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Florida's Medicaid Reform: Will It Work?

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The roar over the nation’s Medicaid crisis grows louder every day. In Florida, this dialogue has been ongoing since September 2006, when the state began enrolling Medicaid beneficiaries in five counties — Broward, Duval, Baker, Clay, and Nassau — into an unusual managed care pilot program.

Controversial since it launched, the program gives insurers unprecedented authority to decide what benefits adult enrollees receive. It was designed both to increase access to care and save funds — worthy goals in a state whose annual Medicaid program costs have now leaped to $20 billion, and which still has one of the highest uninsured rates.

Yet (and this is no secret) the benefits of this pilot program remain speculative. From its inception, provider participation has been low, administrative costs have been high, and there’s been no real evidence that the state is saving money. Enrollment numbers, too, seem shaky. While they have risen significantly since the recession began in 2008, on par with national spikes in Medicaid enrollments, the pilot program still accounts for less than 10 percent of the state’s total Medicaid beneficiaries.

The provider decision: HMO vs. PSN

Currently, beneficiaries in the pilot can choose to enroll in any available managed care plan (HMO) or provider-sponsored network (PSN). The two plans types are treated differently under reform rules: PSNs do not have the same flexibility to decide benefits as HMOs do, unless they choose to participate in an “at-risk” payment plan, which pays on a risk-adjusted, per-enrollee basis, rather than for services provided.

Enrollment in PSNs has grown steadily in the past two years. As of February 2011, provider-sponsored networks were serving nearly half of the enrolled population, up from just 28 percent in February 2008. This is likely due to the departure of several traditional HMOs, who feared that they could not profit from the pilot’s pay-out structure. In Broward County alone, Wellcare, Amerigroup, United Healthcare, Vista and Buena Vista have withdrawn.

For beneficiaries, this means that plan turnover is high. Each time an insurer pulls from the program, the insured must switch to a new plan, which may or may not cover the same doctors or even the same medications.

The disruptive quality of this pilot program is being touted by many as one of its critical downfalls. In addition to the questions about cost effectiveness, this plan-hopping means that there is also the question of quality of care: are enrollees in this new pilot program really getting the services they need?

An information gap

A study published by Georgetown University earlier this month suggests that all of these questions are unanswerable until more data is available. Very little information has been published since the program’s initiation in 2006. In 2009, a study published by the University of Florida showed that state Medicaid costs were slightly down, although it did not account for added administrative costs incurred by the program. It also did not provide information on the quality of care provided.

All of these questions will continue to be wrestled with in the 2011 State Legislature, now in session. In the meantime, Georgetown’s study seems to have the momentary last word. Among its key findings, the university concludes: “Much critical information is still lacking about the impact of Florida’s Medicaid pilots, including whether or not the pilots have saved money – and if they have whether the savings came at the expense of needed care.”


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