The Medicaid Reform Disaster

By Arthur E. Palamara, MD
May 18, 2007

In 2005, Florida embarked upon a grand new experiment: placing all Medicaid recipients into HMOs or a similar contrivance called Provider Service Networks. The results may save the state treasury considerable money, but the impact on patients has been less well received, at times catastrophic. The impact on doctors has been equally disastrous. Already reimbursed far below customary rates, many doctors may no longer participate. Bureaucratic hurdles placed by HMOs make it increasingly difficult for physicians to provide care. A survey suggests that it will not be long before docs just opt out.

Before reform, about 95% of Florida doctors - roughly 33,000 - participated in Medicaid. But only 13,000 of these provided any substantial amount of care. Now a survey conducted by Georgetown University indicates that more doctors are dropping out of Medicaid and those that remain are seeing fewer patients. Most doctors stay in the system only out of loyalty to their patients with whom they’ve enjoyed an established relationship. Feeling overwhelmed by the harrowing challenges of just complying with arcane regulations and realizing that reimbursements are inadequate, many doctors are simply quitting. This is especially true among specialists where fully 2/3 plan to resign unless things improve. And there is little likelihood that things will get better since payment to doctors is down while paperwork is up. Not a reassuring combination.

In the pediatric community, pediatricians are finding it increasingly difficult to provide care, especially for 600 children with special needs. Previously, physicians had to deal with the requirements of only one system. Now each HMO has its own indigenous, time-consuming authorization procedure that forces doctors to comply. Often, these “authorizations” are complex and repetitive. The task is particularly burdensome to small offices that lack the staff to fulfill dogmatic regulations. This challenge is even worse for doctors who treat children with HIV since many medications are not part of the HMO’s formulary.

Pregnant women fare no better. Those tough obstetricians who have accepted the challenge of working within the new system do so only because they acknowledge a “social responsibility”. As such, many established Medicaid providers are flooded with new, expectant mothers seeking care. Because of financial constraints, they are finding it necessary to turn away new Medicaid patients.

Even if an obstetrician accepts lower compensation, the additional headache of dealing with 14 separate entities – each with its own bizarre rules – makes doctors disinclined to participate. Where once it was easy to write a prescription for a uterine ultrasound and send a patient to the nearest hospital, now the physicians’ staff must cast about seeking a specific facility that services that HMO. Gone are the days when a doctor just provided care. The doctor has become an uncompensated agent for the HMO.

More frustrating still, some expectant mothers arrived at the doctor’s office unaware of the change because more than a few patients were randomly assigned to HMOs without the patient’s knowledge. As a result of bureaucratic snafus, some expectant mothers were forced to switch plans a mere 2 weeks before delivery!

These Medicaid changes have diminished the number of specialists available to treat complex problems. Hypertensive specialists who treat pregnancy induced high blood pressure – a very demanding problem replete with legal overtones – are few and far between. Unassisted, Ob-gyn doctors are left to deal with the problem as best they can.

Psychiatric patients comprise another very vulnerable population. Emotionally unprepared for the changes wrought by Medicaid Reform, this population already lacked insight needed to make difficult life-decisions. While the law provided choice counselors to help patients select their best option, most choice counselors were under-trained and lacked critical knowledge especially in the area of psychotropic medications. Often taking years to strike an effective balance, stabilizing medications are vitally important to psychiatric patients. Choice Counselors had wrong or insufficient information when answering detailed medication questions. Many patients are now suffering the consequences. The impact on the physician is even more troubling. When the doctor writes a prescription, the doctor does not know if it is going to be filled correctly. This frustration has caused many doctors to opt out of the system.

While doctors are being paid less, the 14 HMOs and Networks are being paid more. Prior to reform, HMO profit was a staggering 18.6%. Despite this, the Florida legislature is planning an 11.7% increase in payments to HMOs. The securities firm CIBC World Markets and Goldman-Sachs reported that WellCare – a major Florida Medicaid HMO – has been shifting money to the Cayman Islands in the form of reinsurance premiums. Goldman-Sachs spokesman Carl McDonald stated that "Florida appears to be overpaying its Medicaid plans, and it would seem to be only a matter of time before the state figures this out." They're making tons of money," said Oliver Marti, a partner and portfolio manager at CCI, a Stamford, Conn., investment firm. "How does the government allow that?" (April 11, 2007, Tampa Tribune.) How indeed!

Florida’s stated objective was to improve both access and care while saving money. Medicaid Reform seems to be accomplishing little except enriching privately held HMOs. There is little evidence to suggest that this reform should be expanded beyond Broward and Duval Counties.

Patients want a trusted provider and physicians want to provide care free from corporate hassle. Medicaid reform seems to have alienated both those who serve and those who are served. With projected shortages of doctors estimated to be 50% within the next 10 years, it remains to be seen where Medicaid patients will receive their care. Probably from emergency rooms - which will place an even greater burden on local property taxes.





Dr. Arthur Palamara is a vascular surgeon in private practice in Broward County. In 2000 and 2001 he served as the Florida Medical Association representative on the Florida Commission on Excellence, which spearheaded many of the improvements in medical care quality that are just now emerging. He served on the Florida Patient Safety Corporation's Near Miss Task Force, and currently serves on the Corporation's Patient Advocacy Committee. Dr. Palamara is former FMA Vice President, serves on the Association's Council on Legislation.

We are interested in hearing from Medicaid Recipients in Broward County and Duval County. Please contact us by email at medicaidreform@pobox.com.

www.floridamedicaidreform.org