Mandating Managed Care: The Case of Florida Medicare Reform


Jessica Van Parys
Assistant Professor, Hunter College
Douglas Almond
Professor of Economics and International and Public Affairs

The Medicaid program is one of the largest social insurance programs in the United States, providing health insurance to approximately 67 million poor and disabled people. In order to reduce the program's costs, several states now mandate that most or all of their Medicaid beneficiaries enroll in comprehensive managed care plans. This is a proposal to evaluate Florida's experience with mandated managed care. In 2005, the Florida legislature passed Senate Bill 838 to roll out a Medicaid reform pilot. The reform mandated that TANF-related and aged and disabled SSI populations in five counties switch from the state's primary care case management and fee-for-service system (MediPass) to either a health maintenance organization (HMO) or a provider service network (PSN). The reform's goals were to improve access to care, improve the quality of care, reduce fraud, and lower costs. Florida's reform is one of the first examples where nearly all beneficiaries in reform counties were required to enroll in comprehensive managed care. This proposal will analyze how Florida's Medicaid reform affected Medicaid enrollment, healthcare utilization, costs, and outcomes. It will use the CMS Medicaid Analytic Extract (CMS MAX) claims data to track Medicaid beneficiaries before and after the reform was implemented. It will compare the same beneficiaries before and after the reform to similar beneficiaries in non- reform counties to determine how access to care changed, how medical treatments changed, how total costs changed, and how health outcomes changed. This proposal will also determine how the reform affected the Florida healthcare market. Combining the CMS MAX data with healthcare plan data and hospital financial records, it will determine whether the entry and exit of managed care plans affected the degree of price competition in the marketplace. Understanding how the reform affected the healthcare market will shed light on why it may or may not have achieved its objectives. Preliminary results show that the reform successfully transitioned beneficiaries from MediPass into HMO and PSN plans. The increase in PSN enrollment, however, was four times larger than the increase in HMO enrollment. As a result, the reform's success or failure will be tied to how well the PSNs were able to manage care for their enrollees. The Patient Protection and Affordable Care Act has emphasized the need for Accountable Care Organizations, e.g., PSNs, so this research will be relevant to policymakers as PSNs occupy a greater role in the US healthcare system.