Bill proposes Shift in Elder Care

By Stephen Nohlgren and Alisa Ulferts, the St Petersburg Times

April 16, 2004

TALLAHASSEE ( Florida ) - All Medicaid services for the frail elderly - from nursing homes, to adult day care to at-home meals - would be managed by HMOs under a bill winding its way through the Florida Legislature with the governor's backing.  

Under a House bill that passed the health budget committee this week, Florida would pay a fixed rate to an HMO or other managed care organization, which would decide where to send clients and what services to provide.  

Elderly clients would be limited to what the HMO offers.  

Gov. Jeb Bush embraces the concept, if not all the details, as a way to rein in rapidly growing nursing homes costs, which exceed $2-billion a year, a Bush spokeswoman said.  

It would be a dramatic shift in how Florida provides long-term care services to the elderly, taking decisions now made by lawmakers and government officials and turning them over to private insurance companies or other managed care organizations.  

The House bill calls for pilot projects to begin next year around the state, including parts of the Tampa Bay area. In the Senate, a powerful committee chairman wants the program to begin as soon as possible across the entire state.  

But nursing home representatives and advocates warn that quality of care could be sacrificed.  

"In the real world the managed care company is going to go with the lowest prices," said Ed Towey, spokesman for the Florida Health Care Association, a nursing home trade group. "That many or may not bring the best quality. Likely it won't, because it can't."  

The House sponsor disagreed. "There's definitely an incentive in the managed care system to give people quality care," said Rep. Sandra Murman, R-Tampa. "It's a one-stop shopping center concept. I think elders are getting short-changed by not having their care managed."  

Medicaid, the state-federal health care program for the poor, pays nursing homes directly. Two-thirds of nursing home patients rely on Medicaid, including middle-class people who exhaust their savings. A handful of other Medicaid programs pay for bathing, meals, chores and other services that keep other frail people in their homes.  

Under managed care, nursing homes, hospitals and programs such as Meals on Wheels that serve Medicaid clients would have to contract with the HMOs.  

People who needed nursing homes and other services would have to pick from the HMO's provider list, unless the HMO agreed to pay for those services outside its network.  

Supporters say the new approach would stabilize soaring Medicaid costs by shifting financial risk to the HMOs. An HMO that does a good job would keep people in their homes, or in assisted living, and make money. If an HMO skimped on at-home care, the client might land in a hospital or nursing home, and the HMO would have to swallow those bills.  

In Arizona , the number of Medicaid elderly in nursing homes dropped from 95 per cent to 45 per cent after a similar managed care program was approved there, said Mike Radu, a vice president of Evercare. The company, a subsidiary of United Health Group, specializes in home-based elder care and has lobbied Bush and the Legislature for the shift to managed care.  

Current Medicaid programs for at-home care are a melange of fragmented funding sources and eligibility requirements. Radu said companies like his could respond faster and more efficiently. To foster competition, the House bill foresees that two to three managed care organizations would operate in each region.  

Elder Affairs Secretary Terry White noted that his budget for traditional at-home programs has increased 56 per cent over the last six years with only a 10 per cent increase in clients, which suggests that traditional programs are not operating as efficiently as they might.  

"I'm not suggesting we ration care," he said. "But we need to be able to better predict that we are allocating funds to the clients who are most in need."  

Discussions have centered around the I-4 corridor as the first pilot region, including Hillsborough County and possibly Pinellas or Pasco County . But Sen. Durell Peaden, R-Crestview, who chairs the Senate health budget committee, said he is writing language in the state budget that would take the program statewide if the federal government approves it.  

"It's not privatizing Medicaid," Peaden said. "It's providing a continuum of care for elders."  

Still, critics of the legislation worry about how fast the managed care push is developing.  

Medicaid spending in Florida will approach $14-billion next year - about one quarter of the state budget. Bush has already announced his intention to make Florida a pilot project for ending Medicaid as an entitlement program, capping spending at a fixed amount that is easier to predict.  

Now comes Murman's bill and mandatory managed care.  

AARP lobbyist Lyn Bodiford said the proposed legislation does not do enough to prevent HMOs from signing up with "the bottom rung of the nursing homes." AARP does not oppose the notion of managed, long-term care, "but until we know that there are quality standards these HMOs are going to have respect, we are concerned."  

The House bill would require managed care organizations to include "Gold Seal" nursing homes in their network - such as Bon Secours Maria Manor and Menorah Manor in St. Petersburg and John Knox Village Medical Center in Tampa . But Florida has only 10 of those.  

Rich Morrison, who heads a long-term care study commission created two years ago by the Legislature, said Florida should let HMOs show they can operate more efficiently than traditional at-home programs before the state turns Medicaid long-term care over to them.  

The separate Medicare program for the elderly has HMOs, he noted, but beneficiaries can stay in the traditional fee-for-service program if they want, picking their own doctors and hospitals. When Medicare tried to save money by cutting HMO reimbursement, many companies left the market. They still do not save the government any money.  

In negotiating with Medicaid HMOs, the state would have even less leverage, said Morrison, because Medicaid clients would have no alternative.  

"Will the managed care companies still be there once we rachet down the availability of dollars? That's my biggest concern," Morrison said. "Once money runs out will managed care be there? Or will you have destroyed the community infrastructure you need over the long run?"