Florida’s Medicaid reform pilot is saving money, UF study finds

Dr. Jeffrey Harman
Dr. Jeffrey Harman
By Jill Pease

Health care plans in the Florida Medicaid Reform Pilot project have done a better job of controlling costs than Florida’s traditional Medicaid program, according to a new University of Florida study. An initial estimation suggests the reform pilot reduced costs by about 18 percent, had expenditures increased at the same rate as experienced in the non-reform counties.

The Medicaid reform project has lowered expenditures in participating counties by about $200 per member per month for Medicaid enrollees who qualify under the Supplemental Social Security Income program. For enrollees who receive Medicaid through Temporary Assistance for Needy Families, expenditures were lowered by about $30 per-member per-month.

The study findings were recently published online ahead of print in the journal Health Services Research.

Medicaid, the public health insurance program for people with low income, is one of the largest chunks of U.S. states’ budgets, so most states are looking for ways to trim their Medicaid costs — especially given the expansion of Medicaid under the Affordable Care Act, said lead investigator Jeffrey Harman, Ph.D., an associate professor and the Louis C. and Jane Gapenski term professor of health services administration at the UF College of Public Health and Health Professions’ department of health services research, management and policy.

“Many other states are considering reforms to their Medicaid programs that are similar to Florida’s,” he said.

Half of U.S. states are expanding Medicaid eligibility through the Affordable Care Act. A Jan. 22 U.S. Department of Health and Human Services report showed that 6.3 million Americans have enrolled in Medicaid or the Children’s Health Insurance Program since the Oct. 1 launch of the health care law.

The Florida Medicaid Reform Pilot was launched in 2006 in Broward and Duval counties and later expanded to Baker, Clay and Nassau counties in 2007. In 2011, the Florida Legislature voted to expand the Medicaid Reform Pilot through the Statewide Medicaid Managed Care program. Implementation begins May 1. About 2.9 million Florida residents are expected to enroll.

About 300,000 residents currently receive care under the Medicaid reform project. The reform is modeled on private-sector managed care plans and is intended to foster competition among providers that will result in savings without compromising the quality of care. Medicaid enrollees in reform counties have the option of selecting an HMO or a provider service network to manage their care.

The UF study team, which included Allyson Hall, Ph.D., and R. Paul Duncan, Ph.D., both faculty members in the department of health services research, management and policy, and Christy Harris Lemak, Ph.D., of the University of Michigan, compared four years of Medicaid reform pilot cost data for Broward and Duval counties with Medicaid costs in Hillsborough and Orange, two Florida counties that are similar in size and demographics but were not part of the reform.

UF researchers found that while both the HMO and provider service network plans in the reform resulted in lower expenditures, the provider service networks saved more money per member per month — about $7.

“We found that the provider service networks were reducing expenditures to a greater extent than the HMOs,” Harman said. “It wasn’t a huge difference, but it was a difference that would result in real savings to the Medicaid program.”

A previous UF study found that Medicaid reform enrollees in the provider service networks were slightly more satisfied with their care than enrollees in HMO plans.

A provider service network is operated by a health care provider or group of affiliated health care providers, typically a safety-net hospital or a large physician group practice that predominantly serves Medicaid patients. The network is responsible for a defined patient population and held accountable for cost and quality performance.

Many states are moving toward an accountable care organization, or ACO, model for their Medicaid programs, which is similar in structure to the provider service networks used in Florida’s Medicaid reform, Harman said.

“Our study shows that there is real promise in this organizational structure as a way to deliver care to the Medicaid population,” he said.

Harman noted that while significant cost savings were seen in this study, the program was not yet saving money when he conducted a similar study two years into Florida’s Medicaid reform project.

“It may take a while to reap the health benefits of managing patients and providing better access to primary care services that would result in reduced use of inpatient care or emergency room services,” he said.

Future studies should examine use of Medicaid services, Harman said.

“We need to start looking at what services Medicaid enrollees are using and how it is that these health care plans are bending this cost curve,” he said. “Is it because patients are getting better access to primary care, or are they more likely to be getting immunizations or receiving well-child visits, those sort of things. We need to understand how health care plans are achieving the savings. Right now we just know that they are, but it’s all speculation as to how.”

The UF study was funded by a contract with Florida’s Agency for Health Care Administration.

The University of Florida is one of the state’s primary provider service network organizations through First Coast Advantage, a UF Health Jacksonville subsidiary serving a nine-county region that includes Duval, one of the Medicaid reform counties. First Coast Advantage has emphasized improving outcomes through offerings such as a transitional care program to assist enrollees as they go from hospital to home or from one physician to another, and a targeted pharmacy program to ensure that members are taking the appropriate medications and are not receiving multiple prescriptions from unrelated health care providers.