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Medicaid 'Reform' Pays Off: Study

Florida’s Medicaid 'reform' project, which required all beneficiaries in five counties to enroll in managed care, succeeded in curbing health inflation just as state officials had hoped, a new study reports.

University of Florida researchers found that when they compared two of the pilot counties with two others over a four-year period, per-patient spending was lower in the pilot counties.

Managed care spending did not go down, mind you:  It just increased less than in the non-pilot counties, the report says.  On average, the monthly expenditures for elderly and disabled patients were lower by about $200 per month in the reform counties, with smaller savings of $30 a month for children and mothers.

Some physicians and patient advocates who complained about the reform pilot in its early days remain skeptical that the savings are real. Greg Mellowe, policy director for the consumer group Florida CHAIN, argues that the reform counties underwent a huge amount of turmoil, with HMOs pulling out in mid-experiment, leaving patients in confusion.

His belief is that the apparent reductions in spending were tied to “reduced access to care.”

The counties that participated in the Florida Medicaid Reform Pilot starting in 2006 were Broward, Duval,  and three rural ones near Jacksonville. The study compared Medicaid cost data for Broward and Duval with that from two counties similar in size and demographics, Hillsborough and Orange.

Earlier studies by the same group did not discover “the relatively large savings" found in the new report, which was published in a health policy journal, Health Research and Educational Trust. The UF team noted  that it appears to take several years before such changes start to show. Earlier studies had less data they could use for analysis.

The new study also provides good news for those who run Provider Service Networks (PSNs) – non-profit organizations that are owned by doctor groups or other health-care providers, rather than an insurer.

Results from an earlier study showed patient satisfaction scores were higher in PSNs than in health maintenance organizations (HMOs). This study showed that the savings also were greater.

“PSNs appear to be a promising model for delivering care to Medicaid enrollees,” the study concluded.

The study was led by Jeffrey Harman, associate professor at UF College of Public Health and Health Professions. Other UF faculty members on the team were Allyson Hall and Paul Duncan.

Harman said the results should pique interest around the country. "Many other states are considering reforms to their Medicaid programs that are similar to Florida's," he said in a press release.

The savings also were greater for elderly or disabled Medicaid enrollees who depend on Social Security disability payments (called the SSI group) than for the majority of Medicaid beneficiaries, mothers and children (called the TANF group). That's because the health-care  needs of the SSI group were substantially greater.

The results back up the decision by state lawmakers in 2011 to shift the entire state Medicaid program to mandatory managed care – a rollout that the Agency for Health Care Administration, Medicaid’s parent agency in Florida, is in the process of conducting.

It also backs up lawmakers’ decision that at least one PSN should be available to Medicaid beneficiaries in each of the state’s 11 regions. In fact, the results raise the question of why more  PSNs can’t compete for enrollees.

In each region, AHCA has contracted with one or two PSNs, with the majority of contracts going to commercial HMOs.

The study reached no conclusions on why the PSNs had lower spending than HMOs. In general, health policy analysts credit managed care with saving money by coordinating patients' health-care needs, reducing duplication and unnecessary treatment, and by negotiating discounts from health-care providers in exchange for patient volume.

--Health News Florida is part of WUSF Public Media. Contact Editor Carol Gentry at 813-974-8629 (desk) or e-mail at For more health news, visit

Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.