Rauner's Medicaid overhaul: Who bid, and who backed out

Family Health Network is notably absent from a group of insurers that have bid on a lucrative contract for a major Illinois Medicaid initiative.

Now the fate of the Chicago-based health plan, known as FHN, is unclear. Medicaid revenue makes up the bulk of FHN's total revenue, which was nearly $600 million at the end of 2015. In April, the board chairman said he feared the Rauner administration was locking the nonprofit out of a new contract and, if so, the plan likely would dissolve. A group of state lawmakers has been racing to save it.

FHN has more than 200,000 members. Five hospitals that are anchors of their impoverished neighborhoods founded the plan 22 years ago and count on it to generate much-needed revenue. A spokeswoman for FHN did not immediately comment.

Yesterday was the deadline for insurers to submit bids for contracts to participate in Gov. Bruce Rauner's overhauled Medicaid managed care program.

The following insurers submitted bids, according to the Illinois Comptroller's office:

Aetna

Blue Cross & Blue Shield of Illinois

Cook County Health & Hospitals System

Harmony Health Plan

IlliniCare

Meridian

Molina

NextLevel Health

Trusted Health Plan

Insurers that now have managed care contracts with the state, but did not submit bids, include FHN and its subsidiary Community Care Alliance of Illinois, and national insurers Cigna and Humana.

The health plans are vying for a piece of an estimated $9 billion in contracts a year, over four years. The Rauner administration plans to award just up to and seven bids.

Rauner announced in February that he was rebooting managed care to squeeze out more savings as the state moves more of its Medicaid recipients into the program. The intent of managed care is surround patients with doctors, social workers and others who closely monitor and coordinate their treatment with the goal of lowering medical costs.

About 2 million, or 65% of the state's Medicaid enrollees, are in managed care so far. Rauner wants to grow the program.

Rauner's reboot has caused high anxiety in the health care industry, which, like vendors statewide, is eager to get paid in a state without a budget for nearly two years.

Illinois Comptroller Susana Mendoza is among lawmakers and other critics cautioning Rauner to slow down his revamp. The new managed care contracts are expected to be awarded next month and begin on Jan. 1, leaving the winning bidders a short time frame to get ready—that is, expand their contracts with doctors and hospitals statewide.

FHN won't be one of them. Illinois Sen. Omar Aquino, whose legislative districts includes two of the five hospitals or health systems that co-own the insurer, said lawmakers are still considering options to try to help FHN survive. He said the insurer has about 500 employees.

"I want to try to protect them at all costs," he said of FHN's co-owners.

"Rauner's Medicaid overhaul: Who bid, and who backed out" originally appeared in Crain's Chicago Business.