Revolving doors and conflicts of interest have emerged at virtually every level of American government, from municipal offices to federal agencies. State governments, including Illinois, impose an array of financial disclosure rules and cooling-off periods to stop private interests from co-opting the public sector.
The Illinois Medicaid merry-go-round has been whirling under three successive governors — Democrat Pat Quinn, Republican Bruce Rauner and current Gov. J.B. Pritzker, a Democrat.
“It’s like interbreeding here,” said State Rep. Fred Crespo, a Democrat from Hoffman Estates. “How can they have their hands out to the insurance companies and at the same time be making Medicaid policy?”
In the Illinois Medicaid program, officials and industry executives say they carefully vet potential conflicts through frank, top-level discussions. But the BGA found little public disclosure as program leaders toggle between government appointments and top jobs at the for-profit insurance firms.
“The revolving door and apparent conflicts of interest raise ethical concerns about corruption that damage the public’s support for state government in general and the state’s Medicaid program,’’ said Kent Redfield, a professor emeritus of political science at the University of Illinois at Springfield, who reviewed the BGA’s findings.
“Clearly, the appearance of bias is there, and that reduces the effectiveness of the Medicaid program,” Redfield said. “The overall picture assembled by the BGA is that the state’s process for managing Medicaid payments is heavily influenced by people and organizations with an insurance industry perspective.”
Howard A. Peters III
Since 2017, Howard A. Peters III has earned $105,000 per year through the state Office of Medicaid Innovation as an “expert adviser” to HFS. He also sits on the HFS Medicaid Advisory Committee, as well as the Illinois Medicaid Telemedicine Task Force.
At the same time, Peters lobbied the agency and lawmakers on behalf of insurance giant Aetna, one of the four companies hired by the state to run the Medicaid program.
His lobbying firm, HAP Inc., which counts Aetna among its handful of clients, also contributed $70,000 to state politicians since Peters joined the state payroll.
Contacted by the BGA, Peters said his dual roles were fully disclosed and discussed with former HFS Director Felicia Norwood and current director Eagleson before he accepted the state job.
“They understood that I had Aetna as a client,” Peters said. “There is no secret here.”
“I wouldn’t say (it was) what you might call a formal process, but it certainly was a very conscious discussion and a conscious decision about how this would work and the importance of not mixing and mingling, if you will — not having conflicts,” Peters said. “The department certainly doesn’t want the very issue that you’re raising, and I don’t, either.”
Peters said he sees no conflict between his dual roles. State officials are scrupulous about guarding against potential conflicts, he said.
“I don’t think there’s a revolving-door concern,” Peters said. “I think that the state has stringent regulations about what you can do when you leave state government. From what I see in terms of how they conduct their business and what I know about the leadership and their character, I don’t have a reason to be concerned as a citizen and as a person who cares about the quality of the government.”
Eagleson, in a separate interview, said Peters is deliberately excluded from discussions involving the four MCOs, including Aetna.
Eagleson said Peters’ longtime involvement in state government, including cabinet posts, make him “eminently qualified to be a senior adviser” at her agency.
“Everybody is transparent, following the rules,” she said. “He never participates in any meeting that has anything to do with regulating the managed care companies.”
“The work that I advise the department on is not involved with Aetna or the managed care organizations,” Peters said, adding that he advises HFS on a long-term project called health care transformation and on the department’s effort to increase staffing and improve conditions in nursing homes.
Peters said he has not been paid in his roles as current member and former chairman of the Illinois Medicaid Advisory Committee, a panel that includes insurance industry leaders and counsels HFS with respect to Medicaid policy and planning. Rauner in 2018 appointed Peters as the unpaid co-chair of the state’s Medicaid telehealth task force.
Peters’ state salary is paid through the University of Illinois’ Office of Medicaid Innovation, or OMI, an organizational unit within the university that is funded by HFS.
The university office operates under HFS’ direct guidance and through HFS Project Orders, according to records provided to the BGA by the university.
Peters was hired at OMI when it was run by Eagleson, who served as OMI’s $198,000-per-year executive director at the time.
“Theresa was head of the Office of Medicaid Innovations, Director Norwood was director of the Department of Healthcare and Family Services at the time, so they both were aware of my work, and asked me if I was willing to serve them as part time capacity,” Peters told the BGA.
Peters declined to provide details about his lobbying for Aetna.
“I care about my reputation, and I care about the reputations of the people I’m working with,” Peters told the BGA. “If there’s an issue that remotely looks like I can have an interest that’s not theirs, I’m not involved in that issue.”