Blue Cross plans form Medicaid HMO for FL
12:49 pm
Fri January 6, 2012

Blue Cross plans form Medicaid HMO for FL

Florida’s huge and growing Medicaid managed-care market is gaining a new, formidable player: Florida True Health Inc.

Blue Cross and Blue Shield of Florida announced late Thursday that it is forming the joint venture with an experienced Medicaid managed-care organization based in Philadelphia, AmeriHealth Mercy Family of Companies.

BCBS-FL spokesman John Herbkersman said the application to state insurance officials will go in shortly, and the business is expected to open in mid-2012.

“We looked for a partner that had very strong experience in Medicaid and a good reputation,” he said. “That would enable us to hit the ground running from day one.”

Medicaid experts in Florida applauded the move. University of Florida professor Paul Duncan called it "very interesting," saying that since both companies are strong and highly regarded, "I certainly think this has great positive potential."

Medicaid business consultant Brady Augustine of Tallahassee called the arrangement a "perfect marriage," citing BCBS-FL's broad base in Florida and the depth of knowledge that AmeriHealth Mercy brings. "They can be a major player quickly and create competition for the for-profit HMOs," Augustine said.

AmeriHealth Mercy operates in 11 states, with more than 4 million members in its Medicaid managed care plans, which include pharmacy benefits and behavioral health. The company has 25 years’ experience serving low-income chronically ill populations.

The company is co-owned by two of the nation’s largest Blues affiliates, Independence Blue Cross, based in Pennsylvania, and Blue Cross Blue Shield of Michigan. Independence bought the majority interest in a deal that closed Dec. 1.

Herbkersman said Florida’s largest insurer decided it made more sense to go into business with AmeriHealth Mercy than to build a Medicaid HMO from the ground up. Like most Blues plans, BCBS-FL has not participated in Medicaid before.

But this is the logical time to jump in, given the growth in the program for low-income women and children and the elderly and disabled.

"This is something we really have to do," Herbkersman said. "We are the largest health care insurer in the state and we feel we should be working to provide the high-quality services that we provide to (current) customers to Floridians who are in need."

There is a great deal of money at stake in Florida's decision to require all Medicaid recipients to enroll in an HMO or other tight network plan, beginning next year. Citigroup analyst Carl McDonald, who called it "the single largest Medicaid managed care expansion in history,” has estimated the business is worth $6.4 billion.

And because all of Florida True Health's operations will be in-state, the venture will have an inside edge in competing for Medicaid contracts. As Health News Florida reported last summer, the Legislature instructed the Agency for Health Care Administration to give extra points to state companies, to keep jobs in Florida.

Because Medicaid receives a majority of its funding from the federal government, states must get permission from the U.S. Department of Health and Human Services before changing the rules. Florida's request for a waiver so that it can make managed-care membership mandatory for virtually all recipients, now pending, is expected to be approved shortly.

Florida Medicaid covers about 3 million Floridians, most of them children, but spends most of its $20.3-billion budget on nursing-home patients. In 2014, when the Affordable Care Act is fully implemented, the number of enrollees will greatly expand.

The Legislature cited that expected explosion in the numbers and cost as a factor in its decision to require all Medicaid beneficiaries to enter managed care, except for those who have developmental disabilities such as low IQ or autism. Some advocates for the elderly and disabled have opposed the inclusion of frail elderly, including nursing home patients.

When BCBS-FL announced last summer that it would be entering the Medicaid market, the executive in charge, Dwight Chenette, said the company did not intend to include the frail elderly. It was not clear whether that remains the case; Chenette could not be reached this morning.

--Health News Florida is an independent online publication dedicated to journalism in the public interest. Carol Gentry, editor, can be reached at 727-410-3266 or by e-mail.