February 8, 2010
The State of Illinois has unveiled more details about its plan to enroll elderly and disabled Medicaid recipients in health maintenance organizations (HMOs) and has announced that the plan is expected to save taxpayers nearly $200 million over five years.
The new details about the HMO plan came in a Request for Proposals (RFP) issued on Friday, February 5, 2010. The State’s Department of Healthcare and Family Services (HFS) plans to choose two HMOs to provide Medicaid-covered services to 37,737 elderly and disabled beneficiaries in Northeastern Illinois—excluding Chicago.
As previously discussed here and here on this blog, the plan represents the first time that Illinois’ Medicaid program has made enrollment in HMOs mandatory. The plan has run into opposition from advocates for the disabled, who have expressed concern that any savings might be generated through cuts in essential services, especially those delivered in home and community settings. HMOs are typically reimbursed through a capitation rate, which involves a fixed payment per enrollee per month. HFS officials have acknowledged that HMOs have suffered from a bad reputation in Illinois because of concerns that they make money by skimping on services.
In a press release issued on Monday, February 8, 2010, HFS said it believes a program that encourages greater coordination of care and more preventive care will produce better results for Medicaid recipients and lower costs for the State. For example, current Medicaid enrollees with coordinated follow-up care, such as a doctor visit within two weeks of a hospital discharge, have much lower readmission rates, the release stated. Only 21% of patients in a target group saw their doctor within two weeks of discharge; the release did not provide comparative data for similar patients without coordinated follow-up care. HFS also said in the release that only 36% of patients with congestive heart failure are on an appropriate medication regimen, and 25% of diabetics do not have their blood sugar tested even once a year. As in the rest of the country, the disabled and elderly population represents Illinois’ most expensive Medicaid recipients.
The press release said the pilot program is expected to save nearly $200 million over five years. HFS did not provide the State’s total annual Medicaid cost for the pilot program’s population, so it was not possible to determine the relative size of the estimated savings. According to the RFP, the State will tie part of the HMOs’ compensation to performance measures, such as rates of follow-up care and emergency room utilization. HMOs will also be able to earn bonuses of 5% of the capitation rate based on their performance.
The RFP was issued about a month after the originally scheduled date of January 1, 2010. The program was set to start on July 1 but is now expected to begin on October 1, according to an HFS spokeswoman. Proposals from HMOs are due April 15, and bidders are required to keep the proposals available for six months. The contracts would have initial terms of five years, with options to renew for a potential total term of 10 years.
The pilot program would be phased in over two years. In the first year, HMOs would generally be responsible for medical care but not other services provided at nursing homes and in community and home settings. Those services would be covered during the second year of the program.