Feds allow Florida to limit Medicaid costs, benefits

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Feds allow Florida to limit Medicaid costs, benefits Use of managed care to increase - Pear, New York TimesThursday, October 20, 2005 Washington -- The Bush administration on Wednesday approved a sweepingMedicaid plan for Florida that limits spending for many of the 2.2million beneficiaries and gives private health plans new freedom tolimit benefits. The Florida program, likely to be a model for many other states, shiftsfrom Medicaid's traditional "defined benefit" plan to a "definedcontribution" plan, under which the state sets a ceiling on spending foreach Medicaid recipient. Children under the age of 21 and pregnant womenwill be exempt from the spending limits. Florida's plan says "the state will set aside a specific amount of moneyfor each person enrolled in Medicaid," based on the person's medicalcondition and historic use of health care. Leavitt, the secretary of health and human services, approvedthe Florida proposal just 16 days after it was formally submitted tohim, with strong support from Gov. Jeb Bush. After meeting in Washington with the governor Wednesday afternoon,Leavitt said: "Today will be remembered as a day of transformation forthe Florida Medicaid program. Florida's framework will be helpful toother states." Joan Alker, a senior researcher at the Health Policy Institute oftown University, said: "Florida's proposal is one of the mostfar-reaching and radical proposals we've seen to restructure Medicaid.The federal government and the states now decide which benefits peopleget. Under the Florida plan, many of those decisions will be made byprivate health plans, out of public view." Vernon , a former Medicaid director in Michigan who is now aconsultant to many states, said: "Florida's program is groundbreaking.Every other state will be watching Florida's experience." The Florida plan, to be put into effect over five years, willsignificantly increase the use of managed care. Questions and answersprepared by federal officials say that a principal aim of the Floridaprogram is "to bring predictability to Medicaid spending and to reduceMedicaid's rate of growth." President Bush has proposed similar changes at the federal level forseveral years, but Congress did not accept his ideas. In Congress,Democrats and some moderate Republicans resisted the president'sproposals, on the ground that they would have allowed states to cut backcoverage for people who were very poor and very sick. In his actionWednesday, Leavitt waived many provisions of federal law, allowingFlorida to make the changes as part of a demonstration project. Under the waiver, Florida will establish "a maximum per-year benefitlimit" for each recipient and change its role in fundamental ways. Thestate will be largely a purchaser, rather than a manager, of health careservices. Alan Levine, secretary of the Florida Agency for Health CareAdministration, estimated that no more than 5 percent of Medicaidrecipients would hit the annual limit. At that point, he said, "the planwill still be responsible for providing services to the consumer, butthe state's reimbursement would be limited to that amount." Asked if the beneficiary would be personally responsible for payingcosts beyond the limit, Levine said: "That can happen today. There arearbitrary limits and caps embedded in the state Medicaid program --limits on home health services, doctors' visits, prescription drugs." For each Medicaid beneficiary, Florida will pay a monthly premium to aprivate health plan. Insurance plans will be allowed to limit "theamount, duration and scope" of health care services in ways notpermitted by current law. Arnold, the Florida Medicaid director, said he believed thatinsurers would tailor their benefits to meet the needs of differentgroups of Medicaid recipients, including people with AIDS, and childrenwith chronic illnesses. About half of Florida's Medicaid recipients are children, but theyaccount for less than 20 percent of costs. The Florida program includes these features approved Wednesday by thefederal government: -- If a Medicaid recipient does not choose a private health plan, theperson will be automatically enrolled in one selected by the state. -- Medicaid recipients can "opt out" of Medicaid altogether and receivesubsidies to help pay the employee's share of the premium foremployer-sponsored health insurance. Such beneficiaries will haveco-payments and deductibles like other employees in the same healthplan, even if the charges exceed normal Medicaid limits. -- The state will deposit money into individual accounts for Medicaidrecipients who enroll in programs to lose weight, stop smoking and livehealthier lives. -- Florida and the federal government will establish a pool of moneyproviding up to $1 billion a year to assist hospitals and otherhealth-care providers who treat large numbers of uninsured people. Nationwide, Medicaid -- called Medi-Cal in California -- provides healthinsurance to more than 50 million low-income people. The program isfinanced jointly by the federal government and the states, with no limiton per capita spending or on overall spending. Page A - 8 URL:http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/10/20/MNGREFB6481.DTL ©2005 San Francisco Chronicle