Katherine Rogers

As Florida’s Medicaid demonstration enters its third year, legislators and administrators are weighing its advantages and disadvantages, adjusting it, and moving toward expansion.

Launched in Duval and Broward counties in 2006, the Section 1115 demonstration allows the state to require enrollees in the pilot counties to enroll in some form of managed care. The most substantial change granted through the waiver is greater flexibility for plans in the pilot counties. Plans can modify coverage of certain categories of benefits or set maximum benefit levels for some beneficiaries.

Enrollees may "opt out" and use the value of their benefit package to pay for private insurance. Beneficiaries also may receive “enhanced benefit” rewards for engaging in healthy behaviors, such as well-child visits and weight management programs. The credits, worth up to $125 per year, can be redeemed for over-the-counter medications or other health products.  In the fall of 2007, the program was expanded to three counties bordering Duval County.  The pilot may soon be expanded to 20 more counties, and the program could eventually be implemented statewide.

Proponents say the pilot is driving improvements in quality and efficiency, arguing that by allowing Medicaid enrollees to choose between plans, competition among the plans will increase and drive better benefit packages. 

Critics counter that the program essentially privatizes Medicaid, and instead of shielding vulnerable populations from the risks they may face in ill health, the program has engendered mass confusion, limited important benefits, and required cost-sharing for the state's poorest health-care consumers. Greg Mellowe, Policy Director for advocacy group Florida CHAIN, reports that the pilot has produced "persistent confusion among beneficiaries, increased administrative burden for providers and a resulting upswing in delays and denials of medically necessary services."

What the First Two Years Reveals
An October 2008 evaluation by the James Madison Institute highlighted improvements in access to services and benefit packages. “After evaluating the evidence obtained thus far, we conclude that Florida’s pilot project not only ought to be continued in the places where it is already underway, but also that the reforms instituted under this pilot project ought to be extended to the remainder of the state,” researchers wrote.

But a multi-year evaluation from Georgetown University revealed some pitfalls. Researchers noted that one goal was to improve access to specialists, but provider participation has appeared to decline, as some physicians have complained that they are frustrated with the program’s growing complexity.

On the services side, Georgetown results (from the first year of the program) found that beneficiaries didn't know which plans would cover their medications or their doctor, and were unaware of the enhanced benefit credits. Only a tenth of the enhanced benefits credits earned to date have been redeemed, resulting in an average credits earning of only $3, according to advocacy group Florida CHAIN.   

The Georgetown evaluation noted that slowing spending may come at a cost.  "Achieving savings without reduced access to care by relying on the dynamics of market competition might be a questionable assumption when Medicaid already spends much less than private insurance on a per-person basis,” researchers reported.  But this early in the program, evaluation data on spending and service provision may not provide a perfectly clear picture.

State Fine-tunes Program and Cites Improvements
Critics contend that the program isn't saving Florida any money. But James McFaddin, of the Agency for Healthcare Administration (AHCA), says that, as in all 1115 waiver programs, the pilot is required to be cost-neutral. "Once the program is the status quo statewide, then we will see cost savings," he says.

The state has initiated a number of efforts to combat early problems. The agency's second annual report  notes that the "Choice Counseling" program, which helps beneficiaries choose the plan that best addresses their health needs, has been expanded. It now includes field counselors, who visit beneficiaries at home and partner with community members; almost a third of new enrollments are completed by field counselors. The program will also launch a navigator program that will help beneficiaries compare plans' coverage of their medications.

The AHCA reports that the number of enrollees who select their own plans is far higher in pilot counties than in non-reform ones (over 80 percent in reform counties). The number of participating plans has increased, and some plans are now covering more services (e.g., adult dental care and over-the-counter drug benefits).  An evaluation by the Office of Program Policy Analysis and Government Accountability found that "although Medicaid Reform plans have taken some advantage of the flexibility to customize benefits, the services they offer differ minimally from those prescribed under the Medicaid state plan."  The state has initiated a process to offer the first specialty HMO, which will serve people with HIV/AIDS in Broward County.

Redemption of enhanced benefits also is "on an upward trend," said McFaddin. "We're building relationships with the pharmacies so they are making sure that beneficiaries know they have the benefits." 

Critics of the program oppose expansion, citing the need for increased staff at AHCA to administer the program, which would be difficult when the agency is struggling to meet Governor Charlie Crist's request that all state agencies cut costs by 10 percent in these tough financial times. 

The program "is a pilot and the point is to learn as you go along," said McFaddin.  "The agency hasn't made a decision [about expansion]; the Governor's office hasn't made a decision"—which he notes is ultimately up to the Legislature. Either way, the state seems to have learned a lot in the program's first two years. 

(In 2006, the Jesse Ball DuPont Fund commissioned a series of papers and webcasts on the Florida waiver. All the results may be found at http://www.dupontfund.org/ and www.hpi.georgetown.edu/floridamedicaid.)