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Medicaid Reform Progress Report


Medicaid is the state-federal program that provides health benefits to lower-income children, pregnant women, parents, people with disabilities, seniors and others.


“I’m absolutely convinced this will prove to be cost-effective.”
— Tom Arnold, deputy secretary for Medicaid
at the Florida Agency for Health Care Administration

[Photo: Ray Stanyard]

Medicaid spending in Florida is spiraling out of control: In 2005-06, Medicaid costs were 22.5% of the state’s budget. The Florida Agency for Health Care Administration (AHCA) projects that if left unchecked, Medicaid will consume 59% of state spending in 2015. The current program has other problems, particularly in providing access to specialists. “We all agree that Medicaid does need to be reformed,” says Andrew Leone, policy and communications director of Florida CHAIN, a statewide consumer healthcare advocacy organization.


Over the past year, children, parents and disabled people on Medicaid in Broward and Duval counties have been required to obtain their healthcare through health maintenance organizations (HMOs) or provider service networks (PSNs) instead of the state’s traditional MediPass fee-for-service system.

Broward County residents participating in Medicaid reform choose among 10 HMOs and five PSNs, including a specialty plan to serve children with chronic conditions. In Duval, four HMOs and three PSNs are participating. In Baker, Clay and Nassau counties, there is one HMO and one PSN.

“Not knowing which plans cover which drugs is a major problem.”
— Andrew Leone, policy and communications director of Florida CHAIN, a consumer advocacy group

[Photo: Eileen Escarda]
Participants choose their plan based on their specific needs and the participating physicians. The plans include all benefits mandated by the federal government but vary in terms of optional benefits like prescriptions and outpatient services such as physical therapy.

Participation in the pilot isn’t mandatory for individuals with developmental disabilities, pregnant women and seniors who are eligible for both Medicare and Medicaid, nor for Medicaid beneficiaries in nursing homes and hospices.

In the counties using the pilot program, “I think that the implementation has gone pretty smoothly,” says Sen. Nan Rich, a Sunrise Democrat who co-sponsored the original legislation and is vice chairman of the Senate

Health and Human Services Appropriations Committee. Tom Arnold, deputy secretary for Medicaid at the Florida Agency for Health Care Administration, agrees.


One part of the pilot allows participants to opt out of Medicaid and apply their Medicaid premiums toward purchasing a private health plan. The idea is that Medicaid recipients who work for companies that offer health insurance can use their Medicaid allotments to purchase a plan that’s better or includes more family members. As of the end of August, however, only nine people had enrolled in the program. It appears that most who are eligible for Medicaid don’t work for companies that offer healthcare, says Paul Duncan, the University of Florida professor who is leading the state-funded evaluation of Medicaid Reform.

Another part of the pilot is an “enhanced benefits” program for Medicaid participants who take steps toward a healthier lifestyle. Getting routine mammograms, stopping smoking or participating in disease management programs for chronic illnesses, for example, earns participants up to $125 per year with which they can purchase things like non-prescription pain medication, bandages, heating pads and other over-the-counter medical products.

Participants have responded, accumulating a total of $4.3 million in their accounts as of June. But they had spent only $131,493. It’s unclear whether people are saving up their credits, don’t understand the plan or are having difficulty using the credits at pharmacies. The state has put together a laminated information sheet to help participants and pharmacies better understand the program.

To help beneficiaries decide on a plan, the state operates a call center with more than 30 “choice counselors” and has stationed 10 counselors in Broward County and six in Duval, Baker, Clay and Nassau counties. Because of the counseling, more than two-thirds of enrollees selected a managed care plan and did not have to be randomly assigned to a plan, says Arnold.

Medicaid Reform
Enrollment in the five biggest plans (as of June)
Broward County
% of Medicaid Enrollees
Staywell (WellCare)
HealthEast (WellCare)
Pediatric Associates
PSN (Provider Service Network)
Duval County
HealthEast (WellCare)
First Coast Advantage (Shands/Jax)
United Healthcare
Access Health Solutions
Staywell (WellCare)
Source: Florida Agency for Health Care Administration
But one of the biggest complaints about Medicaid reform also involves choice counseling — specifically, the counselors’ lack of information on drug benefits. “Not knowing which plans cover which drugs is a major problem,” says Leone. Counselors now ask upfront if beneficiaries have a chronic illness, disabilities or conditions that require multiple medications and connect them with a special needs counseling center.

Perhaps the biggest question mark about Medicaid reform has to do with whether enough doctors will participate. Data so far are contradictory.

This spring, the Georgetown University Health Policy Institute (working under contract with the Jacksonville-based Jesse Ball duPont Fund) surveyed members of the Broward County Medical Association and the Duval County Medical Society and found that 27% of 141 responding physicians who previously participated in Medicaid didn’t intend to participate in any of the new Medicaid reform plans. Among that group, two-thirds were specialists — a key target in the reform.

It’s unclear whether the report reflects physicians’ antagonism toward the reform plan or toward Medicaid reimbursement rates in general. Arnold argues the Georgetown study is “fundamentally flawed.” His own study — an AHCA survey in March — showed that 97% of Broward primary care physicians who participated in Medicaid before reform are participating in reform. In Duval, the figure is 98%, he says.

Bob Wychulis, president and CEO of the Florida Association of Health Plans, which represents HMOs but not PCNs, says, “Access to specialists and subspecialists is excellent in Medicaid HMOs.” Florida Medicaid, he adds, had been using managed care plans long before the pilot programs. Indeed, Florida’s fee-for-service, or indemnity, plan was on its way out before Medicaid reform came along. As of June 30, 2006, 65% of Florida’s Medicaid beneficiaries statewide received their benefits through managed care, according to the Kaiser Family Foundation’s StateHealthFacts.org.

“Doctors proportionate to their experience are way undercompensated. There’s absolutely no incentive for them to join these plans.”
— Dr. Arthur Palamara, vascular surgeon and former vice president of the Florida Medical Association

[Photo: Eileen Escarda]
But problems remain with specialists, particularly endocrinologists and dentists, says Sarah Sullivan, senior staff attorney for the Medicaid Reform Project of the Jacksonville Area Legal Aid. She explains that one of the HMOs, Wellcare’s HealthEase, does not include endocrinologists — vital specialists for those with diabetes. The HMO will find an endocrinologist and pay for the service separately, but Sullivan says that beneficiaries must get prior authorization before every visit. Dr. Arthur Palamara, a Hollywood vascular surgeon and former vice president of the Florida Medical Association, says physicians are unhappy. “Doctors proportionate to their experience are way undercompensated. They’re all complaining,” he says, adding, “You’ve gone from an indemnity system to an HMO system. There’s absolutely no incentive for them to join these plans.”

Sen. Rich says the Legislature needs to address the physician reimbursement level overall. “I would submit to you, (doctors) are not leaving because of Medicaid reform; they’re leaving because of reimbursement rates.”

Sen. Durell Peaden Jr., the bill’s original sponsor and chairman of the Senate Health and Human Services Appropriations Committee, agrees but is wary of cost. The Healthy Florida Alliance, a group focused on expanding health insurance coverage and reducing tobacco consumption, proposes increasing Florida’s tobacco tax by $1 per pack of cigarettes and using the money to increase reimbursement rates for physicians who provide Medicaid services and also expand healthcare for low-income children and adults.


Florida's Medicaid Population
Population on Medicaid
Source: Florida Agency for Health Care
Administration, data as of May 31, 2007

Arnold says it’s too early to tell whether the pilot programs are succeeding at the critical goal of cutting Medicaid costs for the state. In its waiver application, Florida agreed that the federal government wouldn’t have to increase its share of Florida’s annual Medicaid budget by more than 8% per person. The state pays the HMOs a risk-adjusted premium for each Medicaid enrollee based on the patient’s age, sex, geographic location and health status. The PSNs will be paid on a fee-for-service basis for three years and then a set premium per patient similar to an HMO. Says Arnold, “I’m absolutely convinced this will prove to be cost-effective.”


When the pilot program expanded to Baker, Clay and Nassau counties on July 1, the Nassau County Board of Commissioners asked Gov. Charlie Crist to “pause” implementation. The local lawmakers cited questions regarding quality of care and access to care in Duval and Broward counties. In addition, they expressed concerns that WellCare, the largest Medicaid HMO in Florida, and the Shands/Jacksonville PSN, First Coast Advantage, have not expanded into Nassau County and the local not-for-profit safety net provider system has been reduced because of property tax reform. The governor declined the request.

Medicaid reform will not expand further unless the Florida Legislature votes and Crist approves. Sullivan says she doesn’t expect Crist “is just going to rubber stamp this.” But the impetus to reform Medicaid will be difficult to stop. Rich says she favors adding a few counties at a time. “I think it is better if it goes slower,” she says. Peaden agrees, saying, “You can’t roll it out all over the state. You’ve got to do it in a step-by-step manner.”


Massachusetts, California, Pennsylvania and other states are making headlines for their plans to offer (or require) universal or near universal healthcare coverage for residents. But it’s unlikely that Florida will even think about universal healthcare until it gets Medicaid spending under control.