Providers Push Back on Plan to Extend Medicaid Managed Care

The call by Florida's private health insurance plans to expand Medicaid managed care while eliminating fee-for-service programs and the state's MediPass program is meeting resistance from healthcare providers.

"We don't think that the single approach that the health plans put forward is the one thing that Florida should do," says Bruce J. Rueben, president of the Florida Hospital Association. "Rather, there should be multiple numbers of approaches that are more directly suited to the population centers and the communities that need to be served."

Rueben says HMOs don't work well in rural areas with sparse populations and few services. "In urban areas, there are enough primary care doctors and specialists, there is the full continuum of care from acute-care services through emergency care services all the way through long-term care," he says.

Florida is staring at an estimated $3 billion shortfall for fiscal 2010-2011. State lawmakers have asked healthcare stakeholders for ideas to contain runaway costs for the $17.9 billion Medicaid program, the fourth-largest Medicaid program in the nation, which grew by 11% last year and consumes about 26% of the state's budget.

There were 17 Medicaid HMOs operating in 35 Florida counties last year. Thirty-one counties had no HMOs, and 27 counties had no managed care presence. More than 1.1 million of Florida Medicaid's 2.7 million eligible beneficiaries are now in HMOs. About 35% of beneficiaries are in fee-for-service programs, and 17% of beneficiaries, are in the Medipass primary care case management program, according to the state Agency for Health Care Administration.

Michael W. Garner, president/CEO of the Florida Association of Health Plans, Inc., says that transitioning the remaining beneficiaries into managed care plans could save $111 million over the next two years.

"We have been arguing that we need to move away from fee-for-service to a managed care system, much like a large employer will bring in an administrator to take over the management of their healthcare insurance and/or purchase insurance and transfer the risk to someone," Garner says. "We say give it to the health plans that are experts in managing risk and let us deal with it."

"We believe we bring improved access. We believe we can demonstrate quality and accountability better, and cost savings. We believe we are an effective mechanism for helping to control potential fraud and abuse in the Medicaid program," he says.

Jeff Scott, general counsel for the Florida Medical Association, says the health plans want the state to reduce provider payments by 10% to those who won't switch to managed care.

"Obviously, they want to eliminate fee-for-service because they want the entire Medicaid market to themselves," Scott says. "If you look at their proposal, what they've asked for is that in areas where they have a hard time negotiating a price that would allow them to make money off of being the Medicaid provider, they want the state to intervene and tell the hospitals and providers to negotiate in good faith."

Scott adds that insurers' definition of "good faith" is the HMO demanding reduced reimbursements without much provider input and the state going along with the cuts.

"That is the antithesis of a free market system. It's bizarre how they can make that recommendation with a straight face," says Scott.

Rueben says that—rather than giving tax dollars to out-of-state insurance companies—the state should continue to support local provider service networks that he says are cost-effective, and popular with beneficiaries.

"If you can do it here in Florida and keep those dollars in Florida, it is better than doing this for commercial HMOs that take their profits out of Florida," Rueben says. "Hospitals and doctors have made a commitment to live and work in Florida and serve Florida patients. These HMOs, if the picture is less than rosy, they're out of here."

Garner says the kind of Medicaid savings needed to help resolve the budget crisis can only be generated by eliminating fee-for-service payments. "The core of the problem is the way the fee-for-service system functions, which is to reward payment for utilization. The more you use the more you get paid," he says.