TALLAHASSEE, Fla. — Gov. Ron DeSantis’ administration this week released its most detailed explanation to date on its legal reasoning behind diverting $10 million in Medicaid settlement money to the Hope Florida Foundation.

In short, only $57 million of a $67 million legal settlement Florida made with the Medicaid contractor Centene was considered “potential Medicaid-related damages to the State,” Agency for Health Care Administration General Counsel Andrew Sheeran wrote to lawmakers on Tuesday.

That meant that Centene could be directed to divert the remaining $10 million to the Hope Florida charity, Sheeran wrote. The charity was created by DeSantis’ administration to support the first lady’s Hope Florida initiative, which aims to get Floridians off government assistance, including Medicaid.

“It totally debunks the bogus media narratives that were out there,” DeSantis said Thursday of the agency’s letter.

But Medicaid experts questioned the logic in Sheeran’s memo and said all the money should be owed to the state and federal taxpayers.

It also appeared to be at odds with a move by the DeSantis administration to reimburse the federal government based on the full $67 million amount.

All of it is taxpayer money, according to Scott Newton, a former FBI agent and federal prosecutor with decades of experience investigating, prosecuting and defending healthcare fraud.

“The character, the very identity of the program’s funding never changes,” Newton said. “It is and remains the taxpayers’ money.”

House Republicans have questioned the legality of the state’s $67 million settlement with Centene, reached in October after three years of negotiations. Florida was among more than 20 states to settle with the company, which was found to have overbilled Medicaid systems for prescription drugs.

Unlike nearly every other state, Florida kept the settlement secret until Republican lawmakers began asking this month about the source of Hope Florida Foundation’s $10 million donation.

Not Medicaid funds?

Sheeran wrote to lawmakers that the transaction was neither “illegal” nor “illicit,” as some lawmakers have alleged.

He also said the $10 million “was not comprised of Medicaid funds.”

As evidence, Sheeran gave lawmakers a four-page letter labeled “confidential” by Centene from 2023 showing how the company arrived at $67 million.

The company used the total number of prescriptions and a percentage of how much Florida taxpayers spent on them between 2017 and 2018 to calculate that it owed $56.2 million for overcharges.

Also included in the calculation was an additional $10.8 million for “any other potentially alleged damages” related to overbilling and to incentivize states to settle “without doing formalized claims audits that would cause further delay and cost to the parties.”

In other words, the additional $10.8 million was a margin of error for Centene’s calculations — and an incentive for Florida not to do its own analysis to see if the company was accurate.

It was also the baseline for Medicaid damages. Every state that settled received a minimum of $10.8 million, Centene wrote.

But Sheeran, in his memo, wrote that the $10.8 million “was not to compensate the State for loss of Medicaid funds.” He said that meant the $10 million donation by Centene that came from that portion was “not Medicaid funds.”

It’s unclear if the state ever completed its own audit of Centene’s overbilling to get a better understanding of what it was owed. The state never answered the Herald/Times’ questions about it.

The final settlement was identical to what lawyers working with Centene first proposed paying in restitution in February 2022: $67,048,611.

DeSantis has said the $10 million was a “cherry on top” of the $57 million.“The agreement they reached with the company was for $56 million to recoup for this … Medicaid thing,” DeSantis said Wednesday. “It’s there, it’s documented, and then they got a 10 million private donation on top of that.”

Repaying the federal government

Under federal rules, the U.S. Centers for Medicare and Medicaid Services is owed its share of the Centene settlement. For Florida during this period, that would mean 57% was owed back to the feds.

That calculation must be based on the entirety of the settlement, according to federal guidance.

“It’s not clear to me why the entire $67 million settlement amount isn’t owed to the state’s Medicaid program,” Andy Schneider, a research professor at Georgetown University’s McCourt School of Public Policy who has over 50 years of experience with the Medicaid program.

“If that’s the case, the federal government would be entitled to 57 percent of the amount.”

Florida seems to acknowledge that the entire settlement is for $67 million, according to Rep. Alex Andrade, the Pensacola Republican who has been investigating the Hope Florida Foundation.

He said Florida’s accounting ledger shows that the state is setting aside $38.3 million — which is 57% of $67 million.

“Given AHCA’s own internal disagreement about what is and is not Medicaid money, I’m certainly concerned about their competence over there,” Andrade said in a statement.

Other states do not appear to have added clauses like Florida’s donation to the Hope Florida Foundation into their settlements with Centene.

Massachusetts returned its portion of its $14 million settlement with Centene to its state Medicaid program. Washington returned its portion of its $33 million settlement to its Medicaid Fraud Penalty Account.

California said its share of its $215 million settlement went to its False Claims Act Fund and the state Department of Health Care Services.

Not addressed in Sheeran’s memo is what the Hope Florida Foundation did with the $10 million. It awarded it to two nonprofits. Those nonprofits later gave $8.5 million to a political committee controlled by DeSantis’ then-chief of staff.

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