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UF Study: Medicaid Reform Appears to Save Money

A new evaluation of Florida's Medicaid reform experiment has found that spending on the government health care program in the trial counties of Broward and Duval was lower on a per-patient per-month basis than it was before the reform.

The study also found that the savings in the counties was more than what it was in similar counties that aren't participating in the trial of the Medicaid overhaul.

The study from the University of Florida noted several limitations, including an inability to say whether the lower costs were sustainable over time, and it didn't measure whether the program was cheaper because it was more efficient, or simply delivered less care.

Still, the study shows fairly clearly for the first time that one of the main goals of Florida's controversial Medicaid reform – cuts in spending or at least slower growth in costs - appears to have been achieved in the trial counties.

The state is in the middle of a five year pilot project in changing the way Medicaid works, trying to make it more like private managed care, including making patients take more of a role in their own care. Participants in the five pilot counties are offered a choice of health plans with different benefits, including health maintenance organizations and other types of provider networks. More than 200,000 people were enrolled as of this summer.

The authors of the UF study, Jeffrey Harman and R. Paul Duncan, compared Medicaid spending in Broward and Duval during the first couple years of the pilot with the two years leading up to it. They also compared the change in cost during those two periods to changes between the two periods in certain control counties that haven't changed the way Medicaid works.

UF investigators found particularly big savings for patients being shifted into physician networks, but HMO officials note that that finding appears to be a result of how the comparison was done. Those patients being served in PSNs were compared in large degree to certain non-managed care patient costs, and therefore the savings appear larger than for HMOs, whose reform patients were compared to pre-reform managed care patients, noted Michael Garner, president and CEO of the Florida Association of Health Plans.

“What the study says is that if you take an unmanaged population and move into a managed situation you see a cost savings,” Garner said. “Moving to managed care saves a lot of dollars.”

Researchers have acknowledged shortcomings in the report, noting it didn't look at individual recipients.

“This analysis does not measure changes in expenditures for individual enrollees, pre- and post-reform implementation,” the study said. It acknowledged that the people receiving care in the post reform period could, theoretically, have different medical issues, and some of the difference could be attributable to that. It also noted that HMO costs are based on monthly premiums that aren't necessarily directly related to actual health care costs, because it's not a fee-for-service scenario. And it didn't take into account program and administrative costs associated with actually making the change.

Even with the authors' cautions, the report has still come in for criticism.

The patient advocacy group Florida CHAIN criticized the report for not looking at actual direct spending and how and why it may have gone down, rather than just comparing overall spending pre and post reform.

Among CHAIN'S criticisms is that the period for comparison is misleading because Medicaid spending growth was unusually high in 2004-2005 – the highest ever on record for Florida Medicaid. “By 2005-06 though, spending growth had significantly tapered and has since leveled off,” CHAIN's response said. “But because UF lumped all 24 months together to generate a single 2-year average, that average is significantly skewed by the high-growth year. “

Generally, CHAIN said that the comparison of spending in Medicaid reform counties to the state's traditional Medicaid case management system – known as Medipass – isn't really fair because Medipass doesn't work very well, suggesting that the reform counties should instead be compared to other coverage models.

A story in American Medical News about the study noted that a number of doctors don't like the Medicaid reform project, and quoted some saying its pay for doctors is too low and its authorization processes don't work well.

There has been discussion in the last couple years about when - or whether - to expand the experiment to other counties or take it statewide. The Florida Medical Association opposes expanding the pilot program right now.

1 Responses »

  1. Does the reform include spelling medicaid right in the title or did I miss something???