TALLAHASSEE -- The state's largest Medicaid insurer has announced it will leave Florida's controversial Medicaid Reform program because government-set reimbursement rates are too low.

WellCare of Florida's 78,000 Medicaid Reform clients -- 41,000 of whom are in Broward County -- will still receive state-paid health services but through another health plan, according to the Agency for Health Care Administration.

''WellCare's action is a result of recent state budget cuts that make it economically unfeasible to continue offering members sufficient access to quality health services in those programs,'' the company said in a written statement that called the recent round of rate reductions ``unsustainable.''

The Tampa-based HMO plans to shed its recipients by May 1. However, it plans to continue participation in the state's main Medicaid program, which has slightly higher rates for providers.

But, as the Legislature continues to cut Medicaid rates, they're becoming so low that some companies might leave the state or at least some counties, said Michael Garner, president of the Florida Association of Health Plans, which lobbies on behalf of health insurance companies.

''It's fair to say that the rate cuts are substantial enough that some plans will soon have to decide whether to stay,'' said Garner, who noted that some companies are faring far better than others.

Word of WellCare's plans leaked out Wednesday in the Senate Health Regulation Committee during a discussion about the 2-year-old program, which will expand statewide in 2011 if all the kinks are worked out in Broward and four Jacksonville-area counties.

The program became a political lightning rod after former Gov. Jeb Bush proposed it as a way to improve healthcare and make state payments more predictable. Critics, mostly Democrats and liberals, say the program doesn't work. Republicans and conservatives say the program is the best way to fix a ''broken'' system that consumes about a quarter of the state budget and serves 2.3 million people.

Both sides back up their claims with studies and statistics.

The program seeks to establish numerous managed-care companies that offer a broad spectrum of plans. The companies also have more say in determining Medicaid benefits. The companies are paid more for managing sick clients than healthy ones, a process known as ``risk adjustment.''

One of the fathers of the reform plan, former Bush health chief Alan Levine, said the loss of WellCare is proof that the reform plan is working because the insurer was used to ''cherry-picking'' healthy patients who are more profitable and shedding less-profitable patients.

But the risk-adjustment system made it far harder for WellCare to make a buck, said Levine, who helped implement the program when he became head of the North Broward Hospital District. Levine now heads Louisiana's hospital oversight agency.

''Good riddance,'' Levine said. ``It's no coincidence they decided to stay in regular Medicaid.''

A WellCare spokeswoman declined to comment.

Levine said the Medicaid Reform plan should make it tougher to commit fraud, pointing out that WellCare is under a federal fraud investigation in connection with the conventional Medicaid program.

But not everyone lauds the Medicaid Reform system. Some doctors have fled from the program, complaining that it erects more bureaucratic hurdles and makes it tougher to get paid for seeing clients.

''I'm very happy this has been a limited program,'' said Seminole Republican Sen. Dennis Jones, ``and I hope it stays away from West Florida.''

Marc Caputo can be reached at mcaputo@MiamiHerald.com.

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