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

Published: April 27, 2011 - New York Times

DAVIE, Fla. — A crucial experiment in the future of Medicaid is playing out in Florida, where both houses of the Legislature are vying to find ways to drastically cut costs, manage care and reduce waste and fraud.

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 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.”