Florida Medicaid Disease Management Program Has Not Yielded Health Benefits or Cost Savings, Audit Finds

A Florida legislative audit has concluded that the state's disease management program for Medicaid beneficiaries has resulted in neither financial savings for taxpayers nor improved health for chronically ill patients, and "may actually cost the state money," the South Florida Sun-Sentinel reports. The state Legislature established the program in 1997 after a state task force determined that the 10% of Medicaid beneficiaries with chronic illnesses were responsible for 70% of overall Medicaid costs. Under the program, "specially trained case managers" work with chronically ill patients to "improve their conditions and avoid costly medical care." Expecting the program to result in savings, the Legislature has cut $113 million in the Medicaid budget since 1997. But the audit found that program savings were "highly unlikely," and blamed a "sluggish" implementation and "poor management" by the state's Agency for Health Care Administration, which runs Medicaid. Auditors said the disease management program had created $24 million in administrative costs and had contributed to the state's $1.5 billion Medicaid deficit. Examining specific problems in implementation, the audit found that as of March, the agency "only had contracts [with disease management companies] to cover people with five of the nine diseases mandated by the Legislature, and two of those only covered portions of the state." Furthermore, auditors determined that contracts in effect have reached fewer than 50% of eligible patients, and that the agency "fail[ed] to establish clear guidelines to determine whether companies providing disease management were actually saving money and helping patients." The report recommends that a second audit be conducted next year to examine "whether ... cost savings and program outcomes are being met."

Too Soon to Tell?
In a written response to the audit, AHCA officials said, "Given the experimental nature of this initiative, it may be too early to judge the hoped-for positive results." Florida is one of the first states to employ a disease management program for Medicaid, the Sun-Sentinel reports. But this experimental nature did not prevent lawmakers from issuing criticism of the agency. "If the agency has not set up proper measures to determine whether or not this is an effective program, I don't see where they have an excuse," state Rep. Susan Bucher (D) said. In light of the audit's conclusions, Bucher questioned an abandoned deal between Pfizer and AHCA, revealed last week, that would have given the company's drugs preference on the Medicaid formulary in exchange for providing disease management services. "If (AHCA) can't measure whether (disease management) is saving us money, how are they going to measure the value of services" proposed by Pfizer, she asked. Rep. Mike Hogan (R), however, urged caution in judging the disease management program. "When you do something in government that no one else has done, you're going to get blamed for failures. But if you don't take risks, you don't realize the rewards," he said (Kestin, South Florida Sun-Sentinel, 5/22).