Florida Gov. Jeb Bush's overhaul of Medicaid will start small, but it may someday give insurers broad control over the scope and amount of medical coverage for Florida's low-income and disabled patients.
In the final hours of their legislative session, the state's lawmakers passed a bill clearing the way for a five-county pilot of Bush's ambitious market-driven changes. However, the bill, which awaited Bush's signature at deadline, will ultimately give the Legislature final say over launching the pilot and its expansion statewide.
Florida Agency for Health Care Administration Secretary Alan Levine praised the bill as a first step toward revamping Florida's entire Medicaid program. "It's a major transformation," he said. "Really, it's just time."
Florida is one of many states struggling to curb double-digit increases in Medicaid spending and improve enrollees' health, he said. Other states are also weighing major Medicaid changes to cope with the pinch. Last week, New Hampshire's Health and Human Services Commissioner John Stephen proposed making that state the first to charge monthly premiums to its Medicaid recipients in an effort to save $12 million over two years. Meanwhile, other states have dropped beneficiaries to save money (See related editorial, p. 23).
In January, Bush unveiled a plan to curb Florida's Medicaid budget, which has increased by an average of 13% each of the last six years. The governor's plan stressed moving Florida's 2.1 million Medicaid enrollees into managed-care or provider-service networks, where competition and insurers' risk would help rein in spiraling costs and improve quality, the administration said. Bush called for greater flexibility for insurers to decide on the "amount, duration and scope" of care provided to Medicaid enrollees, which raised concerns that insurers would curtail benefits too sharply. The state would control its costs by paying a risk-adjusted lump sum to insurers.
Under the bill, the Agency for Health Care Administration has the go-ahead to seek a federal waiver from the CMS that is needed to make substantive changes to Medicaid programs. The waiver will seek to implement Bush's Medicaid overhauls in two Florida counties -- Broward and Duval. After a year, the agency plans to expand Duval's program to include Baker, Clay and Nassau counties.
Florida Hospital Association Senior Vice President Paul Belcher said hospitals or physician groups can offer Medicaid insurance under Bush's plan by forming provider-service networks, which contract for services and manage patient care. Three Florida health systems already do double duty as Medicaid insurers, though on a fee-for-service basis. Bush's plan instead offers a lump-sum payment for each enrollee.
Mark Knight is chief financial officer of one of those health systems, the North Broward Hospital District, based in Fort Lauderdale. Knight said North Broward, a four-hospital system, is interested in expanding its Medicaid insurance under Bush's plan.
Bob Wychulis, president and chief executive officer of the Florida Association of Health Plans, said his trade group supports the overhaul. The association represents 17 health plans, nine of which already provide Medicaid managed care. "We certainly are supportive of the expansion of managed care and we're supportive of the reform process," he said.
As it stands, North Broward, along with Memorial Healthcare System, Hollywood, Fla., and Jackson Health System, Miami, already provide Medicaid coverage through a provider-service network for 20,000 Medicaid beneficiaries, Knight said. Combined, the hospital districts generated $30 million in savings by better managing patients' care, he said. Under Bush's plan, North Broward would have greater flexibility to tailor benefits to patients' needs, he said. "We're very pleased with it," he said. "We're very supportive of the Medicaid reform."
Joan Alker, senior researcher at Georgetown University's Health Policy Institute, said lawmakers slowed down and scaled back Bush's original plan. Legislators insisted on oversight and participation, and the final bill requires an evaluation of the pilot projects and legislative approval before there is any expansion.
Legislators also included eligibility criteria for managed-care plans or provider-service networks that want to participate, such as solvency and quality standards. The bill explicitly outlines patients' rights to information and counseling on their insurance options, and it requires the agency to protect Medicaid from abuse or fraud. "They put some flesh on the bone in those two areas," Alker said.
Still, many questions about the plan won't be answered until Florida crafts a detailed proposal for the Broward and Duval pilot, Alker said. It's not clear that private insurers will better control Medicaid's spending or how Florida will limit its spending. The bill requires the state's healthcare agency to analyze and report on benefits and payment rates under three growth scenarios. How much coverage insurers will be required to provide remains uncertain, she said. "I think the governor prevailed on the question of flexibility of the benefits package" for adults, Alker said.
Alker and others said the Legislature would be closely monitoring details. Florida's pilot project waiver request must be posted online 30 days before submission to the CMS, and Florida lawmakers will have 10 days to comment.