Fixing The Managed Care System for Nursing Homes Could Save Almost $70 million

by | Mar 13, 2017

With state lawmakers – especially in the Florida House – looking for ways to cut nearly $2 billion from Florida’s annual budget, more and more legislators are beginning to look at different ways to save money. One proposal that is starting to gain some traction, particularly in the Florida Senate, is to exempt long-stay nursing home residents from managed care. According to one study, carving long-stay nursing home residents out of the managed care program would eliminate excessive administrative costs and case management fees that total nearly $70 million in savings.

But the proposals, filed by State Senator Kelli Stargel as Senate Bill 682, and a comparable version filed by State Representative Alex Miller as House Bill 1059, are not just designed to save the state money. They would also help nursing homes provide better care for their residents by eliminating the long waiting cycle that nursing homes are currently forced to endure while they await reimbursements from the managed care companies that oversee the services nursing homes provide. Long delays in reimbursement mean nursing homes are forced to carry large amounts of debt, an average of about $200,000 per facility, which in turn costs the facilities even more money because they are forced to pay more for staff, administrative and collection costs, finance the debt, and still find ways to deliver quality service.

In addition to the financial savings, the bills would also expand access for patients to managed care networks, which continue to shrink as managed care companies look for more and more ways to cut their own costs.

While managed care, first implemented in Florida in 2013, may be helping to reduce costs in some health care sectors, there is no data to suggest that it’s reducing costs and improving outcomes for Florida’s long-stay nursing center residents.

The study by Moore Stephens Lovelace CPAs, commissioned by the Florida Health Care Association, notes that the number of Medicaid enrollees who receive care at nursing centers grew by 2.6 percent in the two years ending in July, and that more than 95% of those enrollees had been in the long-term care program for more than 60 days. Instead of forcing nursing homes to work through managed care companies for these long-term care residents, and instead using traditional Medicaid, case management costs could be cut by about 72 percent, and administrative costs would be reduced by approximately 54 percent.

Those cuts translate to a savings for the state of Florida of approximately $68.2 million ($36.5 million in administrative costs / $31.7 million in case management fees) by exempting long-stay nursing center residents when it is determined that transitioning them to a lower cost setting could not safely be performed.

Florida Health Care Association has made managed care one of its top priorities this session. “The Managed Care system complicates the Medicaid process for long-stay residents who need consistent care,” said FHCA Executive Director Emmett Reed, during a recent media roundtable. “It places a barrier in the efficiency of the health services of these facilities and drives up unnecessary costs.”



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