To Cap Medicaid, Florida Looks To Managed Care

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In Tallahassee, Florida's Legislature has one overriding goal this session: to close a $4.5 billion budget shortfall. And one of the key programs it is targeting for cuts is Medicaid.

In Florida and every other state, the program, which provides health insurance for the needy, makes up a big chunk of the annual budget. In reforming the program, Florida hopes to save $1 billion in what it spends on Medicaid.

When he introduced a plan recently to overhaul Medicaid, the head of Florida's Senate, Republican Mike Haridopolos, said that his first two goals were improving the quality of care and improving the access to care.

"Then and only then," he said, "we start looking at costs."

But in fact, there is really one thing driving elected officials in Florida and elsewhere to take a hard look at Medicaid — and that's the price tag. Ten years ago in Florida, Medicaid cost $9 billion. By last year, it had risen to more than $22 billion.

More than half of that cost is picked up by the federal government. Even so, Florida's share still amounts to nearly one-third of the state's budget.

Using Contracts To Cap Costs

To bring down that cost, Florida's Legislature is planning to dramatically revamp the way the state delivers health care to those on Medicaid. State Sen. Joe Negron has put together a plan that changes the state's relationship with Medicaid recipients and Medicaid health care providers.

"We want to get out of the check-writing business and into the contract-compliance business," he says.

Negron wants to scrap the old fee-for-service model and replace it with managed care. He proposes negotiating contracts with health care providers, which would agree to deliver care to the state's 3 million Medicaid recipients for a predetermined fee.

Negron says it would give the Legislature a way to effectively cap what it spends each year on Medicaid.

"We're going to decide how much we want to spend on Medicaid," he says. Of the state agencies charged with overseeing the program, he says, "They do not have the authority to spend beyond what we appropriate."

From a budgeting standpoint, it's an attractive idea. It passes off the responsibility for controlling costs, and the risk of busting the health care budget, to private contractors.

But it also means that Medicaid recipients may start seeing fewer benefits. At a time of tight budgets, Republican State Sen. Steve Oelrich said that Florida has few options.

"Like the triage nurse separates the sore throat from the stroke and the heart attack," he says, "what we've had to do here is take our limited resources, and apply them where they're most effective."

Republicans control the governor's mansion and both chambers of the state Legislature, so it's clear some version of Medicaid reform is likely to pass.

That doesn't mean Democrats are going along quietly.

Poor Reviews For Managed Care Experiment

At a recent workshop in Hollywood, Democratic State Rep. Joe Gibbons said he was tired of hearing the Republican refrain that balancing the state budget is like balancing the family checkbook.

Gibbons says that the analogy doesn't justify cutting health care for many who desperately need it. He said, "If my family checkbook at home is short, you know what I do? I get a second job. I don't just eat three days instead of seven. ... What they're telling us we got to do is, you got to eat three days."

It will be weeks until the Legislature finalizes its plans to overhaul Medicaid. But for many Republicans, the future can be found in Hollywood, Fort Lauderdale and other communities in Broward County.

For the past five years, nearly all Medicaid recipients in the county have been part of a pilot program that puts them in privately run managed care plans. Many in the Legislature now want to expand that program statewide.

At the workshop in Hollywood, a succession of doctors, care providers, advocates and Medicaid patients all had the same message: Managed care has been a disaster.

Richard Stein, a retired lifeguard, came to speak on behalf of a friend, Cynthia Bowersox, who, he said, has had four HMO plans in four years. Stein said Bowersox is homeless and was recently diagnosed with throat cancer.

"It has taken four months to get a biopsy on a throat cancer," he said, "due to the impediments placed by the HMOs for authorizations."

A Push For Managed Care

Moving more Medicaid recipients into managed care is something that's been happening not just in Florida, but in almost every state in the country.

In Broward County, critics say the experiment with privately run managed care often reduces access and benefits for those on Medicaid. Those charges will be considered by the Obama administration when it looks at whatever new Medicaid plan Florida comes up with.

If the administration doesn't approve, some Republicans in the Legislature say Florida should drop out of Medicaid. They say the state would then provide care for some 3 million of its poorest residents with whatever resources are available.