Medicaid Reform plans pulling out because of rate cut
By Carol Gentry and Christine Jordan Sexton 8/28/2008 © Florida Health News
TALLAHASSEE – Today, as state officials considered how to cope with a massive HMO pull-out from Medicaid Reform counties on Dec. 1, they also had to consider the possibility that more plans might resign by Friday’s deadline.
They hoped other plans might step into the breach. Doc Kokol, a spokesman for the Agency for Health Care Administration, said AHCA has received informal communications from plans that have not participated in the Reform project saying they might be willing to give it a try. He said he could not name names.
AHCA’s Medicaid officials are “confident” that they will have the capacity to care for the more than 100,000 patients affected by the pending walkout of four plans that cover 60 percent of the patients in Broward, Duval and three other counties, he said.
But two of the companies that are leaving told Florida Health News they can’t afford to remain in the privatization pilot project because of a pending Medicaid rate cut. While the payment decrease will take effect statewide, they said, plans feel it more in Reform counties, where the state withholds an extra 2 percent for enhanced benefits for members.
“This is all about the rates,” said Michael Garner, president and chief executive officer of the Florida Association of Health Plans. “It’s a fundamental consequence of inadequate rates.”
Medicaid HMOs have until Friday, Aug. 29, to notify the state whether they will agree to the terms in the new contract with Medicaid, which covers low-income children and their mothers, the elderly and disabled.
UnitedHealthcare of Florida, AMERIGROUP Florida and WellCare Health Plans, which operates HealthEase and Staywell Medicaid HMOs in Florida, have already notified the state that they will either stop participating in the Medicaid Reform project altogether or pare back their participation. In addition, WellCare said it would stop participating in the traditional Medicaid program in St Lucie County.
Garner said the new Medicaid HMO rates that go into effect Sept. 1 are about 5 percent lower than current ones, which are 8 percent lower than state payments for care rendered outside an HMO setting. That means belt-tightening even outside the Reform counties.
State Sen. Nan Rich fears that further budget cuts will be necessary next year, pushing still more providers out of Medicaid. “If we continue down the path of reducing reimbursement rates, you’ll have less choice in Medicaid, not more choice,” Rich, a Democrat from Sunrise, said in a phone call from the convention in Denver. “This is egregious."
While the letters from the resigning plans didn't refer to the reason, Amerigroup spokesman Kent Jenkins said Wednesday it was the rate cut, brought on by the continuing economic slowdown that has slashed tax revenues. "We understand Florida has budget issues," Jenkins said. "We want to work with them. But the hard fact is, it will lower our revenues at a time when health-care costs are going up across the board."
United spokesman Steve Matthews echoed that on Thursday. WellCare did not respond to requests for comment.
The pullout took some patient-advocacy groups by surprise, including Florida CHAIN, which has long argued that consumers would be hurt by Medicaid Reform.
"It would appear that the stockholders weren’t getting a big enough return on their investment by participating in Reform," said Laura Goodhue, executive director. "Medicaid consumers, evaluators and advocates have been saying all along that the program isn’t living up to its promise, and now it appears that the private market is agreeing."
WellCare's letter to AHCA said it would like to continue coverage for one group in Broward County -- those on Social Security disability support, whose monthly premium payments from the state are far higher than those for mothers and children. But if the Agency for Health Care Administration won't allow WellCare to keep the disabled without the others, Diaz wrote, "the Companies will have no choice but to withdraw from providing services for this population."
Under their contract with the state, the companies had to give AHCA 90 days' written notice of the pullout; affected enrollees must be given 60 days' notice. AHCA spokesman Fernando Senra said the agency will provide a list of the remaining Medicaid Reform participants on Thursday.
"We are working with the plans across Florida to ensure a quality Medicaid system for our beneficiaries, and we will work to make sure beneficiaries continue to get access to quality health care and have a meaningful choice of plans," Senra said.
The Reform plan, a pet project of former Gov. Jeb Bush, requires that most non-institutionalized Medicaid recipients be enrolled in a private plan that takes financial risk for providing their care -- either an HMO or a hospital-and-doctor network. Currently, the Reform counties are Broward, Duval, Baker, Clay and Nassau.
AHCA launched the project in Broward and Duval in September 2006, and added the rural counties in September 2007. The premise is to improve health services by giving managed-care plans flexibility to meet patients' specific needs and to promote competition among the plans.
--Carol Gentry, Editor of Florida Health News, can be reached at Carol.Gentry@FloridaHealthNews.org or 727-410-3266. Tallahassee Correspondent Christine Jordan Sexton is at ChristineSextonwork@hotmail.com.
