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State could save by axing HMOs

By Christine Jordan Sexton 
1/22/2010 © Health News Florida

Florida could save more than $118 million if it removed HMOs as one of the health care options offered to state employees, according to a consultant's report commissioned by the state agency that oversees health insurance for state workers and their families.
The state could save another $143.6 million if it required employees to purchase a high-deductible, self-insured plan administered by Blue Cross and Blue Shield of Florida, says the report by Buck Consultants.

The report, commissioned by the Division of State Group Insurance, comes out amid growing calls by state legislators to retool the state’s health insurance program, which this current year is expected to cost $1.8 billion. 

One of the changes that legislative leaders have already discussed is whether to require all state workers to start paying part of the price of their health-insurance premiums.  Roughly 27,000 state workers -- including legislators, the governor and the Cabinet -- do not pay any premiums.

Currently, state employees have access to one of four plans: a standard HMO, a standard PPO, a high deductible HMO or a high deductible PPO. The PPO options are self insured, which means the state pays a third party to administer the plan. Blue Cross and Blue Shield of Florida is the administrator of the state’s self-funded plan. 

For 2009-10, it's estimated that more than 80,000 state employees willl enroll in the traditional HMO plan and almost 95,000 will enroll in the PPO plan. While there are more people enrolled in the PPO now, state economists predict that HMO enrollment will surpass PPO enrollment by 2012. 

HMOs available to state employees include Capital Health Plan (CHP), AvMed Health Plan, Florida Health Care Plan, United Health Care Plan and Vista Health Plan.

Eliminating some HMOs may not disrupt patient physician relationships because providers can contract with more than one managed care network. But it would be wrenching for those in Capital Health Plan because it is a staff-model HMO based in Tallahassee; its doctors work only for CHP.

“(A)ny HMO network that has a 'staff model' (such as CHP) will result in provider disruption as those providers are exclusively contracted with that HMO and will not be available to treat members once they change vendors,” the report says. 

CHP is one of the highest-ranked managed care organizations in the country and commands great loyalty among its customers. A decision to eliminate HMOs from state workers' health opinions would therefore roil the home of state government. 

To determine the potential savings, Buck Consulting assumed that workers' premium contributions toward the plan would remain the same. But Senate leaders have suggested re-examining that policy, saying it's “out of touch.”

--Christine Jordan Sexton is co-founder of