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HHS Approves Project

Florida’s 2.2 Million on Medicaid are Target of New Experiment with Managed Care Plans

HHS Secretary, CMS Administration heap praise on plan by President's brother

By Tucker Sutherland, editor

Oct. 20, 2005 – It is hard not to be a bit skeptical when two government officials heap unusual praise on the brother of their boss, President George W. Bush, while handing him a guarantee of $1 billion dollars a year for about five years to help his state manage a Medicaid demonstration project. That’s what happened today as Health and Human Services Secretary Mike Leavitt announced approval of the plan by Florida, where the President’s brother, Jeb, is governor. The plan, however, truly is innovative and comes at a time when all states are seeking ideas on how to manage the growing cost of healthcare for the poor and elderly.

Leavitt said the “innovative” Medicaid reform plan will allow Florida Medicaid beneficiaries to choose health care plans that best suit their needs, “for the first time introducing competition and consumer choice to this government-funded health care program.”

“Introducing competition and consumer choice will improve quality of care and empower Florida’s 2.2 million Medicaid beneficiaries,” Secretary Leavitt said. “I commend Governor Bush for his leadership in transforming his state’s program.”

"I believe it will be considered a milestone of national leadership in transforming his state's program," Leavitt told Florida’s Palm Beach Post. "The Florida demonstration will be a valuable part of our national conversation about reforming Medicaid to better serve the people of this country."

In the news release issued by Leavitt’s office, the program was also described as “ground-breaking” and “historic.”

Dr. Mark B. McClellan, administrator of the Centers for Medicare & Medicaid Services, (CMS) the agency which oversees the Medicaid program, also added his accolades. “The Florida demonstration will be very valuable in informing the national dialogue about reforming Medicaid to better serve the people who count on it,” he said.

“Florida is working to make the current Medicaid system more efficient, but more importantly, Florida is working to give people access to care that better reflects their own health needs and preferences. This demonstration provides a framework for improving care and making Medicaid more sustainable without eliminating services or restricting eligibility,” McClellan said.

In requesting this “historic” demonstration program, Florida officials determined that their Medicaid growth rate of 13 percent per annum for the past six years was unsustainable. In 2005, for example, Medicaid spending is expected to consume 25 percent of the state’s budget, or over $15 billion per year. Under the Section 1115 demonstration granted today, Florida will maintain a reasonable rate of program growth while providing enrollees access to improved quality health care services.

When you get past the accolades, the plan is an interesting concept. The basics of the plan is that those in Medicaid will play “a more active role” in deciding how they will receive health care by selecting from a group of state-approved managed care plans that will compete for their business. Beneficiaries will have up to 30 days to choose a health plan. If no plan is chosen, the beneficiary will be automatically enrolled in a plan selected by the state.

Under the Section 1115 demonstration granted today, Florida will calculate an annual amount that it will provide for each enrollee which will be determined by reviewing the enrollee’s “risk” or health status and historic use of health care services.

Beneficiaries will choose a managed care plan with a benefit package that best suits their needs. The demonstration will allow plans to offer “customized” benefit packages, although each plan must cover all mandatory services as outlined in federal law. Plans may also enhance their benefit packages to attract more enrollees.

In addition to having a choice of Medicaid managed care plans, beneficiaries -- for the first time -- can “opt-out” of Medicaid altogether and receive subsidies for their share of the cost to purchase employer-sponsored insurance (ESI).

If a beneficiary chooses employer-sponsored coverage, they will be entitled only to the benefits covered by that plan as well as to any cost-sharing requirements, even if they exceed normal Medicaid limits.

Beneficiaries considering switching to an available employer plan will be able to receive individualized counseling about its potential benefits and risks. Opting-out is voluntary and beneficiaries may chose to rejoin Medicaid within 90 days of opting-out.

Another “ground-breaking feature” of the Florida demonstration, according to HHS, is the establishment of a so-called “enhanced benefit account” (EBA) program. This program will provide direct incentives to Florida demonstration enrollees who participate in state-defined activities that promote healthy behaviors such as weight management, smoking cessation and diabetes management.

Beneficiaries will be allowed to accumulate funds in their EBA and use them for non-covered health-related needs such as over-the-counter medications. Even individuals who leave the Medicaid program can retain use of any funds remaining in their EBA (for health-related uses) for up to three years as long as their incomes remain at or below 200 percent of the federal poverty level.

The demonstration will also establish a fund of $1 billion annually to help the state pay safety-net providers caring for the uninsured.

Florida will begin the phase-in of this “unprecedented demonstration” in two counties, Broward (Ft. Lauderdale) and Duval (Jacksonville), in July 2006. A statewide implementation plan will follow. The demonstration is approved to run through June 30, 2011.

According to the Palm Beach Post, “The next step is for the state legislature to approve the deal worked out between Florida's Agency for Health Care Administration and the federal officials, and Bush on Wednesday asked state lawmakers to call a special session in December to do just that.

“Legislative approval in December would give AHCA about six months to prepare rules for the new Medicaid program, which wants to roll out its first phase July 1 for 210,000 beneficiaries in Broward County and several counties surrounding Jacksonville.

“A spokesman for House Speaker Allan Bense, R-Panama City, said "the speaker is ready," but the spokesman said it might not be easy to set up a session by then.

“Senate President Tom Lee, R-Brandon, said, "The governor should be congratulated for his very hard work on the Medicaid waiver," but Lee did not commit to calling a special session.”

For the complete Palm Beach Post Story – click here.

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