Feds Laying Out What They Want in Medicaid

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Tallahassee, FL -- September 14, 2011 --

As Florida seeks to continue a controversial Medicaid pilot program, federal officials want changes to improve patient care and increase requirements on HMOs.

The changes could include the state spending millions of dollars to beef up primary-care programs, while 20 hospitals would have to come up with projects to bolster the health of low-income people.

At the same time, federal officials are seeking to ensure that HMOs in the pilot program spend at least 85 percent of the money they receive on patient care.

The changes are outlined in a document that was presented Wednesday to the state's Low Income Pool Council, which helps oversee part of the pilot that funnels $1 billion a year to hospitals and other health providers.

The presentation also came a day after the state Agency for Health Care Administration asked the federal government for a temporary extension as officials try to negotiate details for continuing the pilot program through June 2014. The pilot is scheduled to expire Thursday, after a series of earlier extensions.

Federal officials need to sign off on continuing the pilot, which started in 2006 and has been controversial because it requires most Medicaid beneficiaries in five counties to enroll in HMOs or other types of managed-care plans.

The program, a priority of former Gov. Jeb Bush, was originally scheduled to expire June 30. It includes Medicaid beneficiaries in Broward, Duval, Clay, Baker and Nassau counties.

The federal government included its desired changes in what are known as "special terms and conditions,," which were sent to the state in early August.
Phil Williams, a Florida Medicaid official who has been involved in talks about continuing the pilot, said the federal government's stance on the issues has remained the same since it sent the special terms and conditions.

Perhaps the highest-profile change sought by the federal government is requiring HMOs to spend 85 percent of the money they receive on patient care.

In the document, the federal Centers for Medicare & Medicaid Services wants HMOs to start reporting data this year and then comply with the 85 percent standard ---known in the industry as a medical loss ratio --- in July 2012.

Critics of Medicaid managed care have long called for such a requirement, contending it is the best way to make sure money is used for patient care. But the managed-care industry and Republican legislative leaders have pushed an alternative that would lead to HMOs sharing any profits above 5 percent with the state.

Other changes sought by the federal government would directly affect the Low Income Pool (LIP) program and hospitals that rely on it for infusions of money to serve uninsured and poor patients.

As an example, federal officials want the state to spend $50 million a year in LIP money on new or beefed-up programs to improve the quality of care and health of low-income people. The spending requirement would take effect in July 2012.

Williams suggested that one possible way to meet the requirement would be to expand an already-existing state effort to improve primary care. The state is spending $34 million this year on that effort, which has been a priority of Senate leaders.

Also, the federal government wants to place new requirements on the 20 hospitals that receive the most LIP money. Each of those hospitals would be required to start or "significantly enhance" three programs aimed at improving the care and health of patients.

Such a requirement would hit major safety-net hospitals such as Jackson Memorial in Miami, Shands at Jacksonville and Tampa General Hospital. Federal officials also want to impose financial penalties on hospitals that don't carry out the requirements.

Deanna Schaeffer, a LIP Council member and official with the Halifax Health system in Daytona Beach, said some hospitals have already started such efforts to improve care. She is concerned that federal officials would not allow those efforts to meet the requirements.

The federal government has a large amount of control over the pilot program, because the state is asking that it waive parts of Medicaid laws.

State officials have said for weeks that overall LIP funding is a key sticking point in reaching agreement on continuing the pilot program. The federal government is looking at ending such programs across the country in December 2013.

With the pilot program proposed to continue through June 2014, ending the LIP funding early would cost Florida health providers hundreds of millions of dollars.

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