December 15, 2009
Governor Pat Quinn’s administration plans to begin enrolling elderly and disabled Medicaid recipients in Northeastern Illinois—excluding the City of Chicago—in health maintenance organizations (HMOs) in July of 2010. The pilot program, which is expected to cover about 40,000 people, represents the first time that Illinois’ Medicaid program has made enrollment in HMOs mandatory.
The Illinois Department of Healthcare and Family Services (HFS), the agency that administers the State’s Medicaid program, posted a notice on the State’s procurement website in October of 2009 informing vendors that it would be issuing a request for proposals (RFP) seeking two managed care organizations for the pilot plan.
HFS officials elaborated on their plans at a videoconference meeting on December 2, 2009 in Chicago and Springfield with advocates for the disabled. James Parker, the agency’s Deputy Director for Medical Programs, said the Governor’s office has requested that the RFP be issued in early January of 2010 and that Medicaid recipients start to be enrolled in July. Mr. Parker said the pilot program would cover the elderly and disabled who are not also eligible for Medicare and who live in suburban Cook County as well as Lake, Kane, DuPage, Will and Kankakee counties. Mr. Parker requested assistance from the advocates in drafting an RFP that would lead to better integrated delivery of care without disrupting people’s lives.
The idea was met with skepticism by many disability advocates, both at the meeting and in subsequent communications with their members. Mr. Parker said he was aware of the doubts because he had received letters and emails expressing concern. One attendee said she believed that Governor Quinn’s motive was to cut costs and help convince Republican critics of the Democratic Governor to sign on to an income tax increase, an idea that the Governor pushed unsuccessfully earlier in 2009. Advocates were concerned that any cost savings would come by reducing needed community-care services for the disabled.
However, Mr. Parker said that state officials believe that managing care through HMOs will lead to both better and more efficient delivery of care in the long run. He said that the Medicaid population in question uses about $1 billion a year in services. As in the rest of the country, the elderly and disabled are Illinois’ most expensive Medicaid recipients, representing 18% of those in the program but accounting for approximately 54% of costs. In total, the State’s Medicaid program serves about 2.5 million recipients at a cost of roughly $14 billion, of which a portion is reimbursed by the federal government. For more information on the State’s Medicaid program, see the Civic Federation’s report on the program.
Mr. Parker did not give an estimate for how much could be saved. He emphasized that the savings would not come from cutting rates paid for community care services, which disability advocates said are already low. Instead, he said the savings would come from eliminating unnecessary hospitalizations and drug expenditures. Mr. Parker said cost data show that the rate of hospitalization and rehospitalization is extremely high. He also said data indicate that patients often are prescribed two to three different drugs for the same ailment. An HMO could negotiate rates and coordinate care, he said.
Advocates for the disabled said that state data also indicate that the highest costs are for those who receive care in private nursing homes or state-operated developmental centers. They suggested that the State has lacked the political will to focus on those areas of high costs. Mr. Parker said that institutional care would be included in the HMO program, in the long run if not at the beginning of the program.
HMOs restrict patients to a particular network of healthcare providers and are usually paid a fixed fee for each patient. Historically, HMOs have had a bad reputation in Illinois, Mr. Parker said, based on concerns that they make money by skimping on services or by excluding those with major health problems. Mr. Parker said HMOs will be required to provide all necessary services. He said tens of millions of dollars might be set aside to reward HMOs in the program for good outcomes regarding recipients’ health and the quality of their lives.
Illinois currently has several Medicaid managed care programs that have not put many restrictions on patients’ healthcare choices. Under a program started in July 2006, for example, many Medicaid recipients are required to be assigned to a primary care doctor. However, HFS has only recently begun to phase in a policy of requiring patients to either visit those doctors or to obtain a referral if they want to see primary care doctors other than their assigned physicians. Recipients in certain counties may choose to enroll in HMOs instead of signing up with a primary care doctor.