Florida Could Save Billions in Medicaid Costs NCPA: State Reform Program Lowers Costs, Provides Better Care

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Billions of dollars could be saved were Florida to expand privately administered Medicaid health and drug plans statewide, according to a new study from the National Center for Policy Analysis (NCPA).

Billions of dollars could be saved were Florida to expand privately administered Medicaid health and drug plans statewide, according to a new study from the National Center for Policy Analysis (NCPA).

Florida exemplifies Medicaid’s spending problems, with Medicaid accounting for 29 percent of the state’s expenditures in 2010. At this growth rate, the program would have consumed the state’s entire budget in less than 30 years.

However, in 2005, the Centers for Medicare and Medicaid Services (CMS) approved a Florida reform initiative designed to increase beneficiaries’ access to care and the quality of care at no greater cost than traditional Medicaid. This five-county demonstration project moved 413,000 Medicaid beneficiaries into health plans run by private providers and insurers.

  •     Instead of paying for each separate service hospitals and doctors provide to patients (fee-for-service), Medicaid reimburses the health plans in the five counties for each enrolled beneficiary.
  •     Plans are flexible, and competition has led to expanded services available to enrollees, including adult preventive dental care and over-the-counter drug benefits of $25 per household per month.
  •     Though data on long-term health improvements is not yet available, the performance of health plans in reform counties has improved in more categories than in counties with conventional Medicaid.
  •     The cost for each private plan enrollee receiving Supplemental Security Income (SSI) has fallen from 102 percent to 62 percent of statewide average Medicaid expenditures for SSI recipients.

The program has also had an effect on medical cost inflation. According to CMS data, between 2006 and 2009, per capita Medicaid expenditures in Florida increased 5.2 percent, while the cost per enrollee in the reform counties increased only 1.4 percent. Part of this disparity is due to privately administering drug benefits in reform counties. A Menges Group study estimates that integrating drug and health benefits in a statewide managed care program could save Florida Medicaid $5.1 billion over 10 years.

CMS approved Florida’s request to extend the waiver through June 30, 2014. The state has also requested that the reform be expanded statewide and has received tentative approval from CMS to proceed.

Source: Michael Bond, “Florida’s Market-Based Medicaid Reform Demonstration: Cost and Quality Issues,” National Center for Policy Analysis, October 2013. http://www.ncpa.org/pub/florida-s-market-based-medicaid-reform-demonstration-cost-and-quality-issues

Full Study: Florida’s Market-Based Medicaid Reform Demonstration: Cost and Quality Issues

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Catherine Daniell