Medicaid Changes on the Horizon

The election of Rick Scott as the new Govorner for Florida will usher in a new era of changes for health care. It is expected when lawmakers return to Tallahassee on November 16th for the re-organization session that they will call a special session to override some vetos and among other things take up a memorial that will detail principles for Medicaid Reform.

The reform of Medicaid is needed, but the current reform plans have fallen short in deliverying on the promise of managing care. It is generally well known that the managed care plans focus most of their attention on managing inpatient care costs and the pharmacy costs, these are the two largest drivers behind costs so rightfully they garner the greatest attention.

Last year Sarah Hunter was found deceased in her HUD apartment in Fernandina Beach, she was deceased for almost ten days. The records show that over seven abuse reports were filed with the Department of Children and Families regarding self neglect and her failure to care for herself. Ms. Hunter had over 67 admissions to the hospital setting during the two years she lived in her apartment.

You see Sarah Hunter lived at our facility in Hilliard ( Dayspring Village) for two years prior to being relocated to her own apartment with her roommate. Sarah was stable and was sober when she left Dayspring Village. She no longer needed the hospital and was doing exceptional in all areas. Sarah Hunter had a disgnosis of bi-polar and a long history of substance abuse, she could be complex to manage and often would make poor decisions.

A review of the Medicaid costs for Sarah Hunter while she lived at Dayspring Village revealed that her costs were a fraction of what they became when she was relocated to her apartment in Fernandina Beach. What was amazing her Medicaid Reform plan completely missed the issues even though her hospital care was going through the roof while she had the apartment.

The need for changes to the Medicaid Reform plans is apparent and the Sarah Hunter cases surfaces real questions about how managed care plans deal with people who have serious mental illnesses and complex medical needs.

The new proposed plan that lawmakers are expected to take up will roll most of the institutional care into managed care plans. While on the surface the state policy makers hope this will create greater predictability and help manage costs, we need to be careful. You see what happens is the plans create what is called encounter data, this data reflects the service utiliuzation histort associated with the people they serve.

Just this month the Sunshine Health Plan which bought the Provider Service Network (PSN) in Nassau County called Access Solutions has decided to call it quits after less than a year. They plan to discontinue operations on December 31st. A new managed care company called First Coast Advantage is expected to be approved to enter Nassau and Baker Counties on January 1, 2011. First Coast Advantage is a PSN that is owned and operated by Shands Hospital. At the present time they can operate as a fee for service system of care but that will all end once the new legislation is adopted and PSNs and HMOs must all compete on a captiated basis.

It is likely that the PSN once they have picked up the 8000 Medicaid lives in Nassau and another 3000 in Baker will likely look for a takeover partner to take on the larger risk pool, just like Access Solutions did with Sunshine Health Plans.

With the added burden of caring for those in need of institutional care, the risk for many managed care companies will increase dramatically as they struggle with how to manage the costs of these deep end systems of care.

The potential innovvation associated with the shift to managed care is exciting as it offers a real chance for innovative providers to shop proposals to the managed care companies for downward substitution strategies that will help reduce costs associated with institutional care.

For many of the mentally ill, they already find themselves in the nursing homes, unlicensed ALFs,county jails and homeless centers because there is no incentives in how state funding works for licensed care facilities to accept those withy complex needs.

We will wait with great expectation for the changes we see on the horizon to open the doors to greater competition and choice.