Managed Medicaid

Mandatory Medicaid Managed Care Demo Pushed in Ill. Legislature

Reprinted from the Sept. 6, 2007, issue of MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs.

Medicaid beneficiaries in two as-yet-unidentified counties in Illinois would be required to enroll in an HMO under a demonstration project proposal tucked into a budget implementation measure moving toward the governor's desk. Backers say the demonstration could save the state as much as $5 million a year, but providers say it will limit access and harm quality in a system with all the fat long since trimmed.

Patty Schuh, a spokesperson for the state's Senate Republicans, including party leader and bill backer Frank Watson, says that "it's the intention of the General Assembly to look at a [capitated] managed care program as an option for the state's Medicaid program." The pilot, she says, is outlined in the final budget agreement that was signed off on by all four legislative caucuses and ultimately passed by both houses.

The actual budget implementation measure, though, has passed only the state Senate — because the House hasn't been in session to hold its vote. "This has been a very unusual session," Schuh says. "But we think when everything's said and done, the pilot project will be part of the final implementation act that has yet to be written."

Most Medicaid eligibles in Illinois are in a primary care case management managed care program, rather than a capitated HMO. They can now choose either under a voluntary managed care program begun in the 1990s. If the two-county pilot leads to full statewide implementation of mandatory capitated HMOs, Schuh reports, 1.5 million to 1.7 million recipients would be affected. There are about 2 million Illinois Medicaid eligibles in total; the lower figure carves out dual eligibles and some others. Fewer than 160,000 beneficiaries now are in Medicaid managed care plans in Illinois.

Schuh says the number of eligibles in the pilot is not available to the legislature or the public, according to the state's Department of Healthcare and Family Services, because HIPAA "prevents it from providing those raw numbers." Indeed, no one's even been told yet which two counties would participate in the demonstration.

The $5 million savings estimate notwithstanding, Schuh says no "specific marks the program has to meet have been picked," adding that "it seems to be common sense that managed care should save Illinois money. Numerous studies have found that managed care saves money, and other states have used it in place of case management."

She adds: "Managed care is an issue we've been interested in for quite some time. The legislature brought in The Lewin Group, which clearly identified savings that Illinois could anticipate. And nothing has changed since the study. We truly believe managed care can save Illinois money, and the best way to prove that is with a demonstration project."

Provider Groups Oppose Demo

The Illinois Hospital Association begs to differ. "It won't save the state money, and it will hurt quality of care," says the group's spokesman, Danny Chun. Base rates for Medicaid have been frozen for 12 years, he says, and hospitals are already receiving just 62% of costs directly from the program. "The savings have already been squeezed out of the program," he says. "It can't get better rates from providers." And, he adds, Medicaid growth in Illinois averages about 7% — while "in states with mandatory Medicaid HMOs, spending increases have ranged from 10% to 20%."

The state's doctors agree with their hospital counterparts. Illinois State Medical Society (ISMS) President Rodney C. Osborn, M.D., says his organization "opposes mandated HMO enrollment because patients should be able to choose from several health insurance options to find one that meets their diverse health care needs and budgets. Additionally, ISMS favors freedom of choice for physicians, and the proposal would limit that choice."

Furthermore, says the IHA's Chun, predicting the outcome of the state's "pretty turbulent" legislative session is as yet unwise. "There's a specific bill with a number that has the pilot language" — it's House Bill 681/Senate Amendment 2 - "but it may end up in a different bill with a different number, which could be a much different vehicle than the budget implementation act. That's not to say it won't be considered. But given the political environment, it would be insane to make any predictions about anything. Every day there's a new twist and turn that's totally unexpected, and the legislative leaders and the governor are not getting along."

Already, he says, that chaos has helped the pilot measure's forward motion. "It was stuck into the budget implementation act at the last minute in a back-room deal without any hearing on its own merits," he asserts.

More than a half dozen Medicaid plans have exited the Illinois market in recent years. Harmony Health Plans, now a unit of WellCare Health Plans Inc., has remained and reportedly has pushed for trying mandatory Medicaid managed care. But John Aberg, corporate communications vice president, says the firm, which has the lion's share of Medicaid managed care enrollment with 116,000 members (Family Health Network has the rest), "does not normally comment on pending proposals in the legislature."

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