Legislation that would put an end to drastic cuts in payments to providers of medical equipment and supplies for Medicaid patients has been proposed by a conservative Republican and liberal Democrat in the Illinois General Assembly.
House Bill 5930 is designed, at least in part, to address concerns that cuts this year of 10 percent to 50 percent in reimbursement to medical supply companies would put many suppliers out of business and lead to monopolies, according to state Rep. David McSweeney, R-Barrington Hills.
The bill, co-sponsored by Rep. Gregory Harris, D-Chicago, and introduced this month, also would require “minimum quality standards” for medical supplies and equipment and prohibit managed-care organizations, or MCOs, from signing “sole-source” contracts with providers of durable medical goods.
The quality standards, McSweeney said, would help to ensure that patients are well-served by companies accepting the rock-bottom payments being mandated by at least one of the state’s contract Medicaid managed-care companies, IlliniCare Health.
McSweeney, a critic of Republican Gov. Bruce Rauner, said he disagrees with Harris on some reforms that McSweeney would like to see in the Medicaid program. Harris couldn’t be reached for comment.
But McSweeney said he wants to make sure smaller providers aren’t pushed out of the Medicaid provider market. A monopoly wouldn’t bode well for the state and its taxpayers in the long run, he said.
“We’re just setting ourselves up for massive price increases into the future,” he said.
Daniel Heckman, owner of Heckman Health Care in Decatur, said he decided not to sign a contract with IlliniCare this year because of IlliniCare’s mandated payment cuts.
“That’s just not something we could live with,” he said.
Heckman did sign contracts with four other MCOs because those organizations had more reasonable rates for serving Decatur-area patients. But he worries that more of the companies will follow IlliniCare’s lead in the future, so he supports HB 5930.
IlliniCare, because it is part of a large, national company, “is able to weather the red ink for a while to ‘thin the herd,’” Heckman said.
IlliniCare didn’t respond to a request for comment. But Samantha Olds Frey, executive director of the Illinois Association of Medicaid Health Plans, said the association opposes the bill.
The association is interested in ensuring that products and services are high-quality, she said.
But as drafted, the legislation would require Medicaid managed-care companies to pay some vendors more than those vendors are asking for products, she said.
The bill, which McSweeney hopes to get passed in the Democratic-controlled General Assembly during the 2018 fall veto session or 2019 spring session, would prohibit medical supply vendors from being paid less than 10 percent below Medicaid “fee-for-service” rates by managed-care organizations.
Spokespeople for the Rauner administration didn’t respond to a request for comment.
If a managed-care company can find a vendor willing to accept less, “why should a plan use taxpayer dollars to spend more?” Olds Frey asked.
Managed-care contracts are structured so that “anytime a medical plan saves money, the taxpayers of Illinois benefit.”
However, McSweeney said it’s unclear whether savings being generated by the IlliniCare cuts are being passed onto the state or simply adding to the profits of IlliniCare. IlliniCare is part of publicly traded Centene Corp.
McSweeney said he has doubts about any claimed savings from state spending on medical supplies and overall medical care through Rauner’s “reboot” of Medicaid managed care. That reboot, dubbed HealthChoice Illinois, took effect Jan. 1 in many of the state’s urban areas. On April 1, the reboot expanded to all 102 Illinois counties, including the Springfield area.
A special provision in the Medicaid managed-care reboot will place all 16,200 children who are in the care of the Illinois Department of Children and Family Services, as well as 23,00 others including former DCFS wards who have been adopted, into IlliniCare’s managed-care network beginning Oct. 1.
There is secrecy involved in the money saved through the state’s managed-care contracts, McSweeney said. The awarding of contracts didn’t follow the state’s regular vendor procurement process, he said.
The Illinois Department of Healthcare and Family services estimates that the reboot will lead to annual savings of $200 million to $300 million. The total savings, according to HFS, would be more than $1 billion over the life of the four-year contract affecting more than 80 percent, or 2.7 million, of Illinois’ 3.14 million Medicaid recipients.
But McSweeney said, “Nobody can prove to me it saves any money.”
He said managed-care, implemented in the right way, could yield legitimate savings in the Medicaid program for taxpayers, but “it’s not the only answer.”
Illinois’ Medicaid managed care program began in 2012, Olds Frey said. “We know without a doubt that … the state is seeing significant savings from managed care,” she said.
Durable medical equipment in fiscal 2016 accounted for about $101 million, or one-half of 1 percent, of Illinois’ $20 billion-plus Medicaid program. Vendors say good-quality products and services lead to fewer expensive hospitalizations and re-admissions.
Olds Frey said she hasn’t seen reimbursement reductions by Medicaid managed-care organizations lead to monopolies in other states when it comes to medical equipment providers.
Kevin Stewart, president of the Great Lakes Home Medical Services Association, said the association hasn’t seen monopolies form in states, either — at least not yet, but that’s the fear. The association supports HB 5930, he said. A similar legislative proposal by Sen. David Koehler, D-Peoria, Senate Bill 2262, has failed to advance in the General Assembly.
Contact Dean Olsen: dean.olsen@sj-r.com, 788-1543, twitter.com/DeanOlsenSJR.