Florida Trend Web Jan 2014 : Page 66

Floridian of the Year Pat y Geraght Regardless of what the Legislature does this spring with Medicaid, Florida Blue is poised to make Medicaid big business. Through a partnership, it won bids for the Medicaid business in eight of Florida’s 11 Medicaid regions for which it bid. “We will be a large Medicaid player by the middle of (2014),” Geraghty says. Meanwhile, Geraghty has to navigate the new federal law. The company made headlines when it began canceling plans that didn’t meet the law’s new mandat-ed coverages, affecting 300,000 Florid-ians. The day of Geraghty’s interview with Florida Trend , President Obama was in Massachusetts saying such poli-cies were substandard and from “bad apple insurers.” Florida Blue answers that its “Go Blue” product responded to customer demand for a plan not in-tended as a full insurance plan but one that offered protection that met cus-tomers’ budgetary and lifestyle needs. Obama, after much criticism over the canceled plans here and in other states, granted them a reprieve for a year even though they didn’t meet the new federal requirements. Florida Blue said it will offer customers renewals. Geraghty supports the law. The deal implicit in the act is that insurers take costly sick and high-risk people without excluding any with pre-existing condi-tions and without charging them com-mensurately with the risk they repre-sent. In return, in theory, the law — by mandating coverage — is supposed to deliver new, healthy, high-margin, pre-mium-paying customers. Geraghty says providing coverage for pre-existing conditions and for chil-dren of policyholders up to age 26 is popular and appropriate. Where he and the law part ways is over its shrinking of age-rating premium categories. In the individual market before the law took effect, Florida limited how much an insurance company charged an old-er customer — say, near retirement — to seven times what it charged a younger one for the same coverage. The federal law restricts how much premiums can vary based on a person’s age to three times. While that’s better for older Geraghty worries that the new health care law’s higher premiums for young people will drive them out of the market. customers, it means younger ones pay more to in effect subsidize them. Ger-aghty worries it will drive young peo-ple out of the market. By the end of October, a day short of the first full month of the Obamacare ex-changes, Geraghty — obeying the federal government’s instructions that data re-leases come from Washington — would say only that more than 1,000 people had signed up for Florida Blue policies through the healthcare.gov website. A Florida Office of Insurance Regula-tion report says that on average Florida Blue premiums will go up 31% under the Affordable Care Act. Says Geraghty, “This is a place where averages lie, OK?” A young, healthy customer earning too much for a government subsidy might see his premium double while a chroni-cally ill older person might see a 20% re-duction. “It really depends on who you are, whether or not you’re advantaged or disadvantaged by the law in the final analysis,” he says. The individual market, as much as it has been in the news, accounts for less than 10% of Florida Blue’s insurance base. Throughout its insurance lines, Flori-da Blue has to find a way to lower costs. Its overall underwriting gain in 2012 was $68.5 million, less than half the $152.8 million Florida Blue gained in in-vestment income. To lower costs and improve care, Flor-ida Blue is trying the “medical home” approach, which now includes 2,300 doctors. A patient’s care is led by a single physician who coordinates the care pro-vided by others. As part of the effort, the company pays primary care doctors to keep offices open for longer hours to cut ER use and gives incentive pay for qual-ity care. Florida Blue also has agreements with accountable care organizations, in which hospitals, doctors and other pro-viders coordinate care on a value-based compensation model. In a third endeavor, Florida Blue provides direct care through its own doctors in a multispecialty practice in Largo, a clinic in Pensacola, a managed-care plan, called a staff-model HMO, in Daytona, and a mixed-model HMO in Tallahassee. “There is not one silver bullet,” Geraghty says. As Geraghty leads Florida Blue into the new health care world, it helps that the company is strong financially. Rat-ings firm A.M. Best last year raised Flori-da Blue’s rating to A+. The company’s un-derwriting gains and investment income give it a capital position that could offer a competitive advantage and allow it to respond to changes in the market under Obamacare, according to A.M. Best. The Blues stand to benefit from their experience dealing directly with con-sumers since the exchanges hold the po-tential of moving more people into the direct-purchase market. Additionally, says Raymond James health care analyst Michael Baker, Blues with the financial wherewithal are at an advantage as mar-gins get squeezed and as the demand for more tech spending in the under-au-tomated industry grows. The question is whether such large, traditional orga-nizations can adjust as the government reshapes the market. “There’s a lot of change coming at once,” Baker says. “There’s a much greater need to drive for efficiency, for innovation, and how you adjust to this changing backdrop. What was a steady ship will likely get into choppier seas so you need a captain who can look out and see where the next destination is, the path, if you will, to the future.” 66 JANUARY 2014 FLORIDATREND.COM photograph: Jon M. Fletcher

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