Competitive bids for Florida’s Medicaid managed care contracts will be scored to an unprecedented degree on the basis of quality not price, said Douglas M. Cook, director of the Agency For Health Care Administration (AHCA). Bids will be scored on a scale of 1,000 points, with quality factors worth 800 points and price 200, according to Mr. Cook.
The Florida agency is plunging ahead with its ambitious timetable to award contracts. Competitive bids are due on Oct. 4. But, a protest filed by Physician Corporation of America, the state’s largest Medicaid HMO, threatens to delay the process.
Sandy Berger, spokesperson for the agency, said the HMO has requested a formal administrative hearing and has asked for information on how the agency prepared the RFP and what opportunities there were for input on the drafts. The agency has furnished information to the HMO and has seven days to forward the request for an administrative hearing.
Mandated by the legislature in bills passed early this summer, the move to competitive bidding is expected to save Florida taxpayers $17 million a year on Medicaid. HMOs will have to take a capitation cut of at least 3%. Currently, managed care plans are paid 95% of fee-for-service levels for Medicaid clients. Under the bidding process, HMOs can submit rates as low as 87% of the fee-for-service rate for 200 of 200 points on price or as high as 92% for 150 of 200 points on price.
While the mandated benefit package has remained unchanged, in scoring the bids, the state agency will also consider what "quality and benefit enhancements" will be offered such as: health/wellness programs, smoking cessation classes, fitness and exercise programs and teen pregnancy prevention. Other such services include neighborhood programs, which could include 24-hour clinics, home visits for prenatal and post-partum cares, immunization outreach, and services such as flu vaccines and asthma and diabetes management that target "at risk’’ groups. Also considered by the agency will be partnerships with county public health units to provide "seamless coverage" to clients who become ineligible for Medicaid temporarily, and benefits such as comprehensive dental care.
Contract awards will take place in December with Jan. 1, 1997 as the effective date. Final scores on quality and cost will be used to allocate enrollment capacity. For example, if an HMO’s score represents 60% of the total score of all bidders in the county, that HMO would get 60% of enrollment. The state will not put a limit on the number of plans that operate in a county, according to Ms. Berger.
Mr. Cook said his main goal is to "set the bar higher" and improve the quality of care for 390,000 clients now in Florida’s 20 Medicaid plans. Florida HMOs have been under fire amid allegations of poor quality of care, enrollment abuses and excessive administrative costs.
Cutting rates "hurts industry"
But Peter Kilissanly, president and chief operating officer of PCA, which has enrolled about 148,000 Medicaid client, said cutting payment rates would "hurt the industry.’’
The state’s quick move to bidding has caused industry alarm and confusion.
Richard Dorff, president of the Florida Association of HMOs, said he worries that bidding will cause some large out-of-state HMOs to offer "lowball prices’’ and drive existing plans out of the Medicaid market.
"To us, it could mean the end of the road, basically. It’s a very serious threat to our ability to continue operating,’’ saidPaula Jordan, executive director of small Sunshine Health Plan in Pompano Beach, the not-for-profit plan of a federally qualified health center. "I think competitive bidding is going to eliminate some of the small plans which probably have a better, kinder, approach to serving Medicaid recipients,’’ Ms. Jordan said. "You’re going to have the big guys left who can afford to lowball the competitive bidding process, who have the staff and money to wow AHCA.’’
Patient advocates were cautious in their appraisal. Anne Swerlick, staff attorney for Florida Legal Services in Tallahassee, said her group is strongly supportive of the concept of competitive bidding in managed care, as long as it is not driven by price.
"I think it’s great if they’re saying this is going to be based on quality,’’ Ms. Swerlick said. "As long as it’s not driven by the lowest bidder, we think it’s a good idea.’’
Ms. Swerlick said her agency also is enthusiastic about the requirement that Medicaid HMOs would have to provide exercise classes and smoking cessation programs for the poor. "That can only be beneficial to Medicaid recipients,’’ she said.
Other states that have implemented a competitive bidding process include Arizona, California, Connecticut, Hawaii, Missouri, New Jersey, New York and Rhode Island.
The new contracts also give HMOs some features they have long fought for: one year lock-in, and the auto-assignment of 60% of Medicaid clients who don’t select an HMO or MediPass, the states primary care management program. (Previously, all those who didnt select an HMO or MediPass provider on their own were auto-assigned in the MediPass program.) The contracts are good for 30 months.
Fraud by providers
Mr. Cook, in interviews with Florida newspaper editorial boards, also took aim at what he called ’elaborate schemes’’ to defraud Medicaid by some of the state’s 82,000 Medicaid doctors, pharmacists and other medical suppliers. He proposed that MediPass providers also face tougher quality and integrity checks, though the agency released no specifics. First to feel the effects of any such changes, however, would be Broward County and Dade County, the Miami area, which Mr. Cook called a hotbed of Medicaid fraud.
Miami has about 358,000 Medicaid recipients. Statewide, non-institutional high-volume providers are projected to bill Medicaid about $1.4 billion in fiscal 1995-96, led by $593 million for pharmacy service and $456 million for physician(clinic) services.Mr. Cook said the state would work to weed out providers who fail to meet unspecified tests of integrity or quality. The state described the effort as moving from any willing provider to an exclusive provider organization,’’ and Mr. Cook said the Miami-based crackdown would begin by requiring prior authorization of services.’’ He also halted payments to 3,300 South Florida medical equipment or home health providers until the firms obtain a $50,000 surety bond. In 1995, Mr. Cook said that the state denied more than 30 million Medicaid service claims, nearly a third of the total submitted. These denials are evidence of widespread abuse in the program, he said. When it comes to suspect billings by health care entrepreneurs, ’Florida is like the wild west,’’ the health director said.
Mr. Cook said his main goal is to "set the bar higher" and improve the quality of care for 390,000 clients now in Florida’s 20 Medicaid plans.
Steps the state agency expects to take to reduce fraud and abuse outside of the HMO system include a new system to screen new medical providers to make sure they provide high quality care and submit honest billings and more aggressive criminal prosecution of Medicaid abusers. Since January, the state agency has referred 89 cases to a statewide grand jury empaneled last year by Governor Lawton Chiles to target health care fraud. The state also has referred 99 cases involving durable medical equipment providers to its Medicaid Fraud Control Unit and 11 cases involving home health providers.
Issuing Officer for the Medicaid Managed Care contract is Kate C. Morgan, Chief of the Bureau of Managed Health Care, Agency for Health Care Administration, 2727 Mahan Drive, Tallahassee, FL 32308-5403. (904) 922-6830.
This article was written for SHW by Fred Schulte, a Florida-based reporter
Florida Medicaid to score managed care bids mostly on quality factors, not price
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