Pediatric group wins early legal battle against DeSantis administration and its Medicaid rates

An administrative judge has refused to dismiss the state’s largest pediatric care provider’s allegations the DeSantis administration miscalculated Medicaid rates to cover the costs of applied behavioral analysis for children with autism.

Division of Administrative Hearings Judge W. David Watkins ruled Wednesday that Pediatric Associates has legal standing to challenge Medicaid reimbursement rates for applied behavioral analysis (ABA) services the Agency for Health Care Administration (AHCA) first put in place in February 2025 and readjusted that November. 

A final hearing in the case has been scheduled for Oct. 1-2.

Pediatric Associates, which claims to treat about 15% of Florida’s pediatric Medicaid population, quickly released a statement praising Watkin’s order.

“DOAH rejected all of AHCA’s arguments for dismissing the case and ruled that Pediatric Associates has the right to challenge them, pointing to the agency’s acknowledgment that its funding changes could predictably cause harm,” the company said in a prepared statement.

“AHCA’s flawed rate-setting methodology that led to our lawsuit has already drained millions in funding from Florida’s pediatric care system. Our goal is to protect access to everyday pediatric care depended on by more than two million Florida children on Medicaid. We are confident in our position, and we continue to urge AHCA to correct these actuarial errors and resolve this crisis for Florida families.”

The ruling came as a legislatively mandated 10-member task force reviews the state’s healthcare delivery system to “improve care experience and service continuity for enrollees and families receiving ABA services, while safeguarding long term program sustainability.”

The task force, which held its first meeting earlier this month, must submit its recommendations — along with the pros and cons of each proposal — to the governor and Legislature by Dec. 31.

Why does Florida spend so much money on treatment for children with autism and special needs?

In its legal challenge, Pediatric Associates asserted the rates have reduced pediatrician payments by nearly $300 million over 20 months and were adopted in violation of state and federal statutes.

In its motion to dismiss filed with the state Division of  Administrative Hearings on July 14, AHCA argued in part that Pediatric Associates lacked standing to challenge the rates because the state doesn’t pay it directly. Instead, the company gets paid by managed care organizations (MCO) under state contract.

Because of that, AHCA argued that any financial harm the providers might experience is outside the Medicaid statute’s “zone of interests.”

Watkins disagreed.

“But the fact that Pediatric Associates’ financial harm flows through MCO intermediaries does not defeat standing, especially at this stage, because Pediatric Associates need only allege that its injury predictably results from the Challenged Rules,” he wrote.

Additionally, Watkins said, AHCA’s position that Medicaid statute protects only the state’s interests is “irreconcilable” with a 2019 ruling from the Florida 1st District Court of Appeal that healthcare providers have standing to challenge Medicaid rate-making methodologies.

All about ABA

ABA includes therapy for adults, children with autism, and special-needs children that focuses on individualized interventions to help control challenging behaviors. The idea is to improve the quality of life for children with special needs and their families.

Florida in 2025 switched its ABA delivery model to require managed care plans to cover services for children. Previously, patients, once authorized, saw the Medicaid ABA provider of their choice and the state paid for the services. Since 2025, the care must be provided by the state-contracted plans, and ABA providers who want to continue working with their clients must negotiate contracts with the plans in their regions.

AHCA relied on its contracted actuarial consultants to calculate how to modify rates (by age cohort and geographic location) to include provision of ABA services 

Pediatric Associates’ administrative challenge argues the actuarial consultants made several math mistakes, such as when they spread the costs for ABA services equally across the nine Medicaid regions and across all age groups.

The challenge alleges the new rates “dramatically reduced funding for pediatric care — primary, specialist, and acute — by as much as 20 to 30% in some counties. Overall, Florida has experienced a roughly 15% drop in reimbursement for core pediatric care — approximately $15 million per month in cuts to essential funding — even as the cost of providing this care has risen,” the suit alleges.