As budget picture worsens, Florida seeks savings on Medicaid
Last week, lawmakers received grim news that Medicaid could cost the state more than expected in the upcoming year — numbers that provided the backdrop for continuing discussions about how to overhaul the program.
Legislative economist Amy Baker said Florida’s share of the state-federal program could cost some $2.4 billion more in the next budget year than it did last year, an increase of more than $300 million over earlier forecasts.
In addition to increasing health care costs, the program that provides health care to the poor and disabled faces other growing burdens. Demand for its services has risen, fueled by high unemployment, and federal funding for the program is set to decrease.
Last year, the state spent more than $3.5 billion on the $20 billion program, and the federal government covered the rest. Next year, it might be expected to contribute closer to $6 billion, out of a total of nearly $22 billion.
“Medicaid’s killing all of our state budgets,” Gov.-elect Rick Scott told a conservative blog during a Republican Party of Florida meeting this weekend.
“The changes in this country are going to happen at the governor level,” he added. “We’re the ones dealing with the big issues.” For that reason, he said he would press the federal government to allow the state more flexibility to find savings.
“Let us figure it out, because we can take care of the patients at a better price than the federal government with all their rules can,” he said.
State Sen. Joe Negron, R-Palm City, said during a Health and Human Services Appropriations Subcommittee meeting on Tuesday that he was looking for ways the state could save money on Medicaid — even if lawmakers are constrained by federal guidelines.
Several businesspeople testified before the committee, saying their struggles to provide health insurance for their employees mirror those of the state: The cost of care is rising, but the recession has put a damper on revenue.
Negron wondered aloud whether some Medicaid recipients were receiving services that are not available to people on private insurance plans: Why should private-sector employees see their tax dollars used to subsidize care their own insurance doesn’t cover?
Negron outlined a list of eight principles (.pdf) that would guide the reform effort. One of them states, “Medicaid health care benefits will be roughly comparable to the health insurance benefits received by Floridians who are paying the taxes that fund Medicaid.” (You can read the full list of principles below.)
Under Negron’s plan, the Agency for Health Care Administration will enter contracts with private managed-care providers (such as HMOs or similar organizations run by doctors). The contracts will stipulate “guaranteed cost savings,” thus increasing the program’s “fiscal predictability.” Negron also said he would be looking to find a way to carve out increased payments for doctors, which would make them more willing to treat Medicaid patients.
During the regular session earlier this year, the House passed a bill aimed at replacing the “fee for service” system that currently guides much of the program with a managed-care system.
Speaking to reporters after a hearing in November, Senate committee member Don Gaetz, R-Niceville, said that if providers are charged with keeping costs down, they’ll focus on preventative medicine and keeping patients healthy (which can save money in the long run), rather than simply billing the state whenever they provide treatment.
At the time, some critics warned during testimony that savings could also come from managed-care groups skimping on coverage, noting that Medicaid HMOs have denied or limited treatments like speech therapy for children (.pdf) and complicated prospective mothers’ access to pre-natal care (.pdf).
Negron said last week that anyone worried about cuts in services should come prepared to suggest other ways to adress the budget shortfall. At this point, those cuts remain hypothetical, as the committee is still hammering out its plan and waiting to find out what changes the federal government will allow.
Here are Negron’s guiding principles for reform:
1. Medicaid Reform has two goals: improved care and fiscal predictability, in that order.
2. Every Floridian receiving her or his health care through Medicaid will have a primary care physician. Delivery of and payment for health care in Medicaid will be focused on value and outcomes, not simply reimbursement for procedures.
3. In long-term care, home and community based options will be presented contemporaneously with nursing home alternative.
4. The AHCA Medicaid unit will be transformed from a check writing and fraud chasing agency into a contract compliance and monitoring operation.
5. To the extent that we deploy ACO’s, PSN’s, HMO’s and other managed care organizations, we will insist on: guaranteed savings with performance bonds, strict prompt payment requirements, liquidated damages from posted cash reserves for contract breaches and patient abandonment, as well as periodic opportunities for Medicaid recipients to change plans. We will assume that our friends and neighbors enrolled in Medicaid can make informed judgments in their own best interests without a retinue of intermediaries substituting their collective preferences for individual choice.
6. The precise amount of money spent on Medicaid each fiscal year will represent a fixed appropriation in a total sum determined by the Legislature.
7. Medicaid health care benefits will be roughly comparable to the health insurance benefits received by Floridians who are paying the taxes that fund Medicaid.
8. Physicians that join us in taking care of our fellow citizens receiving Medicaid will benefit from increased compensation and enhanced legal protections.