October 1, 2005
Associated Press

CHARLESTON, S.C. - South Carolina will submit a revised Medicaid program overhaul to the federal government for approval in the next couple of weeks that would put most of the program's participants into managed care health insurance programs similar to those used by people with private insurance.

In the process, the state hopes capping how much money would be spent on each recipient will save $300 million during the next five years.

The savings, outlined in a draft plan, could be greater, but the agency "took the most conservative approach," said Robert Kerr, director of the state Department of Health and Human Services, which oversees South Carolina's Medicaid program.

For years, Medicaid's rapid growth and sheer size have prompted calls to make the program more efficient in South Carolina and elsewhere. In 1995, about 10 percent the state's general fund budget went to Medicaid. In the fiscal year that ended June 30, it had jumped to 19 percent.

"We can prove we won't spend any more than we would under the current system," Kerr said.

Whether the changes can be proven to deliver what Medicaid's elderly, disabled and poor recipients need remains a question.

Medicaid's state and federal dollars provide basic health care coverage for about 850,000 South Carolinians, including the costs of about half the births in the state and payments for three of four nursing home residents.

The overhaul would certainly bring changes for Medicaid recipients moving into a managed care system where insurers would have limited flexibility to determine what's covered. For instance, while insurers would be required to cover hospitalizations, emergency room visits and prescription drugs, they also would not have to cover psychological or dental services.

And young people will lose coverage at age 19 instead of 21 under the current Medicaid program.

The changes also would require co-payments for most recipients. For instance, a visit to an emergency room has a $25 co-payment if the patient could have gotten the same care at a physician's office. Prescription drugs now have $3 co-payments, but that would change to $1 for generic drugs and $8 for brand-name drugs that have generic equivalents.

The draft proposals says children and pregnant women would not have co-payments.

But others would have to pay them before they could see a doctor - something not allowed under the current system. Supporters say that's the only way to put teeth into the system and change behaviors.

Others say that's a problem.

"That's a very scary step to be taken for Medicaid recipients," said Sue Berkowitz, executive director of the South Carolina Appleseed Legal Justice Center. "For me, $8 isn't a stretch. ... But for somebody who is so low income they're on Medicaid, that's a huge barrier."

South Carolina is not alone in seeking federal permission to overhaul Medicaid programs.

Last week, the federal Department of Health and Human Services approved Florida's plan to shift thousands of Medicaid patients into managed care. Florida Gov. Jeb Bush plans to call a special legislative session in December to win approval for a pilot program that would be implemented next summer in two counties. If successful, the state then would seek federal approval to use the changes statewide.