House Budget Proposes Cuts to Medicaid Managed Care Plans

Lawmakers seek to reduce payments to contracted plans that provide Medicaid care in Florida

Feb. 26, 2026 at 3:39am

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The Florida House's proposed health care budget includes a 1.3% 'efficiency' savings, or a $206.2 million reduction, to the state's Medicaid managed care plans for the upcoming fiscal year. The House also proposes withholding 2% of what the state pays per client per month to the contracted plans, with the ability to earn back half or all of the withholding based on performance in lowering infant mortality rates.

Why it matters

This is the first time since the inception of Florida's mandatory Medicaid managed care program that there has been a move in the Legislature to reduce payments to the contracted plans that provide care. The proposed cuts and withholdings could have significant financial impacts on the managed care organizations and potentially affect the services and care available to Medicaid enrollees.

The details

The House's proposed 1.3% 'efficiency' savings reduction is meant to reflect claims by Governor Ron DeSantis and the Agency for Health Care Administration that the newest Medicaid managed care contracts include a 1% savings in Medicaid costs for Florida taxpayers. However, this savings was never actually reflected in the agency's budgets. The House increased the efficiency savings to 1.3% to reach a $270.5 million reduction target, though the agency provided no real mathematical basis for the 1% figure. Additionally, the House budget proposes withholding 2% of what the state pays per client per month to the contracted plans, with the ability to earn back half or all of the withholding based on performance in lowering infant mortality rates.

  • The House passed its budget on Thursday, February 19, 2026.
  • The new Medicaid managed care contracts fully went into effect on February 1, 2025.

The players

Rep. Alex Andrade

The Pensacola Republican who chairs the House Health and Human Services Appropriations Subcommittee.

Governor Ron DeSantis

The Governor of Florida who announced the 1% Medicaid cost savings when rolling out his legislative budget request in December.

Agency for Health Care Administration (AHCA)

The state agency that released the third Medicaid managed care invitation to negotiate new multiyear contracts worth tens of billions of dollars in spring 2023.

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What they’re saying

“The governor claimed that he negotiated 1% efficiency reduction and AHCA claimed that, but they never, never, reflected it in their budgets. So, it's largely just a clarification of that.”

— Rep. Alex Andrade, Chair, House Health and Human Services Appropriations Subcommittee

“They've already contracted to risk 2% of their revenue. So, I don't see that as a gain nor a loss to them, like they've contracted right now to improve health metrics.”

— Rep. Alex Andrade, Chair, House Health and Human Services Appropriations Subcommittee

What’s next

The Senate budget does not include the cuts to the Medicaid managed care plans, so the differences between the House and Senate budgets will need to be negotiated before a final state budget is passed.

The takeaway

The proposed cuts and withholdings in the House budget could have significant financial impacts on Medicaid managed care organizations in Florida and potentially affect the services and care available to Medicaid enrollees. The outcome of the budget negotiations between the House and Senate will determine the final impact on the state's Medicaid managed care program.