Florida doctors wary of Medicaid overhaul

Some say the state plan of shifting more patients into managed care is a bad idea, but others see opportunity.

By Amy Snow Landa — Posted Jan. 2, 2006

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Florida physicians have mixed views on the state's Medicaid reform plan, which the state Legislature approved Dec. 8 and Gov. Jeb Bush is touting as the most ambitious attempt to redesign Medicaid since the program's inception.

Some physicians are concerned that the plan transfers more Medicaid dollars and administrative control to HMOs and other private entities that set up managed care plans.

But other doctors would like to be among those entrepreneurs, said Arthur Palamara, MD, a vascular surgeon in Hollywood, Fla., and past president of the Broward County Medical Assn.

As part of its Medicaid reform plan, the state is encouraging physicians and hospitals to set up provider service networks that would compete with HMOs and other insurers in offering managed care plans to Medicaid patients.

"It does create an opportunity for small entrepreneurs to go ahead and offer up a capitated network and to provide a source of treatment for beneficiaries," Dr. Palamara said.

Under the federal waiver approved in October 2005, Florida will create a pilot program that pays managed care plans a risk-adjusted premium and allows them unprecedented flexibility to decide the amount, scope and duration of covered benefits for Medicaid enrollees.

Florida's waiver is the first of its kind and could have a far-reaching effect on the state's program, said Joan Alker, senior researcher at Georgetown University's Health Policy Institute. "It is attempting to move Medicaid from a program that guarantees beneficiaries a defined set of benefits to a program where they are guaranteed a fixed amount of money to purchase a package of services that may or may not meet their needs."

The plan is a radical transformation of the Medicaid program because it transfers the bulk of responsibility for beneficiaries' health care to private entities, she said.

State officials say their goal is to cap Florida's Medicaid expenditures and give insurers incentives to provide care more cost-effectively. Medicaid consumes 25% of the state's budget in Florida and is projected to consume nearly 60% by 2015 if current trends continue.

The state will roll out the program initially in two counties -- Broward and Duval -- starting this year, but plans to expand it statewide within the next few years, pending the state Legislature's approval.

Meanwhile, Florida physicians who care for children are well aware of Medicaid's cost pressures but don't think putting more children into managed care plans is a solution, said Louis St. Petery, MD, a pediatric cardiologist in Tallahassee and executive vice president of the Florida Pediatric Society.

Children account for 53% of the state's Medicaid population but only 17% of its Medicaid costs, he said. "Doing things to children is not where the savings are going to come from. But they're the ones who are going to suffer most from this 'reform.' "

Children's access to care is already inadequate under Medicaid because low reimbursement rates and administrative hassles deter physicians from participating, Dr. St. Petery said.

The Florida Pediatric Society filed suit against the state in November, alleging that Florida has denied Medicaid-enrolled children equal access to health care.

The lawsuit is unrelated to the state's Medicaid reform plan, but the plan does little to improve children's access to health care and actually could make the situation worse, Dr. St. Petery said. "Having to go through HMOs and PSNs just adds more layers that don't solve those problems."

A potential opportunity

But some doctors say the changes in Medicaid are going to happen whether physicians like it or not, and provider service networks at least offer them an opportunity to respond proactively.

Dr. Palamara, who is a Democratic candidate for the state House of Representatives, said he would have voted against the Medicaid reform plan had he already been elected.

"I personally think this is going to fail, because most of these patients are going to receive care from for-profit HMOs," he said. "But since this passed the Legislature and is going to be law, we are faced with a situation where we have to do something."

In that spirit, the Broward County Medical Assn. has begun internal discussions about whether to set up a provider service network in partnership with other organizations.

Rather than set up an independent network, which would involve significant financial and human capital, the association would probably form a sub-network of doctors to offer services to a PSN run by another organization, such as the local hospital district, Dr. Palamara said.

A provider service network would give health care professionals more control that they could use to redirect profits into increased reimbursement for Medicaid services, he said.

Medicaid HMOs operating in Broward County currently reap profits averaging about 18.6%, he said. "Instead of taking an 18% profit, we could turn that into reimbursement for doctors."

The Florida Medical Assn. also believes that forming provider service networks could have a positive impact on physicians' ability to serve Medicaid patients, said Francie Plendl, its director of governmental affairs.

For years, Florida physicians have been frustrated with Medicaid's low reimbursement rates and excessive regulation, she said. "If PSNs are formed in Florida, there is a potential that reimbursement rates could go up, because physicians and hospitals would have more control over reimbursement and rendering good patient care."

But Dr. St. Petery is less hopeful. "I don't see provider service networks being very viable, except in a very small number of places."

He predicts that large, for-profit HMOs already operating in Florida are going to gobble up most of the new Medicaid patients. "How is a provider service network going to compete with those giants?"

Georgetown's Alker warned that premiums also might fall short of expectations, given that the state's goal is to save money, and there isn't a lot of fat in the Medicaid program to cut.

The state has not yet announced the premium levels it will pay to HMOs and PSNs, she noted. "Until people see the premium levels, it is impossible to say whether you can raise your reimbursement rates."

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