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Medicaid threat: a game of chicken?

 Senate leaders began rolling out a plan to transform the Medicaid system Tuesday with a threat: If Washington doesn't go along, Florida could give up billions of dollars in federal money and run the program itself.

The plan, outlined during a special meeting in the Senate chambers, would shift hundreds of thousands of low-income Floridians into private managed-care plans. It would exempt certain people with disabilities, while also placing tough requirements on HMOs and shielding doctors from malpractice lawsuits when they treat Medicaid patients.

The bill's chief architect, Sen. Joe Negron, created the biggest stir when he threatened to have the state take control of the program if federal officials don't let lawmakers have flexibility in making changes. If that actually happened, Florida would likely lose billions of dollars in federal matching money that pays for more than half of Medicaid expenses.

"We're going to give the federal government 100 reasons --- good reasons --- to work with us,'' said Negron, a Stuart Republican who is chairman of the Health and Human Services Appropriations Committee.

But at least for now, the chances of the federal government giving such flexibility to Florida appear slim. The state already is in limbo because the federal government has raised questions and sought changes in a much more modest Medicaid pilot program that covers five counties.

Karen Woodall, a longtime social-services lobbyist, also said hospitals and other types of medical providers would object because they receive a large chunk of the federal money to care for Medicaid patients.

"We're not going to make that up somewhere else,'' she said.

Senate leaders held a briefing late Tuesday afternoon as they prepare to release a detailed bill about overhauling Medicaid. That bill is expected to be released Thursday.

Negron said the proposal could save about $1 billion in its first year and $4.3 billion over three years. The primary thrust would be to enroll Medicaid beneficiaries in HMOs and other types of managed-care plans that accept a monthly premium from the state for the treatment of each enrollee.

Health-care lobbyists said they won't know the full effects of the proposal until seeing details in the bill.

Negron, however, made clear the Senate managed-care requirement will not include people with developmental disabilities such as autism and Down syndrome, for whom advocates and health-care providers have expressed great concern. 

The senator also said the proposal will not force people in nursing homes to enroll in managed-care plans. The proposal, however, will use managed care to provide other services to seniors to try to help them remain in their residences instead of moving into more costly nursing homes.

The proposal also will include steps aimed at making sure managed-care plans spend enough money on patient care.

Negron said managed-care plans would have to spend 90 percent of the money they receive on patient care --- a concept generally known as a medical-loss ratio. Such ratios, unpopular with the insurance industry, raise difficult questions about which expenses should be counted as patient care.

Michael Garner, president of the Florida Association of Health Plans, said his industry group will have to see details of the Senate proposal.

"It is one of the areas we will definitely be paying a lot of attention to,'' Garner said.

But the proposal will include two measures that doctors have long sought. Negron said it will call for raising physician payment rates and also will provide malpractice protections when doctors treat Medicaid patients.

The Senate proposal is still a long way from becoming law. The legislative session does not start until March 8, and House leaders are expected to have a different approach to reforming the $20 billion health system.

Also, any such changes would depend on federal approval. Senate President Mike Haridopolos, R-Merritt Island, and other Republican leaders routinely blast the Obama administration on issues such as the federal health law.

The notion of wanting more flexibility is nothing new. For months, Haridopolos has likened the idea to welfare reform in the 1990s, when the federal government gave states money and allowed them to drive details of assistance programs.

"It's pretty easy,'' Haridopolos said during an interview this week with Health News Florida and another news organization. "Why wouldn't Washington want some stability in their costs and, in turn, give us accountability?''

But in reality, it is not that easy. Lawmakers last spring agreed to seek an extension of a five-county Medicaid managed-care pilot program that began in 2006 and is set to expire this June 30, but federal health officials have refused to grant it so far. The issue remains undecided heading into the 2011 session.

Part of the uncertainty centers on the future shape of the Low Income Pool, a $1-billion-a-year funding program that was included in the pilot to help hospitals and other treatment providers serve poor and uninsured patients.

But the federal government also wants to require the state to seek approvals whenever it wants to expand the pilot program beyond the current five counties. That appears to fly directly in the face of the Senate proposal to have more leeway to shape the program.

The Senate last year proposed a 19-county extension of the pilot, which operates in Broward, Duval, Clay, Baker and Nassau counties. The House offered a far more extensive plan that would have gradually required managed care statewide and incorporated long-term care and developmentally disabled people.

The proposals died when the two chambers could not reach agreement.

--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at