ILLINOIS — While Congress is determining the fate of the Affordable Care Act, Governor Bruce Rauner’s administration is quietly preparing a massive overhaul to the state’s Medicaid system.
Up to 3.2 million Medicaid patients in Illinois, including 1.4 million children, could be affected under a new plan set to take place on January 1, 2018. Industry experts expect many of the state’s poorest patients would have to change doctors, while others could be forced to change prescriptions.
Rob Karr of the Illinois Retail Merchants Association says, “I think [Medicaid patients] will see some changes perhaps in who they can go to. Perhaps there will be changes on the margins in terms of what drugs they can use.”
Some in Springfield are preaching caution, especially with a looming GOP effort to repeal and replace the Affordable Care Act, a process currently under debate in the U.S. Senate. The Congressional Budget Office scorecard of the first GOP bill, which has since been revised, estimated Congress could cut $88 billion in annual nationwide Medicaid spending. At that rate, Illinois would see a $4 billion annual reduction of federal Medicaid funding. The current version of the American Health Care Act, dubbed ‘TrumpCare’ by some, has not yet been rated by the Congressional Budget Office, but cuts to Medicaid funding would almost certainly mean a reduction in the state’s recently expanded Medicaid population.
Comptroller Susana Mendoza, a Democrat, pointed to the fluidity on Capitol Hill as a prime reason to press pause on this plan. “I think it is important to wait just so that we have a little bit better as to what those estimates for the Medicaid population are going to be,” she told WCIA.
Mendoza testified Wednesday before the House Human Service Committee, urging lawmakers to intervene and block the Rauner administration from making structural changes to consolidate Managed Care Organizations.
The Department of Healthcare and Family Services is asking qualified health insurance providers and hospital groups to submit bids to compete for the $9 billion in annual business before Monday, May 15th. The proposals will be reviewed before four-year contracts are scheduled to be awarded on July 1st.
Mendoza describes the restructuring as the “largest procurement in state history,” and is urging lawmakers to intervene, citing a lack of oversight in the Purchase of Care process, a system drafted into law by a Democratic-led General Assembly and used by the Pat Quinn administration.
Currently, 12 MCO plans are available to Medicaid patients across the state, but coverage areas are scattered and unreliable. Under the Rauner administration’s overhaul, HFS insists every county would have a minimum of five plans from which to choose, while patients in the Chicagoland area would have up to seven plans.
Mendoza’s letter predicted the realignment would put at least 500 people out of work at the companies who could lose out on the bidding process. A spokesman for HFS downplayed any job churn, pointing out that state spending levels — and theoretically, administrative workload — would stay the same.
Right now, Medicaid patients in Champaign, DeWitt, Ford, McLean and Vermillion counties have only one MCO plan available to them. Patients in Sangamon, Piatt, Menard, Macon, Logan and Christian counties have lost at least one MCO provider this year due to program failures. Rauner’s administration points to the blighted programs and spotty coverage stretching across Central Illinois to justify the massive outsourcing move.
HFS spokesman John Hoffman tells WCIA that currently 65 percent of Illinois Medicaid patients participate in managed care programs. Under this new realignment, Hoffman predicts enrollment could rise to 80 percent or higher.
MCOs act in similar fashion to HMO insurance plans, pooling large numbers of patients together and then coordinating their care with medical providers and pharmaceutical companies. These private companies negotiate prices with health care providers and often assign care coordinators who can help schedule appointments for patients. Care coordinators routinely try to reduce cost, such as unnecessary visits to the emergency room. In some cases, patients can grow frustrated with care coordinators when they feel their insurer is steering them away from the plan of care they desire.
Hoffman claims reducing the number of plans could make enrollment less confusing for new patients. Critics argue it betrays the conservative free market principle that competition drives prices down. However, the larger patient pool model is based on a different calculation altogether, which essentially relies on a ‘safety in numbers’ approach, whereas more patients in a pool assures lower risk to the insurer.
Another element to the cost structure could be described as ‘buying in bulk.’ Higher patient population in an insurance pool can signify more business for doctors looking to grow their practice. Insurance companies, or MCOs in this case, will often dangle the reward of high patient volume in exchange for discounted prices for services rendered.
HFS Director Felicia Norwood says this MCO realignment would drive down cost to state taxpayers, but she could not give specific estimates. “We are in the middle of a competitive procurement process, so we cannot release certain information with respect to the Request for Proposal,” Norwood said, referring to the bidding process. “The governor’s intention with this RFP — and what we’re going to achieve — is quality healthcare for Medicaid beneficiaries at a sustainable cost.”