Florida Legislators Pass H.M.O. Plan for Medicaid

 

MIAMI — In a sweeping overhaul of its $21 billion Medicaid program, the Florida Legislature approved a bill Friday to shift nearly three million Medicaid recipients into managed-care programs in the hope of saving money and improving services.

“Medicaid has grown faster than any other part of our budget,” said State Senator Joe Negron, Republican of Stuart, who took the lead on the bill. “It is crowding out funding for education, economic development and other parts of the budget that are equally important.”

If signed into law as expected, the bill will make Florida, with one of the largest number of Medicaid patients and a high rate of uninsured, one of the biggest states to jump almost entirely from a traditional Medicaid payment system into managed care. The wholesale shift would begin in July 2012.

The bill, a compromise between the House and the Senate versions, would allow the state to decide how much to spend on Medicaid each year, share in the profits of managed-care companies if they exceed 5 percent and penalize networks that reneged on contracts. To help ensure better care for patients, the bill would also require plans to include specialists and provide higher reimbursement rates to doctors.

Patients would be charged $10 monthly premiums and $100 if they showed up at the emergency room with a non-emergency.

The state and managed-care companies would control which services to provide to Medicaid patients. In so doing, the legislation would do away with the existing fee-for-service system, in which the state pays providers for each service, a practice that has led to widespread fraud and inconsistent care. Reimbursement rates have dropped so low that many doctors choose not to treat Medicaid patients.

The Legislature’s bill seeks to remedy those issues with the requirement that plans include specialists and the higher reimbursement rates to doctors.

Another sweetener for doctors and hospitals is a provision that limits the amount they would have to pay out in malpractice damages for pain and suffering to $300,000 for each Medicaid claimant, unless the damages award is punitive. Senator Negron said the cap was appropriate because doctors who treat Medicaid patients are basically providing a public service and should be encouraged to do so.

But Democrats said it would be unreasonable to charge poor patients fees and unjust to treat them differently in malpractice cases. “Why is it that their pain and suffering is devalued?” asked State Senator Arthenia L. Joyner, a Democrat of Tampa.

Gov. Rick Scott, a wealthy former health care executive who made revamping Medicaid a priority, supports the legislation, which is projected to save $1.1 billion in its first year.

But the proposed law cannot go into effect without the approval of the federal government, which pays more than half of Florida’s Medicaid tab. Last month, the federal government advised legislators to choose the payment system that would guarantee that a percentage of the money, in this case 90 percent, would go to patient services. Instead, the Legislature chose the other option: to share profits with managed-care companies.

But Senator Negron said he was not worried. “We have given the federal government a hundred good reasons to approve our plan,” he said. “I think they will work with us because they have the same economic pressures that we have.”

Democrats and patient advocates said that they worried profit would get in the way of care and that some people would not be able to pay premiums. They expressed alarm that the bill is based on a five-year-old pilot program in five Florida counties that had decidedly mixed results. At least seven managed-care companies pulled out of the program in Broward County, and many patients — most of whom are low-income children or pregnant women — fled to networks run by hospitals.

Managed care is not new to Florida. About 60 percent of Medicaid patients are in some form of managed care but, outside of the pilot program, they must receive a mandated minimum level of benefits.

The Medicaid overhaul also extends into long-term care. Nursing home residents would shift into managed care, but the bill provides a separate provision for them. Payments would go directly to the nursing homes, bypassing managed-care companies, so money would not be deducted for administrative fees. Savings would come by shifting more people into home- and community-based programs.

Developmentally disabled people would be exempt from the managed care system for now. And each of the 11 managed-care regions in Florida would have to include a network run by a hospital or doctors. Those networks could continue to use the traditional payment system for three more years.

Those who already have insurance and are eligible for Medicaid would receive a voucher from the state to apply to their policies.

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Editorial: The Ryan Plan for Medicaid

The desire for fiscal relief is understandable. Medicaid insures low-income people and in these tough economic times, enrollment and costs — for the federal government and state governments — have swelled.

Representative Paul Ryan, and the House Republicans, are now proposing to ease Washington’s strain by capping federal contributions. Like his proposal for Medicare, that would only shift the burden — this time onto both state governments and beneficiaries.

Still, some governors may be tempted. His plan promises them greater flexibility to manage their programs — and achieve greater efficiency and save money. That may sound good, but the truth is, no foreseeable efficiencies will compensate for the big loss of federal contribution.

Mr. Ryan also wants to repeal the health care reform law and its requirement that states expand their Medicaid rolls starting in 2014. Once again Washington would pay the vast bulk of the added cost, so states would be turning down a very good deal to save a lesser amount of money.

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Here’s how Medicaid currently works: Washington sets minimum requirements for who can enroll and what services must be covered, and pays half of the bill in the richest states and three-quarters of the bill in the poorest state. If people are poor enough to qualify and a medical service recommended by their doctors is covered, the state and federal governments will pick up the tab, with minimal co-payments by the beneficiaries. That is a big plus for enrollees’ health, and a healthy population is good for everyone. But the costs are undeniably high.

Enter the House Republicans’ budget proposal. Instead of a commitment to insure as many people as meet the criteria, it would substitute a set amount per state. Starting in 2013, the grant would probably equal what the state would have received anyway through federal matching funds, although that is not spelled out. After that, the block grant would rise each year only at the national rate of inflation, with adjustments for population growth.

There are several problems with that, starting with that inflation-pegged rate of growth, which could not possibly keep pace with the rising cost of medical care. The Congressional Budget Office estimates that federal payments would be 35 percent lower in 2022 than currently projected and 49 percent lower in 2030.

To make up the difference, states would probably have to cut payments to doctors, hospitals or nursing homes; curtail eligibility; reduce benefits; or increase their own payments for Medicaid. The problems do not end there. If a bad economy led to a sharp jump in unemployment, a state’s grant would remain the same. Nor would the block grant grow fast enough to accommodate expensive advances in medicine, rising demand for long-term care, or unexpected health care needs in the wake of epidemics or natural disasters. This would put an ever-tightening squeeze on states, forcing them to drop enrollees, cut services or pump up their own contributions.

This is not the way to go. The real problem is not Medicaid. Contrary to most perceptions, it is a relatively efficient program — with low administrative costs, a high reliance on managed care and much lower payments to providers than other public and private insurance.

The real problem is soaring medical costs. The Ryan plan does little to address that. The health care law, which Republicans have vowed to repeal, seeks to reform the entire system to deliver quality care at lower cost.

To encourage that process, President Obama recently proposed a simplified matching rate for Medicaid, which would reward states for efficiencies and automatically increase federal payments if a recession drives up enrollments and state costs. The president’s approach is better for low-income Americans and for state budgets as well.

 

In Florida, H.M.O.’s Would Treat Medicaid Patients

The cuts and changes being sought by the Republican-led Legislature and encouraged by the new Republican governor, Rick Scott, a wealthy former hospital company executive, are deeper than those in many other states.

In the past 11 years, the cost of Medicaid in Florida has grown to $21 billion from $9 billion and amounts to a third of the state budget. The federal government pays more than half the tab.

“There is a consensus that the Medicaid system is irretrievably broken,” said State Senator Joe Negron, a Republican who took the lead in writing the Senate bill, which is expected to come to a vote before the legislative session ends a week from Friday. The House approved its bill this month. The changes could go into effect as early as next year.

“I’ve never seen something where we are spending $21 billion and nobody is happy,” Mr. Negron said. “We were not going to kick the can down the road another year.”

Relying loosely on a five-year-old pilot program to shift care to H.M.O.’s, Florida lawmakers are poised to scrap the traditional model in which the state pays doctors for each service they perform. Instead, almost all of Florida’s Medicaid recipients would be funneled into state-authorized, for-profit H.M.O.’s or networks run by hospitals or doctors. H.M.O.’s or networks would also manage the long-term care of the elderly, shifting them away from nursing homes and leading to an expansion of in-home care. Lawmakers who support the bill say the state needs this flexibility in curtailing the exploding cost of Medicaid.

The Florida legislation is being closely watched by other states as they tackle the rapid growth of enrollment and the cost of care. Because Florida has three million Medicaid patients and a high number of uninsured people, a swift jump into managed care would be significant. And while many states use managed care for Medicaid users in one form or other, the Florida proposals stand out because they would set possible limits on services, giving the state and H.M.O.’s the right to deny some benefits that are now offered to patients. This would require federal permission.

“If Florida adopts this method of looking at managed care, other states will definitely look at that, and this is a tool we can use,” said Michael W. Garner, the president of the Florida Association of Health Plans, which lobbies for H.M.O.’s. “The toolbox is pretty empty right now.”

But there is concern across the state that the emerging proposals will not only reduce available health care for millions, but also leave the most vulnerable — the disabled, the elderly and those with serious chronic illnesses — at risk. An April study of the pilot program by Georgetown University raised doubts about patient services and cost efficiency, saying there was too little data. For some, the proposals hold a fearful prospect.

Vicki Ahern, 40, a single mother in Davie, Fla., who is her son’s full-time caregiver, spent several years trying to cobble together a network of medical specialists across several counties to help her son, Keith, 16, grapple with muscular dystrophy, spinal injuries and debilitating pain.

Then, suddenly, the network crumbled. With 10 days’ notice, Ms. Ahern said, Keith was shuttled into the pilot project, which transferred Medicaid patients in five counties to H.M.O.’s and hospital- or doctor-run networks. The counties are Baker, Clay, Duval and Nassau in the northeast and Broward in the south.

The participating H.M.O.’s in Broward County, where the Aherns live, listed none of Keith’s doctors or therapists; they offered few specialists and fewer services. The one rheumatologist who proved helpful dropped out of the program because of low reimbursement rates and frustrations with the bureaucracy.

“I started panicking and considered moving out of state, but we couldn’t,” Ms. Ahern said. “I was very angry because I knew he wasn’t going to get his services. If you have a chronic disability or are medically fragile, then forget it.”

After several months in the pilot program, Ms. Ahern discovered she could opt out, a long bureaucratic process, and she did.

The two bills now in play in Tallahassee are modeled in large part on the pilot program. It allowed the state to provide a set amount of money for managed-care companies to more efficiently serve each Medicaid patient, who include low-income children and pregnant women, the developmentally disabled and others.

The bills vary: the House version would send the developmentally disabled to managed care; the Senate’s would not. The Senate is pushing block grants, which would restrict financing further by creating a cap on the Medicaid budget each year; the House version does not.

The proposed changes worry health care advocates and Medicaid patients, who say that the for-profit nature of H.M.O.’s makes it difficult to care for the neediest.

The pilot program appears to have been far from successful, according to the Georgetown report: H.M.O.’s fled because of low reimbursement rates. Among those leaving was WellCare, which left 55 percent of Duval County’s Medicaid patients in limbo. The company was later accused of cherry-picking Medicaid patients to maximize profits, and five of its former executives were indicted on fraud charges.

Patients were shuffled from H.M.O. to H.M.O. and reported difficulty gaining access to services. In other cases, doctors listed in the network stopped accepting Medicaid patients. Supporters of the bills say that the rates would be adjusted to increase H.M.O. participation and that oversight would be bolstered.

Lawmakers are also planning steep budget cuts in the Medicaid program to tackle the state’s yawning deficits. This would make the shift even more burdensome, Democrats say.

“It can’t work,” said Representative Elaine J. Schwartz, a Democrat, who held community meetings on the program in Broward County. “It undermines the basic purpose of Medicaid, which is to provide services. If the private sector could have made money on Medicaid, they would have. With this plan, we are basically handing them $20 billion. Two groups of people will suffer: the patients because they are bamboozled and the taxpayer who is not getting their money’s worth.”

Joan Alker of the Center for Children and Families at Georgetown, who co-wrote the April report, said that so far there was no solid evidence of how much the pilot program had saved or whether the savings came from denying services. Florida pays among the lowest rates in the country for each Medicaid patient, ranking 43rd, making Medicaid less expensive than private insurance, Ms. Alker said.

Mr. Negron said he envisioned $1 billion in savings from his proposal in its first year and perhaps $4 billion in subsequent years.

“One of my guiding principles,” he said, “is that our friends and neighbors on Medicaid should not receive fewer benefits than their counterparts, but they shouldn’t have a more generous benefit either.”