Florida Medicaid Pilot Program Costly but of Limited Benefit

A recent examination of one part of a controversial Florida Medicaid pilot reform program that tries to encourage personal responsibility for health improvement found little evidence of changed behavior but high administrative costs.

“Working with beneficiaries to improve their health is a worthy objective, but there is little evidence to suggest that this program is achieving this objective,” wrote Joan Alker and Jack Hoadley, Ph.D., in a report from Georgetown University's Health Policy Institute.

They found that Florida's incentive-based pilot program—one of a handful nationally—uses economic incentives that are more likely to work for simple objectives, such as obtaining well-child visits, than for“ complex behaviors,” such as losing weight or quitting smoking.

The program, which was approved in 2005, provides beneficiaries with up to $125 in annual credits as rewards for actions ranging from annual checkups to major lifestyle changes, such as obtaining drug and alcohol treatment. The credits can be redeemed for health care products at certain pharmacies.

Rewards Don't Change Behavior

The researchers found little evidence that the program led to behavior changes. Many beneficiaries were unaware of the program or how to redeem credits, and some critics said the program rewards actions beneficiaries might have taken regardless of whether they were offered rewards for taking such steps. High administrative costs—$1.1 million to administer less than $300,000 in redeemed monetary rewards—raised questions about the efficacy of the approach.

Florida is one of a handful of states trying to incorporate incentives for healthy behaviors in its Medicaid program. Other states testing incentive-based approaches in their Medicaid programs include West Virginia, Idaho, Wisconsin, and Michigan. Federal and state policymakers have become increasingly interested in incentive approaches, so the outcome of the Florida program is likely to have broader impact.

The researchers noted that the Medicaid population is “particularly challenging” with regard to personal responsibility initiatives because beneficiaries have more chronic physical and mental illnesses than the general population.

Mental Health Approach Questioned

The same researchers had issued a report in May on another part of the pilot program that focused on its impact on beneficiaries with serious mental illness.

They concluded that the program's use of private managed care plans was frequently a poor fit for beneficiaries with serious psychiatric conditions.

“It appears that the complexities of delivering evidence-based, recovery-oriented mental health services were not fully considered when state officials developed the Medicaid reform pilot program,” the authors said. “This review suggests that the state may need to take a more active role in ensuring that Medicaid beneficiaries receive the types and level of mental health services they need.”

The pilot program's shortcomings exacerbated the state's poor standing in national rankings of treatment access for serious mental illness. The state ranked near the middle (20th) of the states (including the District of Columbia) in per capita income in 2005, but it ranked near the bottom (48th) in per capita spending on mental health services, according to a November 2007 report by the National Association of State Mental Health Program Directors Research Institute.

The researchers noted that Florida also has experimented with“ various prepaid behavioral health programs” for beneficiaries with serious mental illnesses. They have not studied those programs but suggested that programs that allow for services to be individually tailored to the complex treatment needs of people with serious mental illness “may provide a path to improving mental health services.”

Reports on the Florida Medicaid program are posted at<http://hpi.georgetown.edu/floridamedicaid>.▪