TO: The Honorable Rick Scott Governor-Elect of the State of Florida FROM: Alan Levine Chair, Health and Human Services Transition Team DATE: December 18, 2010 RE: Presentation of Agency and Policy Recommendations Governor Scott, First, let me thank you for asking me to serve during your transition, Florida has great challenges and opportunities ahead, and we are grateful you offered yourself for public service. You have selected a terrific HHS transition team, and everyone worked hard to prepare a series of reports that will hopefully provide the information you and your team need in order to capture the major issues. You will find a host of detail and recommendations at a level designed to provide starting points for action. ‘There are many recommendations within each agency related to policy and structure. In addition, the Policy Team focused their efforts on large-scale policy issues not confined to any one agency and which would benefit from your immediate attention. With all the major policy issues at hand, we tried to refine the policy report to those issues which are pressing. Believe me, itis not exhaustive, as there is no shortage of issues that would benefit from your attention. For purposes of transition, we really wanted to prioritize. To summarize some of the larger policy issues: 1. There seems to be consensus among the teams that a reorganization of the state health and human services agencies, based on function and reduction of redundancy, would serve the state well. For example, with fifteen waiver programs, some of which being operated by three agencies, it makes sense to merge the functions of the Agency for Persons with Disabilities with Elder Affairs into an office of Long-term care within a larger health and human services agency with the responsibility for financing the functions. The aging of Florida’s population combined with the increasing needs of persons with developmental disabilities requires coordination of efforts in the provision of waiver programs, as well as planning for a more integrated long-term care system, There are literally dozens of other examples of overlap which would be reduced if a consolidation were to occur. The policy team has provided a suggested table of organization to serve as a starting point for planning purposes. A. couple of things I would like to point out include a. The appointment of @ licensed M.D. or D.0. to serve as the State Health Officer would be critical to ensure the oversight of the professions and certain state health functions are properly overseen by a physician. That said, the Secretary of the Department should not be required to be a physician, b. Much work has been done improving child welfare, adoption and family preservation programs within DCF. Under no circumstances would we recommend including thosefunctions in a new Health Department. We believe those functions should remain separate and focused on the well-being of children and families in the system. c. There will most certainly be hesitation to consolidate the functions of the Department of Elder Affairs with the Ageney for Persons with Disabilities and contain these functions within a new health and human service agency. Various groups have a stake in the current model, and we respect that. That said, given our challenges, we really believe it js best to focus on function. With so many waiver programs overlapping, and the need to create a rational system for delivery of long-term care, we need to look beyond the political subdivisions of state government and focus on creating efficiency within the functions themselves. There is strong consensus that you should continue to lead the advocacy for repeal of the Patient Protection and Affordable Care Act. As the policy team articulates, PPACA is very costly for Florida at the very time we cannot even afford to operate the Medicaid program in its current form, ‘The Obama administration’s unwillingness to allow the legal case to move right to the Supreme Court is leading to more uncertainty at the state level. This uncertainty has the potential to cost Floridians tens of millions of dollars as funds are expended to prepare for the requirements of PPACA. ‘There are three major health care initiatives that would be under way at the beginning of your administration, a, The multi-ageney responsibility for implementation of PPACA (OIR, AHCA, DOH, DCF, ete.). b. Working with the Legislature to plan, pass and implement Medicaid reforms. ¢. Working with the Legislature and multiple agencies to plan, pass and implement consolidation of agencies. ‘These multiple issues that have so much interagency responsibility beg for having a central leader within your office to “quarterback” these issues and provide guidance for the Agencies on your behalf. This individual should have a strong grasp of health policy and management, and should be capable of working closely with the legislature. Incidentally, the fact that these issues cross over so many agencies lends itself to the argument for why there needs to be consolidation of the agencies themselves. Any consolidation, if approved by the Legislature, will take at least a year to plan and implement. ‘The Obama administration is asserting that Florida's Medicaid reform waiver may be renewed, but only after a renegotiation related to the annual $350 million secured by Governor Bush for Florida's Low Income Pool program. One of the massive failures of PPACA is that it does nothing to solve for the fact that states like Florida, a state which has worked hard to save the federal government billions of dollars, has continued to be shortchanged in the federal support wwe receive for the provision of care for the poor, and with the major cuts to Medicare contained within PPACA, this disparity will get worse. A glaring example of this disparity is that Florida’s $200 million DSH allotment is among the lowest in the nation, even though Florida is, the fourth largest state. Compared to New York's allotment of $1.6 billion, Florida’s funding per capita at $10.96 falls well short of New York’s $82.75 per capita. Florida receives a lowerallotment per capita than Indiana, Connecticut, Mississippi, Rhode Island, Maine, Georgia, Massachussetts, and 37 other states, We receive less total dollars than Tennessee, Georgia, New Jersey, Louisiana and 15 other states. As the Scott administration renegotiates the 1115 waiver, we think that Florida should not only keep the $350 million, but should demand a substantial share of the savings we have provided the federal government. The terms and conditions are currently in discussion and I recommend Florida should be aggressive in demanding a reasonable return on the savings we have provided to Washington. ‘The Medicaid reforms passed by the 2005 Legislature, as well as other steps taken to create savings (changes to the preferred drug list, for instance) did not produce theoretical savings. They are real savings. And at the very same time Florida is generating these savings, CMS has continued to give more funds away to other states that already have high DSH allotments (eg., California just received billions of dollars of additional funds, and Louisiana received a state plan amendment to increase federal dollars based on @ new IGT-like program similar to Texas). Our posture with CMS should not be defensive, The entire funding system for the poor needs to be reformed, but until that time, ‘we are left with this patchwork DSH system in which Florida is treated horribly unfairly and other states benefit from past wheeling and dealing. ‘This is an issue we attempted to fix in 2005, as there was recognition by Washington there was a disparity. Any effort to place Florida on the defensive with regard to the $350 million we properly claim should be met with strong opposition by our Congressional delegation and the Scott administration, and the argument should be advanced that Florida should be receiving more of the savings we are generating, . The fastest way to achieve savings through giving Medicaid consumers a choice of private insurance options is by expanding the 1115 Medicaid reform waiver statewide. Any changes that need to be made based on the Legislature's actions can be done easier through the existing 1115 waiver than by starting a new application — a process which can take well over a year. Nationally, an entirely new approach to Medicaid is needed — one that gives states flexibility to leverage state and federal dollars to make health insurance more affordable for everyone. For instance, why do we take the healthiest population — children — and generate a government- created silo where we keep this healthy risk out of the commercial marketplace? While this is ‘one logical question, we also recognize any solution must be driven by Congress. The past Congress opted to expand publie programs rather than ask the question of how we can leverage the dollars currently being spent to help reduce the cost of private health insurance. With the emphasis on repeal and de-funding of PPACA, there may be an opportunity to rethink these issues. We hope the Scott administration will be part of that discussion. With the number of Americans over the age of 50 set to nearly double in the next 20 years, itis clear we must have a new, organized approach to the provision of services for our aging population and, importantly, for persons with disabilities whose caregivers are aging. The current model of financing this care is based on a template designed for a time when these services were somewhat static. Today, they are exploding in terms of demand while at the same time, the resources required to finance them are deteriorating. Structurally, the long-term care system must adapt to the expected growth in volumes, and must adapt in a way that is designed to ensure people receive the services they need. This may be differentiated from services they want. There is wide agreement that systems need to be in place that capture and implement this, and we should not be shy about using private sector solutions. “Managed care” seems to be the buzzword. But to be clear, what we are talking about is creating organized, coordinated