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Legislators reject 'anti-free market' Medicaid push by GOP contributors

A proposal to force Florida hospitals into contracts with Medicaid managed care plans was defeated on two fronts in the House and Senate on Tuesday, despite a push by two of the state’s most politically connected HMO operators. 

The proposal, to require all hospitals to be part of a managed care plan's network, was tucked into House and Senate bills by House and Senate leaders at the urging of lobbyists for Miguel Fernandez, chairman of MBF Healthcare Partners in Coral Gables, and Akshay Desai, chairman and CEO of Universal Health Care Group, Inc, is the new finance chairman of the Republican Party of Florida.

Desai has contributed more than $735,000 to state and federal Republican campaign committees, including $92,000 since June. In January, Fernandez gave Gov. Rick Scott’s re-election campaign $125,000. 

But the measure was fiercely opposed by hospitals, who warned that it would reverse attempts to rely on the market to drive the price of the contracts, as expected last year when legislators passed the landmark Medicaid reform. 

The Legislature voted in May to turn the state's entire Medicaid program over to private managed care on the theory that private insurers can save the taxpayers money, though critics claim the change will simply funnel government cash to private industry.

Hospitals argued they when previous managed care HMOs were in operation they were left with significant amounts of unpaid claims and, without protections, are reluctant to sign contracts with smaller plans that might not remain solvent and do not have sufficient reserves to pay claims. In recent years, the three government funded health plans declared insolvency, leaving the hospitals with no way to recover their losses.

The House voted to remove the requirement from a wide-ranging House bill, HB 1419, on Tuesday by a narrow 65-44 vote. 

Meanwhile, the Senate Health and Human Services Appropriations Subcommittee agreed with the state’s Safety Net Hospitals and stripped the provision from a similar Senate bill with an amendment by Sen. Steve Oelrich, R-Alachua. 

“Hospitals should be free to enter into or not enter into contracts with HMOs of their choosing. Those plans that have done their homework and properly developed service networks are disadvantaged,’’ Oelrich said. 

Sen. Rene Garcia, R-Hialeah, however, defended the provision as needed to make sure that there is more competition between HMO plans. 

“The hospitals are against it and the bigger plans are against it because they want to shut out the smaller plans from participating,’’ he said. “That's the free market. All the hospitals can shut down Medicaid reform. They can say we don't want anymore plans. We want to make sure every plan that comes in has an opportunity to come in and bid for these numbers.” 

Pete Buigas, lobbyist for Fernandez' Simply Healthcare Plan, said the change was needed because "the small plans are concerned about the lack of being able to compete.  We're trying to figure out a way to level the playing field."

Simply Healthcare Plans operateas four offices in the state designed to take advantage of the Medicaid reform.

The House also voted 62-51 to restore the cap on the number of trauma centers in the state, which had been removed from the original bill.

-- Staff writer Brittany Davis contributed to this report.