene’s practices related to the reporting of pharmacy benefit services costs in the Medicaid program, including the pricing of prescription drugs.”

The investigation “concluded that Centene’s inaccurate reporting of pharmacy benefit services costs, and the State’s use of that data received from Centene, resulted in at least a $2.4 million negative financial impact to the State during the settlement period,” the statement said. “In lieu of further review, investigation, and potential litigation, Centene and the State of New Hampshire have agreed to settle this matter in exchange for payment in the amount referenced above and the implementation and continuation of business practices that provide full transparency related to pharmacy benefit claims.”

Ohio authorities caused controversy in August when — just two months after the settlement was announced — the Ohio Department of Medicaid said that it would give Centene a multi-billion-dollar managed-care contract as part of the largest public procurement in Ohio history. Allegations of past misconduct were not counted against the company in a competitive procurement process.

Centene has said that the moves aren’t related to the settlements, but in the wake of the Ohio suit the company has said it’s getting out of the pharmacy-middleman business altogether and Michael Neidorff, its CEO who made $59 million in 2020, announced his retirement.

This story was republished from the Ohio Capital Journal under a Creative Commons license.

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IL- After legalizing midwives, Illinois lawmakers look to cover the service with Medicaid

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[ MM Curator Summary]: Illinois program officials believe midwives will address poor maternal outcomes.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



SPRINGFIELD, Ill. (WICS/WRSP) — Springfield lawmakers want to expand Medicaid to cover in-home birthing services.

A bill that has already passed in the House would expand Medicaid coverage for midwife services. The voucher program would include coverage for home birth services, in-home prenatal care, and postpartum services from certified professional midwives.

In December, Gov. JB Pritzker, D-Illinois, signed a law that allows for the professional regulation of midwives in Illinois, a practice that had been illegal in the state since 1992.

Rep. Mary Flowers, D-Chicago, is a chief sponsor of the Medicaid bill and says it aims to address major healthcare disparities experienced amongst Black women.

“In 2018, the Illinois Department of Public Health (IDPH) reported that Black women were six times as likely to die from pregnancy related conditions when compared to white women,” Flowers said.

The same IDPH report found that 72% of pregnancy-related deaths and 93% of violent pregnancy-associated deaths in Illinois were preventable.

Between 2016 and 2017, IDPH also reported that Black women had the highest level of severe maternal morbidity, with a rate of 101.5 per 10,0000 deliveries. The statistic is almost three times the maternal morbidity rate for white women.

The Medicaid legislation directs the Task Force on Infant and Maternal Mortality Among African Americans to “partner with Holistic Birth Collective to advise the Department of Healthcare and Family Services on the development of a Medicaid voucher program.”

If the bill becomes law, the Illinois Department of Healthcare and Family Services must apply for the Medicaid coverage change by Dec. 31, 2022.

Illinois is the 36th state to legalize the practice of midwifery.


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Biogen Shares Fall Premarket on Medicaid Coverage Plans for Aduhelm

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[ MM Curator Summary]: Hopes are fading for Aduhelm backers.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Shares of Biogen Inc. fell nearly 10% in premarket trading Wednesday after Medicare officials indicated they plan to limit coverage of the company’s Alzheimer’s disease drug Aduhelm, prompting several Wall Street analysts to cut their views on the company.

The Centers for Medicare and Medicaid said in a proposed policy that they would cover Aduhelm on the condition that patients are in clinical trials and have early-stage symptoms.


Analysts at Stifel called the proposal, which is subject to a final decision due in April, a “big blow” to Aduhelm that means the drug won’t be a meaningful revenue driver for the foreseeable future.

Mizuho analysts, who have a neutral rating on Biogen shares, cut their price target on the stock to $207 from $270 after removing nearly all Aduhelm sales from their model. Analysts at Piper Sandler downgraded Biogen shares to neutral from overweight and reduced their price target to $216 from $362, while analysts at Needham cut their target to $292 from $328.

Biogen shares rose as high as $468.55 on June 7 after the U.S. Food and Drug Administration’s approval of Aduhelm, the first new Alzheimer’s drug in nearly two decades, but the stock fell back amid pricing issues with the drug and ended last year at $239.32, below its 2020 closing price of $244.86.

In premarket trading Wednesday, Biogen shares were down 9.3% to $219.23.

Write to Colin Kellaher at


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Molina closes $60M acquisition of Cigna’s Medicaid contracts in Texas

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[ MM Curator Summary]: Molina completes another acquisition, this time adding 50,000 lives.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


Dive Brief:

  • Molina has completed its acquisition of rival health insurer Cigna’s Medicaid contracts in Texas, the California-based payer said Monday, as it continues to invest heavily in the safety-net insurance program.
  • The purchase price for the transaction was approximately $60 million in cash, according to a recent filing with the SEC.
  • Though Molina was already active in Texas, nabbing Cigna’s beneficiaries is a significant add: As of November, Cigna covered approximately 50,000 Medicaid beneficiaries in the state. Molina closed out 2020 with 357,000 members in Texas. 

Dive Insight:

Molina covers some 4.8 million people in the U.S., but Medicaid is the payer’s flagship business, representing more than three-fourths of its members (and premiums). The program has grown because of the pandemic, causing some players in Medicaid markets to ratchet up their investments and others to jump in for the first time.

Molina is known for being acquisitive, but has been on a tear as it looks to capitalize on this growth. Currently, the payer offers Medicaid plans in 18 states, with the greatest scale and revenues stemming from health plans in California, Ohio, Washington and Texas.

Moving to nab Cigna’s Medicaid contracts in Texas, first announced in April, is one such recent deal that should yield significant financial returns for Molina: Cigna’s some 50,000 Medicaid members in the state represent approximately $1 billion in annual premium revenue.

Along with recent contract wins in Nevada and Ohio, Molina also in October announced it had closed its acquisition of New York Medicaid health plan Affinity Health for approximately $380 million, and that it had entered into a definitive agreement to acquire AgeWell’s New York’s Medicaid managed long-term care business for approximately $110 million.

The AgeWell deal, which will add about 13,000 members to Molina’s rolls representing about $700 million in premium revenue, is expected to close by the third quarter this year.

Like most other major payers, COVID-19 ushered Molina to high profits in 2020, but more recently has negatively impacted the insurer’s finances. Molina’s net income in the third quarter of $143 million was down 23% year over year as the payer shelled out more for patient care than in the prior-year quarter.

Despite COVID-19’s volatility, Molina has been managing well in the markets, outperforming the S&P 500 last year. But the stability of the Medicaid rolls it’s so dependent on is a key area of interest for market watchers, as the longevity of the public health emergency will determine if and when a restart of Medicaid redeterminations will impact managed care organizations this year.

The Families First Coronavirus Act, passed in March 2020, gave states a temporary bump to their federal match funds in the Medicaid program as long as they ensured eligible beneficiaries stayed enrolled during the national emergency. That continuous coverage requirement contributed to Medicaid becoming the largest single source of insurance coverage in the U.S.

But when the emergency ends, states can resume redeterminations, potentially kicking millions off the safety-net insurance due to a change in income or other factors.

Molina said along with its third quarter financial release it expects the public health emergency to run at least through mid-January.

The payer’s Medicaid enrollment has ballooned to about 4 million members at the end of the third quarter, due primarily to the continuing suspension of redeterminations. Molina estimates that’s resulted in an increase of more than 700,000 Medicaid members since the beginning of the pandemic.

However, CEO Joe Zubretsky told investors in October the insurer expects to keep only half of those new Medicaid members gained during the pandemic after redeterminations are resumed nationwide.

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Medicaid managed care bill drops on eve of 2022 Legislative Session

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[ MM Curator Summary]: A state legislator wants to pre-empt the MCO protest machine.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Sen. Jason Brodeur filed SB 1950, a 36-page proposal to reduce Florida’s number of Medicaid managed care regions — from 11 to eight — and require managed care plans to contract with two of the state’s cancer hospitals.

Filed Monday, the bill, in an attempt to blunt potential legal challenges to the nine-figure Medicaid procurement, contains language that would preclude any managed care plan from providing care to any of its enrollees until all administrative challenges to the procurement are settled.

Brodeur’s proposal would reconfigure the current 11 Medicaid-managed care regions.

The bill consolidates Medicaid Regions 1 and 2 into a Medicaid Region A. Medicaid Regions 3 and 4 will roll into the new Medicaid Region B. And Medicaid Regions 5 and 6 are rolled together into Region C. The rest of the Medicaid regions remain the same, with letters replacing numbers.

Florida requires most Medicaid beneficiaries to enroll in a managed care plan to receive services from the cradle to the grave. Only Medicaid-managed care organizations that win competitively bid Medicaid contracts in a region can provide the care. The current Medicaid managed care contracts expire on Dec. 31, 2023. The agency is gearing up to begin the new procurement process and work on the new Medicaid managed care contracts to replace the current agreements.


The bill comes weeks after Agency for Health Care Administration Secretary Simone Marstiller signaled the agency would push for some legislative changes to the program.

Marstiller asked lawmakers in the fall to include an additional $2 million in her agency’s fiscal year 2022-2023 budget to hire outside counsel.

Marstiller said she wanted funding available to the agency “at the ready” to ensure her team can employ the best outside legal help available.

The Senate bill does not propose any changes to the Medicaid dental program, although Medicaid Director Tom Wallace hinted the agency might want to pursue changes.

The bill also requires Medicaid-managed care plans to contract with Sylvester Comprehensive Cancer Center and Moffitt Cancer Center.

The Brodeur bill eliminates the state’s requirement to allow the public to have feedback before submitting Medicaid amendments to the federal government for review. AHCA told Florida Politics Tuesday the public comment requirement being eliminated from the bill was specific to creating the Medicaid managed care program. Federal law still requires a public comment period.

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Clinics Say California’s New Medicaid Drug Program Will Force Them to Cut Services

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[ MM Curator Summary]: A judge has denied CA clinics’ request to keep drug prices high so they can make more 340B profits.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



An East Palo Alto resident is inoculated during a COVID-19 vaccination clinic run by Ravenswood Family Health Network at Facebook headquarters in Menlo Park on April 10, 2021. Ravenswood clinics serve low-income populations with more than half of their patients participating in Medi-Cal and other public health care programs. (Anne Wernikoff/CalMatters)

SACRAMENTO, Calif. — California’s sweeping new program to buy prescription drugs for its nearly 14 million Medicaid patients has alarmed health clinics that say they will lose money and have to cut services.

Gov. Gavin Newsom acknowledged Monday that some clinics, which serve the poorest Californians, would lose funding, and he included $105 million for them in the 2022-23 proposed state budget he unveiled in the state capital.

But the allocation falls far short of what clinic officials say they need to keep critical health care services funded in some of California’s neediest areas. California’s federally qualified health centers, which operate more than 1,000 clinics across the state, have filed a lawsuit in federal court to exempt them from the program, but a judge on Monday denied their request for a temporary reprieve while the lawsuit proceeds.

“People are going to be laid off; services are going to be cut,” said Anthony White, president of the Community Health Center Alliance for Patient Access, a statewide organization of federally qualified health centers. “It’s going to decrease access for our patients.”

The drug program, known as Medi-Cal Rx, debuted Jan. 1 and is one of Newsom’s key health care initiatives. It takes the responsibility for prescription drug coverage in the state’s Medicaid program away from managed-care plans and puts it into the hands of a state contractor.

On his first day in office in 2019, Newsom promised the overhaul would deliver better health care for patients and generate “substantial annual savings” because the state would negotiate lower prices as one of the largest drug purchasers in the country.

The Newsom administration anticipates the state will save $414 million in the 2022-23 budget year and nearly two times that amount in the next one, said Keely Martin Bosler, director of the California Department of Finance.

California’s health clinics, however, could lose up to $200 million a year in drug reimbursements, White estimated, money they have been using to care for patients with asthma, HIV and other chronic health problems. The reimbursement money is a key revenue stream for clinics, but they rely primarily on federal grants for their funding, in addition to some patient revenue and private donations.

At issue is money the clinics have received through a federal prescription drug savings program known as “340B.” The 340B program requires drug manufacturers participating in Medicaid to offer deep discounts to certain providers that care for underserved and uninsured people, including health clinics. The health centers, in turn, must use that money to expand health care services.

Beginning Jan. 1, California started buying prescription drugs for all its low-income and disabled residents enrolled in Medi-Cal, the country’s largest Medicaid program. Because the state expects to get bigger discounts on drugs than the roughly two dozen Medi-Cal managed-care insurance plans did, clinics expect to receive less 340B money.

The $105 million Newsom earmarked for health clinics in his budget proposal to offset their losses was not intended to fully replace them, said Michelle Baass, director of the state Department of Health Care Services, which administers Medi-Cal, in the state’s Jan. 5 response to the clinics’ lawsuit.

“Plaintiffs have no entitlement to continued profits from selling marked up 340B drugs,” she wrote.

The funding Newsom proposed is not guaranteed. Indeed, it is now subject to the annual budget negotiation process. The legislature has until June 15 to negotiate with Newsom and adopt a deal. The 2022-23 state budget takes effect July 1.

Mark Ghaly, secretary of the state’s Health and Human Services Agency, said the administration has been working with clinics and is open to further discussions.

“We’re always happy to sit down and try to understand what the conditions are today,” Ghaly said.

California Healthline’s Angela Hart contributed to this report.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.


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