New study: Florida's networks control health costs better than Medicaid


Published: Tuesday, February 4, 2014 at 4:31 p.m.
Last Modified: Tuesday, February 4, 2014 at 4:31 p.m.

Results from a study of Florida’s Medicaid Reform Pilot Project show that provider service networks, which the state intends to implement this year throughout the state, control costs better than traditional Medicaid.

PSNs, like HMOs, or health maintenance organizations, are managed care companies that coordinate patient care. HMOs deliver care through contracts with provider organizations such as hospitals, while PSNs are directly organized by providers.

The idea of both is to guide, and ideally streamline, patients’ care without sending them to expensive specialists unnecessarily, explained Paul Duncan, one of the study authors and a University of Florida professor in the College of Public Health and Health Professions and the director of the Florida Center for Medicaid and the Uninsured.

“Cutting out the middle man,” is how Duncan described PSNs.

At the heart of PSNs is usually a big coordinating hospital in a network that also includes doctors’ offices and medical laboratories, Duncan said. UF Health is one such center, which is the primary provider in a PSN based in Jacksonville covering nine counties that will include Alachua when the PSN expands west, Duncan said.

“There will be a PSN built around the Shands network,” he added.

Duncan’s study recently was published in the journal Health Services Research and sponsored by AHCA, the Agency for Health Care Administration. It looked at roughly 300,000 Medicaid enrollees, starting in 2006 in Broward and Duval counties, and then a year later in the counties of Baker, Clay and Nassau.

“For each individual enrollee, the state spends $7 per month less than it would have if the same enrollee was chasing the services on their own,” Duncan said.

Seven dollars might not seem like much, but the costs of Medicaid add up — accounting for a large portion of most states’ budgets.

What accounts for the decreased expenditures with the PSNs is still unknown, Duncan said, but among them could be fewer doctors’ visits overall, or more visits to primary care providers and fewer to an emergency room.

A previous study conducted by Duncan showed that patients in PSNs were also slightly more satisfied with their care than those enrolled in HMOs.

Not all experts agree that the pilot project would pay off, however. Greg Mellowe, the policy director of Florida CHAIN, a consumer health advocacy organization, said the study was flawed because it didn’t adjust for factors such as age and gender, which could influence spending.

He also said that there was, for a period, reduced access to care in counties that implemented the PSNs as the HMOs pulled out.

“Tens of thousands of recipients in (the reform plan) were left in limbo for a month or perhaps months and not enrolled in any plan,” Mellowe wrote in an email.

Mellowe continued that this reduced access to care accounts for the cost reductions instead of any other potential factors such as reduced ER visits.

The pilot program is slated to expand to the rest of the state. In June, the Centers for Medicare and Medicaid Services approved Florida’s request to move its Medicaid services into managed care programs, allowing implementation of the PSN system throughout the state. Roughly 2.9 million residents are expected to enroll over the next several months.

Duncan added that there has been nationwide interest in Florida’s program as a cost-saving measure — even in Medicaid-expansion states where the federal government is largely picking up the tab.

Although the issue of Medicaid expansion is separate from the pilot program, these study results could encourage expansion by showing that Medicaid services can be delivered “a little less expensively,” Duncan said.

“Some of the concerns on the state side might be allayed a little bit, but the state’s role is limited anyway.”

Another study on Medicaid expansion that came out Monday in the journal Health Affairs compared expansion and non-expansion states.

In opt-out states such as Florida, the study found that low-income women would forgo recommended breast and cervical cancer screenings; diabetics would forgo medications; and low-income adults would face greater depression, medical expenses and risk of death.

In Florida, the study found that between 1,158 and 2,221 uninsured residents would die prematurely without Medicaid expansion.

With Medicaid expansion, 1,266,471 more Floridians would gain coverage. There also would be 115,882 fewer depression diagnoses and 38,344 fewer catastrophic medical expenses.

Although Duncan’s specialty is evaluating the Medicaid pilot program already in place, he did add that expansion would bode well for the state.

“I think when the federal government says that it will pay almost all of the expenses, for Florida to say no strikes me as fiscally imprudent,” Duncan said.

Contact Kristine Crane at 338-3119, or kristine.crane@gvillesun.com.

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