Florida Medicaid Reform

FLORIDA MEDICAID REFORM

The Florida legislature took a major step in May to change the nature of the Medicaid program in the state, with an eye to controlling future program growth and introducing greater benefit flexibility for providers and consumers.

With passage of SB 838, the legislature set the state on the path to a new defined contribution managed care model to be pilot tested in two counties after federal approval of a 1115 demonstration waiver. A “defined contribution” plan means a fixed premium paid to the provider organization per plan member, rather than a “fixed benefit” model under which the provider is reimbursed for the delivery of specific services.

SB 838 calls for the Florida Agency for Health Care Administration (AHCA) to create a capitated (fixed payment) managed care system for all Medicaid recipients in fee-for-service or other managed care systems and in the MediPass (the statewide primary care case management system) program. No Medicaid-eligible populations are to excluded, although the bill calls for AHCA to develop special “service delivery alternatives” to meet the specific needs of certain disability groups. ¹

In partnership with the Department of Elderly Affairs, AHCA is also directed by the legislation to create an integrated (acute and long-term care services) fixed-payment delivery system for elderly Medicaid recipients. Medicaid funding for services provided to people age 60 or older will go into the demonstration project in two areas of the state, with voluntary enrollment to be tested in one of the areas. To be excluded from the pilot are persons age 60 and older with developmental disabilities in the community or in institutions, and persons in that age group in AIDS, traumatic brain injury, and spinal cord injury waiver programs.

Other key features of SB 838 include the following:

Directs program implementation to be contingent on federal approval to preserve the upper-payment limit funding mechanism for hospitals, and protection of the disproportionate share program, including allowing for a reasonable growth factor.
Creates three categories of care: comprehensive care, enhanced services, and catastrophic care. Separate risk-adjusted capitation rates would be set for specific population groups, with the rate further adjusted depending on whether the plan selected by the beneficiary offered some or all of the three categories of care (comprehensive, enhanced, and catastrophic).
Authorizes AHCA to develop the pilot demonstrations in Broward and Duval counties; with legislative approval, AHCA may expand the demonstration to other counties in one year.
Allows Medicaid recipients to opt-out of Medicaid-certified plans by using their premium to purchase health care coverage through an employer-sponsored health insurance plan.
Mandates a two-year evaluation of the demonstration program by the Florida Office of Program Policy Analysis and Government Accountability to assess cost savings, consumer choice and access to services, and coordination of care, and to recommend whether it should be expanded statewide.
Requires the Office of Program Policy Analysis and Government Accountability to conduct a study of Medicaid buy-in programs to determine if these programs can be created without expanding the overall Medicaid program budget, or if the Medically Needy program can be changed into a Medicaid buy-in program.

Under the comprehensive care (or basic care coverage) category, the program premium is expected to be sufficient to cover “most services needed by most people,” according to AHCA. The enhanced Services category provides flexible spending accounts for beneficiaries who have complied with healthy practices to purchase additional services or to retain for use in purchasing employer-provided insurance. catastrophic coverage begins at a specified dollar threshold and covers all services up to a maximum amount.

Although the legislation requires the demonstration program to offer mandatory and optional Medicaid services as specified in Florida law, SB 838 is silent on provider flexibility to adjust scope, duration, and intensity of services. This was a key component of the governor’s proposal, adopted in the House version of the bill (HCB 6003), to allow providers flexibility in tailoring benefit packages to beneficiaries. Committee staff anticipated that the waiver application would provide greater detail on this point, giving the legislature an opportunity to authorize or restrict program provisions dealing with scope, duration and intensity of services when lawmakers review the waiver application. SB 838 requires AHCA to seek legislative approval for the waiver applications before submission to CMS and before eventual implementation of the program. The legislature must also approve statewide expansion of the program.

SB 838 does not set out any specific fiscal goals. The lawmakers expressed their intent, however, that the demonstration program should “stabilize” Medicaid expenditures compared to the three years prior to implementation of the demonstration

The Florida legislature acted against a backdrop of a state Medicaid program with about 2.2 million enrollees and almost $14 billion in FY 2004-05 costs. Program expenditure growth has averaged 13 percent per year over the last six years. In FY 2005, Medicaid will represent 24 percent of Florida’s budget.

¹Children with chronic medical conditions, Medicaid-eligible children in foster care, and persons with developmental disabilities

1115 Waivers Page