Background on Florida’s managed care program

Florida passed a reform bill in 1993 mandating that all employers participate in managed care by January 1, 1997. Participation was optional before 1997 and afforded willing participants up to a 10% premium discount.

Florida’s managed care program involved elaborate plans called Managed Care Arrangements (MCAs), which were approved by the state’s Agency for Health Care Administration. Each plan had to include a number of provisions, the biggest of which was the creation in all Florida counties of networks of workers’ compensation certified medical care providers, who were the exclusive choice for workers who had been injured on the job. According to Florida regulations, injured workers who seek medical services outside the approved MCA designated by their employer cannot expect that their workers’ compensation medical bills will be paid or their disabilities certified. In order to access full workers’ compensation benefits, employees were required to use the doctors and services associated with their employers’ MCA.

The workers’ compensation networks had to include designated medical specialties in each county in the state and/or employer approved providers who had facilities within a 30 minute travel distance of the employer’s location. All network providers had to be certified by taking a five-hour course designed by the state. Gatekeeper providers would be designated for each case. They would have the responsibility and power to determine the extent and nature of care to be given to the injured worker. This included diagnostic testing, referrals to specialists and, ultimately, the approved treatment plan. In theory and in fact, the gatekeeper physician would be the ultimate and binding decision-maker on all medical services provided to the injured worker. Providers who participated in the managed care networks often discounted their services below the mandated fee schedule amount allowed by the law.

Each approved MCA contained a grievance procedure that was designed to resolve medical disputes quickly and efficiently outside of the formal litigation process. Medical providers could also file grievances and typically these involved disputes over fees.

Other requirements of managed care included: nurse case management to pre-approve designated procedures; establish treatment protocols for the adjuster; utilization review; medical bill review for fee schedule reductions; and managed care discounts. State filing requirements allowed for compliance auditing for all of the above.

Most employers complied by contracting with a company that had an approved plan. Smaller employers that purchased insurance from an insurance carrier participated in the carrier’s MCA. Additional fees were charged for each service provided by the MCA that were paid as a fee on each claim. Larger, fully insured employers occasionally asked the carrier to alter their managed care arrangements by “carving out” a network of medical providers hand picked by the county to treat their employees. In exchange for this customization, some employers would agree to pay an additional MCA approval fee of $1,000 and sometimes agreed to waive the managed care discount off the fee schedule to attract the “best” physicians to their customized networks. Again, fees were charged to each claim for the services dictated by the MCA provisions.

Self-insured employers and self-administered employers tried a variety of approaches to gain access to certified networks while performing all or some approved MCA plan provisions with their own claims staff. But overall, Managed Care vendor usage skyrocketed. A cottage industry emerged in Florida to help employers and carriers comply with the new law.

Enhanced medical control, reduced or eliminated excess and/or unnecessary medical services and significant reductions in litigation were forecast. Medical outcomes would be improved for employees and costs would come down for employers.

As a result of the mandated MCA programs, workers’ compensation medical costs trended slightly downward when adjusted for inflation and allocated expense fees went up significantly. Furthermore, for some employers, litigation expenses also increased as managed care providers and claims administrators struggled to comply with the provisions of the law.

Many large, self-insured employers practiced the cost control measures included in the MCAs well in advance of the law mandating managed care. These employers complained that the law eroded their ability to manage their workers’ compensation claims effectively because they were thrown into the mix with other employers. Their individual plans were often more sophisticated in the areas of case management and medical provider selection than were the MCAs.

Florida employers always had control of the medical provider selection. As such, the networks offered little to improve the quality of provider services for employers, who had a keen knowledge of the medical community and sophisticated medical case management processes. Six years into optional managed care and three years into the mandatory program, Florida’s statewide results reflected little if any improvement in cost control as a result of mandatory managed care.

In response to these disappointing results and the compelling arguments of some of its largest employers, Florida passed a law that provided employers the choice to opt out of managed care as of October 1, 2001. Thus far, more than 400 employers have exercised that option and many others are considering it.

Employers with Florida-based operations should carefully review their managed care arrangements versus the alternatives of either opting out or “carving out” the best possible network, weighing the pros and cons of each plan before making a decision. When considering whether or not to opt out of state-approved MCA programs, employers should think about the following issues.

What are the benefits of staying in a Managed Care Arrangement?

• Networks identify and contract with certified medical providers in all legally designated specialties in all Florida counties. This is a benefit because it is not always easy to find workers’ compensation certified doctors in the more rural counties in the state.
• Many participating medical providers discount their fees below the Florida fee schedule and willingly adhere to the utilization protocols outlined in the law.
• MCAs have a process in place to monitor compliance with Utilization Review protocols, so the employer and its claims administrator should not need to police this aspect of cost control.
• The mandatory pre-certification procedures ensure that many medical services must be authorized before they are undertaken and the cost incurred on the claim.
• Grievance procedures may provide a more efficient alternative medical dispute resolution process, so that disputes can be quickly resolved on their own without the risk of taking on other non-medical issues at the same time.