Medicaid is sick, and it's giving Florida a case of budget consumption.
Gobbling up nearly a third of the state's revenues, the medical program for the indigent and disabled is projected to cost Floridians $19 billion this year -- a billion more than last year.
What's worse, patients are unhappy about the level of care they receive, and some providers flat-out refuse to serve them.
"We have 2.7 million people on Medicaid, and they wear it like a stigma around their necks," says state Sen. Joe Negron, R-Stuart.
Lawmakers, health-care professionals and even law-enforcement agencies know there's a problem. But, so far, the only "solutions" seem to involve cutting reimbursement rates or further curtailing service.
"Medicaid paralyzes the budget," said Senate President-designate, Mike Haridopolos, R-Merritt Island. "I intend to put the bulk of my attention toward this."
"This requires more than a nip-and-tuck budget. We need fundamental change," notes Sen. Don Gaetz, chairman of the Health Care Committee.
Gaetz, who formerly worked in the health-care field, knows whereof he speaks. The Niceville Republican notes, for example, that Medicaid's failure to fund primary preventative dental care for children simply leads to bigger costs down the road.
But, kicking the can down the road is exactly what Florida and the federal government have been doing for decades.
Gov. Charlie Crist's budget provides $2.7 billion in additional funding to cover costs associated with increased enrollment and utilization of medical services for low-income families with children, as well as elderly and disabled individuals.
Interested parties, both in and out of government, say the cash-strapped state cannot afford these additional outlays. They want to do more than continue to throw money at a hemorrhaging system.
While Gaetz and Florida Hospital Association president Bruce Rueben agree that there are "no silver bullets," there are some signs that the public and private sectors may, finally, be motivated to work together to patch up Medicaid's battered reputation and save a few bucks along the way.
The state Agency for Health Care Administration projects $715 million in annual savings if the state adopted an HMO model for all Medicaid patients. But, AHCA's plan also calls for an 8 percent reduction in rates.
Rueben says further rate cuts won't fly.
"A 1 percent cut amounts to a loss of $53 million a year," the FHA chief says. "Medicaid is already paying less than our costs."
Florida Medical Association general counsel Jeff Scott concurs.
"Medicaid is the worst payer out there. Doctors would rather see patients for free than deal with all the bureaucratic hassles."
Even more disconcerting, Rueben says plans have been floated to increase the per-patient tax on hospitals from 1.5 percent to 2.5 percent.
Though Republican leaders in both houses of the Legislature have vowed not to increase taxes, and no such bills have yet been introduced, Rueben remains wary.
"These (tax) ideas aren't coming from Democrats, they're coming from Republicans," he said.
Indeed, state economists are examining the impact of levying a 5.5 percent assessment against health maintenance organizations' net revenue as well as increasing an assessment now placed on both inpatient and outpatient revenue.
The HMO assessment would total $410.2 million while the increased assessment on inpatient gross revenue would raise $215 million. The increased assessment for outpatient care would bring in $11.5 million.
The Hospital Association and the FMA are equally unimpressed with talk of giving HMOs more control over Medicaid.
"While Medicaid is in a crisis and we have to finance it differently, this would be a dangerous step and establish a bad precedent," Rueben says. "Some of these companies are here today and gone tomorrow."
FMA's Scott says an HMO takeover is "not a realistic option. Even they know it won't work on a statewide basis."
Under one proposal yet to appear as a bill draft, Scott said HMOs would "hammer physicians into involuntary servitude. If providers do not negotiate in 'good faith,' their reimbursement rates would be cut by 10 percent. It's absolutely unconscionable."
Fact is, HMOs already are heavily entrenched in the Medicaid money machine, with 1 million Medicaid recipients currently enrolled through 18 HMOs.
Associated Industries of Florida says the state's business community is primarily concerned about the state getting "the biggest bang for the buck," says Jose Gonzalez, AIF's vice president for governmental affairs.
While not endorsing any particular plan at this juncture, AIF wants Tallahassee to "have the flexibility to look at different options and to negotiate with different plans," Gonzalez said.
Scott points to some success stories in North Carolina and Oklahoma, which use "medical home" programs to provide follow-ups and coordinated care to indigent patients.
Focusing on primary-care providers, these programs have won physician buy-in through increased reimbursements. Lower costs result from greater investment at the front end, thereby reducing costly emergency room visits.
Sen. Durell Peaden, R-Crestview, has introduced SB 2532, which would direct AHCA to establish a medical home pilot project.
Negron believes that the private sector can play a reforming role in Medicaid.
"Since no one's happy with the system we have, why not redesign it from scratch? We could use the $19 billion the state is spending now to subsidize insurance and let patients make their own decisions," Negron says.
Negron's vision of transforming Medicaid from a government benefit system to an insurance-based, market-driven program would carve the state into regions, where multiple coverage plans would be offered.
"This would relieve the state from having to write millions of checks and verify credentials. It would reduce enforcement issues," he says.
Reform on this scale would also require a federal waiver, which could take years to obtain. So, in the meantime, lawmakers are back to that annual nip-and-tuck procedure, trying to hold the budget line for another year.
ACHA chief Thomas Arnold acknowledges that other savings -- some of them substantial -- can be made in the short term.
"Administrative functions can be streamlined, some staffing can be reduced and some contracts can be renegotiated," he said, estimating that the latter two initiatives could save some $3 million in the first year.
But, far bigger savings could come through tougher enforcement.
Arnold projects that stepped-up prosecution of fraudulent activity could net $58 million from selected counties in the first year. "We see $20 million in Miami-Dade alone," he said.
Yet, this is still just a drop in the bucket.
According to the latest estimates, Florida Medicaid is hemorrhaging as much as $3.2 billion through fraud each year. That's almost 20 percent of the state's Medicaid budget. No business could ever hope to sustain operations with that kind of loss margin.
Florida TaxWatch, as part of its 88-point plan to make government more efficient, recommended this month that the state outsource to private firms the recovery of fraudulent, wasteful or abusive Medicaid claims. TaxWatch estimates initial savings at $50 million.
TaxWatch also proposed increasing penalties for Medicaid overbilling to the tune of $104 million.
Attorney General Bill McCollum reports that cash recoveries through his office's Medicaid Fraud Control Unit hit a record $198.9 million last year. There were 108 convictions that year, notching a steady increase since 2006.
Chief Financial Officer Alex Sink, who, like McCollum, is running for governor, said that since McCollum took office, the number of Medicaid fraud cases opened has dropped from 727 in 2004-05 to 372 in 2008-09.
Florida has the second highest number of Medicaid recipients in the nation, but ranks 39th in convictions per person in its fraud unit, she said.
"This is not a new problem, but nobody is focused on it or paying attention to it,'' Sink said. "Every time I go to South Florida, I hear about some fly-by-night company who's billing the state for a Cadillac wheelchair and they're providing the Ford version and pocketing the difference.''
McCollum says the state could do more with a little cooperation from Washington. He noted, for example, that a 1992 federal rule prohibits states from screening Medicaid claims to look for a pattern of fraud. He has sought an exemption from this rule.
Even with tightening state budgets -- MFCU staffing dropped from 207 employees during the third quarter of 2008 to 165 in the second quarter of 2009-2010 -- the office ranked fourth in the nation in recoveries. For every dollar spent, the fraud unit netted $45.49 in recoveries, said Sandi Copes, communications director for the Attorney General's Office.
"We are exploring ways to make this issue a higher priority for the state," Copes said.
McCollum and Negron on March 9 called for a Fraud Strike Force to coordinate state and local enforcement efforts.
SB 8 would place the strike force with the Department of Financial Services and require the auditor general and the Office of Program Policy Analysis and Government Accountability (OPPAGA) to audit AHCA's Medicaid fraud and abuse system.
Senate President Jeff Atwater, R-North Palm Beach, hailed the legislation, saying, "This comprehensive and aggressive anti-fraud bill will provide every level of government the tools to investigate and prosecute fraud perpetrators to the full extent of the law."
Earlier, and in a similar vein, Sink proposed:
- Creating a Medicaid fraud inspector general to coordinate fraud-fighting activities in different departments
- Instituting visual checks to verify the address and inventory of Medicaid suppliers
- Adopting a Florida grand jury recommendation to ban prescription payments to doctors who have been barred from Medicaid for fraud
- Sending bills to Medicaid recipients so that they can report overbilling
Another bill, SB 752 by Gaetz, would amend current laws to tighten licensing rules and prepayments, while expanding the state's authority to suspend and terminate shady providers.
With a growing sense of urgency, officials say Florida needs to get its act together on enforcement before Washington decides what to do on health care.
AHCA's Arnold points out that there are 3.8 million uninsured Floridians, and that some, if not most, of them could end up on the state's Medicaid rolls.
Bottom line: A big government problem could get even bigger.
