Illinois Democrats want to spike Rauner's Medicaid reboot

The Illinois General Assembly has quietly passed a bill that aims to unwind Gov. Bruce Rauner's Medicaid reboot.

The bill—which would essentially scuttle what could be the state's largest procurement ever—is now making its way to the governor, whose approval is a long shot. After all, back in February, Rauner called for overhauling a major Medicaid initiative known as managed care to rein in spending. The revamped program is expected to cost up to $13.5 billion a year, about 38% of the state budget passed in July.

Rauner has already named six winning bidders—private insurers, which are known as managed care organizations or MCOs, that administer Medicaid benefits to recipients. But critics contend the selection process wasn't transparent enough. Lawmakers still want to know, for example, who reviewed the bids and selected the winners.

"This is a way to try to unwind that process," said Sen. David Koehler, a downstate Democrat who is chief sponsor of the bill.

Koehler's bill would amend the Illinois Procurement Code, a roadmap of regulations for state contracting. The current code does not include contracts with MCOs. Currently, those are exempt from the state's traditional route of securing business (as are collective bargaining agreements and contracts between state agencies). Instead, the Illinois Department of Healthcare and Family Services, which implements Medicaid, a health insurance program for the poor and disabled, oversaw the bidding process in-house.

Both the state Senate and House passed the bill on Sunday, two days after Rauner awarded the bids.

"I'm sure (Rauner will) veto" the legislation, Koehler said. Even if he does, lawmakers could override the decision, said Rep. Greg Harris, a bill sponsor.

Rauner spokeswoman Laurel Patrick would not say if the governor planned to sign the bill, only that the legislation is under review.

In managed care, Illinois pays insurers to not only administer health insurance benefits, but also to focus on prevention and steer enrollees away from expensive ER and hospital visits. The overall goal is to keep Medicaid recipients healthy, ultimately saving taxpayers money.

Before insurers had to bid for contracts, 12 health plans managed the benefits for nearly two-thirds of the state's 3.2 million Medicaid recipients. Under Rauner's overhaul, 80% of Medicaid enrollees must choose or be assigned to a MCO, and the initiative will expand from 30 to all 102 counties in the state.

Ultimately, nine carriers bid for contracts. The winners are Blue Cross & Blue Shield of Illinois, the largest carrier in Illinois; CountyCare, a health plan run by the Cook County Health & Hospitals System; and the following insurers affiliated with national or regional carriers: Harmony Health Plan, IlliniCare Health Plan, Molina Healthcare of Illinois and Meridian Health.

The contracts, with initial four-year terms, are significant. Managed care now costs Illinois about $10.5 billion, but the tab is expected to increase to between $12.8 billion and $13.5 billion a year under Rauner's revamp because enrollment will increase, and health plans are paid a fixed amount of money per enrollee. But the state expects to save around $1 billion over four years partly because the MCOs have agreed to be paid less money.

The legislation is the second attempt this year to move MCO contracts under the state procurement code. In May, the bill didn't make it out of committee.

But that was before Rauner announced the winning bidders. The bill was resurrected quickly—and passed the Illinois Senate with a 38-18 vote two days later—amid fresh concerns that no minority-owned companies won a bid, said Harris, a Chicago Democrat.

"This was one of the biggest selling points" in the managed care reboot, said Harris, a Chicago Democrat.

In a statement, John Hoffman, a spokesman for the healthcare and family services department, said that HFS "ensured that managed care reboot mirrored traditional procurements in every substantial aspect, including the integrity of evaluations, transparency and the use of objective measures. In addition, plans have been chosen through competitive statewide bidding for the first time ever in Illinois, using strict rules to ensure impartiality and prevent favoritism."

He added that, typical of procurement rules, HFS would not reveal who evaluated the bids to preserve the integrity of the process.

"We continue to move forward with a managed care reboot," Hoffman said in the statement. "We are not speculating on the possible effect of any pending legislation."

But the prospect of having to rebid leaves the MCOs in a lurch. For the winners, their new contracts begin on Jan. 1, leaving little time to add hospitals and doctors to their networks and inform patients who will have to switch health plans.

In a statement, Cook County Health CEO Dr. John Jay Shannon said the system is still preparing to provide coverage to Medicaid enrollees in 2018 despite the uncertainty around the pending legislation.

"It is our hope that there will be a quick resolution on this issue as it is essential that our members, and all individuals covered by Medicaid in the state, understand their coverage options for the coming year," Shannon said in the statement.

Representatives for Blue Cross, Molina, Harmony and Trusted Health Plan declined comment. A spokeswoman for NextLevel Health, a minority-owned firm that did not win a new contract, declined to comment as the insurer appeals the state's decision. Other insurers did not return messages or did not provide comment.

"Illinois Democrats want to spike Rauner's Medicaid reboot" originally appeared in Crain's Chicago Business.