THE CAPITAL, TALLAHASSEE, September 11, 2012…..After months of political and legal wrangling, counties and the state have put on hold a lawsuit about the constitutionality of a new law that would cost counties tens of millions of dollars in disputed Medicaid charges.

A document filed Monday in Leon County circuit court calls for an “abatement” of the case until later this year, as counties and the state Agency for Health Care Administration continue talks about how to carry out the law. Also, the document says some counties could notify the state this week that they are dropping out of the lawsuit.

The case stems from a dispute about whether counties have paid their full shares of required Medicaid costs going back to 2001. Legislative leaders, arguing that counties owed money, passed a law in March aimed at recouping back payments and collecting money in future years — while counties argued the state’s billing system was riddled with problems.

An initial estimate indicated counties could owe as much as $325 million in back payments. But that number was cut by about half after AHCA officials visited each county to go through billing issues.

A coalition of counties filed the lawsuit in April, arguing in part that the new law violated a state constitutional ban on what are known as “unfunded mandates” imposed on local governments. The abatement of the lawsuit does not change those allegations or another claim by the counties that the state is legally barred from trying to recoup money from 2001 to 2008.

But the document filed Monday indicates that counties and AHCA officials have been working closely on the complicated billing issues, including a statement that says counties “have had unprecedented access to agency staff for collaboration in seeking solutions.” The document, known as a stipulation, lists 54 of the 67 counties as plaintiffs in the lawsuit, along with the Florida Association of Counties.

It was not clear late Tuesday afternoon how many counties might choose a settlement option that is outlined in the document. But if counties withdraw from the case, they would be able to avoid a controversial part of the law that allows the state to withhold what are known as “revenue sharing” payments to recoup Medicaid money from the past.

Counties are adamantly opposed to losing the revenue-sharing payments, arguing they often have pledged that state money to cover specific expenses. If counties agree to settle the lawsuit, they would be able to choose what sources of money to use in making regular payments on the past billings.

The document does not give a specific length for an abatement of the lawsuit, though it says it would last no longer than Dec. 31.

Cragin Mosteller, a spokeswoman for the Florida Association of Counties, said putting the lawsuit on hold would give more time to address a crucial issue that deals with future Medicaid payments. Mosteller said AHCA currently is allowing counties to delay paying disputed bills until questions are resolved about the billings.

But Mosteller said that practice is scheduled to end in April. She said counties would have to pay the disputed amounts upfront and then contest the charges. Counties want to be able to continue delaying payment until questions are resolved.

“We think that’s an option that should be forever,” Mosteller said.

The law and constitutional challenge center on a longstanding requirement that counties reimburse the state for certain hospital and nursing-home costs for residents who are Medicaid beneficiaries. Counties contend the state’s billing system has been badly flawed, such as relying on inaccurate patient addresses.

Separate from the lawsuit, three counties are fighting the state’s attempt to collect a total of more than $30 million in Medicaid billings from Nov. 1, 2001, through April 30, 2012. Those cases, filed by Broward, St. Lucie and St. Johns counties, were sent this week to the state Division of Administrative Hearings.

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