Suddenly, A Cloud Over Care In The Sunshine State

As Florida's largest recipient of Medicaid dollars, Jackson Memorial Hospital in Miami struggled in the late 1980s to serve the medically unwanted. The tax-assisted hospital was delivering more than 17,000 babies annually--mostly to Medicaid patients shunned by private doctors and other hospitals, whose costs weren't covered by rock-bottom reimbursement rates.

But by last year, Jackson Memorial's maternity count had plunged to 10,000, thanks in part to a dramatic revamping of Florida's Medicaid program, which encouraged private managed-care plans to enroll poor and disabled patients covered by Medicaid. The number of prepaid health plans serving program recipients more than doubled, to 29, while the number of enrollees quadrupled, to 417,000, by the end of 1994. Better yet, growth in Florida's Medicaid spending was halved, and the state saved $67 million last year by using managed care.

But don't uncork the champagne just yet. Although Florida's reforms have increased service options for the poor, officials fear the gains could be erased if Medicaid spending caps ardently desired by Congressional Republicans are imposed. Even if finances hold up, Florida provides a warning to those who are convinced that states manage programs better than the feds.

ABUSES APLENTY. The reform started out so well. Governor Lawton Chiles in 1991 aggressively expanded a program to contain costs by enrolling recipients in managed-care programs. The state waived some regulations to encourage prepaid plans to serve Medicaid clients, allowing them up to three years to meet stricter financial and review standards imposed on health maintenance organizations that serve commercial clients. Florida also raised reimbursement rates--but still ranks 44th in spending per recipient.

Soon there were abuses aplenty in what became the equivalent of a health-care gold rush. For example, a 1994 investigation by the Fort Lauderdale Sun-Sentinel found that some plans signed up patients, such as severely retarded recipients or those hundreds of miles away from clinics, without their knowledge. A resulting state review found only eight plans to have no regulatory problems: The other 21 received fines or moratoriums on new enrollees or both. The state rescinded contracts with two plans, and the Florida attorney general is investigating another for fraud. "We've seen costs come down," says Douglas M. Cook, director of the Agency for Health Care Administration, "[but] because we moved aggressively, we paid a price in quality."

Longer term, the state must bring the program under control. Medicaid soaks up 17% of Florida's general revenue budget. And given the state's aging population, that burden seems certain to grow. "The fastest-growing segment of the population is over 85," says Cook. "People retire in Florida, outlive their retirement [funds] or ability of relatives to care for them, end up in hospitals and nursing homes--and Medicaid pays for them."

As for Jackson Memorial, officials fret that Washington's Medicaid caps could return the hospital to its late-1980s crunch. Says Chief Executive Ira Clark with a sigh: "Our fear is that the Medicaid population will stop being attractive [to private physicians and health plans], and they will all be back."