Florida hospitals are gearing up to compete with health-maintenance organizations in a possible expansion of Medicaid managed care.
Two major hospital-industry groups said Tuesday they back creation of more "provider-service networks'' in various areas of the state. The networks could be an alternative to HMOs if lawmakers expand a pilot program that requires Medicaid recipients to enroll in managed care.
Hospitals and other certain other organizations can operate the networks, which sign up Medicaid beneficiaries and then provide most of the enrollees' health care. Nearly 90,000 people are enrolled in such networks in Duval and Broward counties, the two largest areas of the five-county pilot program.
Officials of the Florida Hospital Association and the Safety Net Hospital Alliance of Florida told a Senate committee Tuesday that their organizations support additional provider-service networks, though it was not immediately clear where the networks could be created or how long it would take.
With lawmakers focused on trying to hold down Medicaid costs, Paul Belcher, a senior vice president of the Florida Hospital Association, said networks could match cost savings touted by HMOs.
"I do think we can achieve savings that are equivalent to what you see in the HMO proposal,'' Belcher told the Health and Human Services Appropriations Committee.
Sen. Don Gaetz, a Niceville Republican who serves on the committee, called the hospital-industry support of creating provider-service networks a "very positive development.'' But Gaetz said he wants to see assurances from all the managed-care organizations that they will hold down Medicaid costs.
"I would like to see contract language that requires a guaranteed level of savings for the taxpayer,'' said Gaetz, who also is chairman of the Health Regulation Committee.
Lawmakers have spent weeks considering whether to expand the controversial pilot program, requiring more Medicaid recipients to enroll in managed-care organizations. The state Agency for Health Care Administration last month proposed expanding to as many as 19 additional counties, a move that would save an estimated $58.7 million in the upcoming year.
Hospital-industry officials have raised objections in the past about such an expansion. But with lawmakers inching toward a decision in the coming weeks, the statements Tuesday signaled that hospitals may want to compete if the expansion goes through.
AHCA Secretary Tom Arnold said he has expected that provider-service networks would be part of any expansion of requiring Medicaid recipients to enroll in managed care.
"When I talk about managed care, I'm talking about HMOs, PSNs (provider-service networks) and maybe a medical-home concept,'' said Arnold, referring to a concept in which doctors direct the care of patients.
As of last month, Medicaid beneficiaries were enrolled in provider-service networks in seven counties, though most of the programs were relatively small, according to AHCA figures. About 64 percent of the 140,000 enrollees were in Duval and Broward counties.
One network, established by Shands Jacksonville hospital, includes University of Florida physicians, other hospitals and the county health department, according to the network's Internet site.
A report released last year by University of Florida researchers found that the pilot program had saved money in Duval and Broward counties, and that the biggest savings were in provider-service networks.
At the time, a managed-care industry official attributed the difference between savings in the networks and HMOs to the types of Medicaid recipients enrolling in the networks. He said many of the enrollees had previously been in fee-for-service programs that included little case management. That yielded savings when they entered the managed environment of provider-service networks.
In contrast, he said many of the people who enrolled in HMOs had already been in managed-care plans.
In speaking to the Senate committee Monday, hospital officials pitched a series of changes that could make it easier to establish provider-service networks and bolster enrollment. For instance, they asked for a change in the way Medicaid recipients are assigned to plans and also sought to ease solvency standards that normally apply to managed-care organizations.
But those requests drew objections from Michael Garner, president of the Florida Association of Health Plans. He said his HMO-industry group is fine with the idea of more provider-service networks but they need to operate on a "level playing field.''
Garner said the solvency standards require managed-care plans to have enough money in case they are hit with high costs, such as happened last year because of H1N1 flu.
"They want to make sure you have dollars in your reserves, where you can handle unexpected surges in utilization for some reason,'' Garner said.
--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida.org.
