THE CAPITAL, TALLAHASSEE, March 17, 2011 --

A House health committee overwhelmingly approved a plan on Thursday that would shift hundreds of thousands of Medicaid beneficiaries into HMOs and other managed-care plans, as Republican leaders push to rein in the roughly $20 billion program.

A change was made in the bill in how the $1-billion-a-year Low Income Pool – which pays for the care of poor and uninsured patients –would be divvied up among hospitals.
The 12-6 vote by the House Health and Human Services Committee was the first move in what likely will be weeks of debate and negotiations about the future shape of Medicaid.

Before the meeting, committee Chairman Rob Schenck, R-Spring Hill, made several changes to an earlier version of the bill.

Perhaps the largest change revised a formula for divvying up money to hospitals under the Low Income Pool. Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, told the committee that the revision could jeopardize as much as $125 million for facilities such as teaching hospitals and children's hospitals. The revision would make more money available to community hospitals.

But House and Senate leaders agree that the program needs a major overhaul that will rely heavily on managed care.

"There's just no accepting the status quo,'' said Rep. Matt Hudson, a Naples Republican who voted for the bill Thursday and also is the House's chief health-budget writer. "We can't be there anymore.''

But Democrats on the committee opposed the bill, with Rep. Mark Pafford of West Palm Beach questioning whether lawmakers were focusing enough on the quality of care that Medicaid beneficiaries will receive.

“The thing that is driving all of this is money,'' Pafford said.

The committee rejected additional changes that Pafford proposed during the meeting. For example, the Democrat proposed pushing back a deadline for implementing a managed-care system for seniors who need long-term care.

The bill calls for that move to be made by Oct. 1, 2013, but Pafford sought to delay it until October 2014. Schenck, however, said it is important to move forward earlier because of the large costs in the long-term care program and because managed care can provide services that will help keep seniors out of nursing homes.

With backing from top House leaders, the bill is almost certain to pass the full House in the coming weeks. But that is only part of the equation for overhauling Medicaid, with House and Senate leaders needing to reach agreement on a final plan --- and, ultimately, needing to seek federal approval.

So far, the House and Senate have proposed Medicaid-reform bills that include substantial differences. Among other things, they disagree about how to break the state into managed-care regions and how to hold HMOs and other types of plans accountable for serving beneficiaries.

But Senate Health and Human Services Appropriations Chairman Joe Negron, R-Stuart, said Wednesday that House and Senate officials have been holding informal discussions about bridging their differences.

And bottom line, Republican leaders agree they need to change the Medicaid system to limit its steadily increasing costs.

"There are differences, but I think the overall goal is the same --- to bring budget predictability to Medicaid,'' said Negron, the chief architect of a Senate proposal released last month but yet to face a committee vote.

Here are some of the key questions that the House and Senate will have to answer:

--- Who should be included in managed care?
Both the House and Senate would enroll the vast bulk of Medicaid beneficiaries, such as children and women, and seniors who need long-term care. But the chambers disagree about whether thousands of people with developmental disabilities, such as autism and mental retardation, should be required to enroll in managed care. The House wants to include that group, while the Senate would not.

--- How should the state be carved up for a managed-care system?
Under the House and Senate proposals, managed-care companies would compete for Medicaid contracts in different regions of the state.

But the House wants to carve the state into seven regions, while the Senate favors 19 smaller regions. The answer to this question is important, at least in part, because regions have to include enough Medicaid beneficiaries to make them financially viable for managed-care plans.

--- How would managed care be phased in?
The Senate wants to move much faster than the House, proposing that the statewide managed-care system would be in place for most beneficiaries by Dec. 31, 2012. For long-term care, the deadline would be March 31, 2013.

The House, meanwhile, would start with long-term care being fully implemented by Oct. 1, 2013. For the broader Medicaid population, the target date would be Oct. 1, 2014. For people with developmental disabilities, it would be Oct. 1, 2016.

--- How would managed-care plans be held accountable?
The House and Senate both would require managed-care plans to sign five-year contracts but would take different approaches to ensuring that the system provides quality care. One of the issues, for example, centers on making sure HMOs and other plans spend enough money on patient care.

The Senate would require plans to spend 90 percent of the money they receive on care --- a concept known in the insurance industry as a "medical loss ratio.'' The House, meanwhile, would use a profit-sharing formula that would require plans to send money to the state if they make more than 5 percent in profits.

--- What happens with the federal government?
Clouding the whole Medicaid issue is that Florida needs approval from the federal government to make major changes. The Senate proposal takes a confrontational approach to the issue, threatening to forgo billions of dollars in federal funds if Washington doesn't go along with the state's wishes. Such a move would allow Florida to craft its own Medicaid program without federal restrictions.

But the House proposal makes no such threats, with House Speaker Dean Cannon, R-Winter Park, expressing doubts about the wisdom of such a strategy.