State’s Medicaid managed care program slammed
Wednesday, Apr 3, 2019 - Posted by Rich Miller
* Stephanie Goldberg at Crain’s…
Sinai Health System administrators were surprised when a Medicaid managed care insurer refused to reimburse the hospital chain for treating a patient with two broken bones. It’s not uncommon for medical claims to be denied by the private insurers administering Medicaid benefits in Illinois—especially when doctors fail to request prior authorization. But a doctor can’t get approval to operate on someone two weeks before he’s injured in a car accident, as Sinai CEO Karen Teitelbaum points out.
The claim, which has since been paid, is just one example of care being denied due to process and paperwork rather than medical reasons in the government-funded program for low-income patients.
Under HealthChoice Illinois, the state pays private insurers a set amount per patient rather than paying for each medical service provided. The goal is to improve people’s health and control costs by ensuring all care is appropriate and high-quality. However, it has significantly increased administrative costs for some hospitals—many of which are already strapped for cash.
“Hospitals and systems are having to staff up with dozens and dozens of employees to chase down claims,” says A.J. Wilhelmi, CEO of the Illinois Health & Hospital Association. “Depending on the size of the organization, some are spending hundreds of thousands of dollars—and likely millions of dollars—to address the denials and delays in payment. For smaller hospitals, this additional administrative cost isn’t in their budget so they do the best they can with the staff they have.”
* Joe Cahill at Crain’s…
Illinois’ reboot of Medicaid managed care has delivered a kick in the teeth to hospitals that serve the state’s most vulnerable patients.
Launched early last year, HealthChoice Illinois expanded Medicaid managed care from just 30 counties to the entire state. Under managed care, Illinois pays private insurers a fixed fee to cover medical care for patients who rely on Medicaid, a joint federal-state health insurance program for people of modest means. The state explained the move as a way to provide “enhanced health coordination and quality services at sustainable costs.”
But the costs of HealthChoice quickly became unsustainable for hospitals with large numbers of Medicaid patients. As my colleague Stephanie Goldberg reported in Crain’s this week, those hospitals are now spending more to collect the same amount of money—and in some cases less—from Medicaid managed care insurers. […]
Yet the state of Illinois, facing its own fiscal crisis, has increased financial pressure on institutions that play an essential role in public health. Hospitals say onerous HealthChoice paperwork requirements have forced them to hire more administrative staffers to wrangle payments from managed care companies. They also say HealthChoice insurers are rejecting 26 percent of claims, depriving hospitals of payment for hundreds of millions of dollars’ worth of services. A state report says the most recent data available shows a denial rate just under 11 percent during the first quarter of 2018.
A program that drives up hospitals’ administrative costs isn’t making health care more efficient, effective or affordable. The state might be saving money, but only by shifting costs onto hospitals.
* Meanwhile, in Iowa…
One of the three insurance companies providing services for the Iowa Medicaid program is quitting. […]
Gov. Kim Reynolds says she ended negotiations with UnitedHealthcare on Friday when the company dictated contract terms she believed unreasonable.
Foxhoven says the company wanted full payment without meeting all required performance requirements in its contract.
UnitedHealthcare says persistent funding and program design challenges made it impossible for them to provide the quality care and service they believe people deserve.
Former Gov. Terry Branstad hired private companies to manage the Medicaid program previously run by the state in 2016 and it has been the target of criticism since for cuts in services, reported slow payment of bills and doubts about its promised savings to taxpayers.
* In other news…
The Galesburg Cottage Hospital has announced the suspension of all inpatient labor, delivery, and urology services.
The Hospital group announced on April 2, that it will suspend inpatient labor and delivery and urology services effective May 2.
“The decision was impacted by declining market demand for these services and the significant negative impact of the Medicaid Supplemental Payment Program.” –Eileen Inness, Director, PR […]
“In 2018, the hospital experienced a significant loss of funding as a result of the state’s redesigned Hospital Assessment Program that impacted the amount of Medicaid Supplemental Payment the hospital received,” said Jim Flynn, CEO. “While many hospitals in our state received additional funding as a result of the redesigned program, Galesburg Cottage Hospital experienced decreased funding of more than $5 million.”
- GADawg - Wednesday, Apr 3, 19 @ 3:16 pm:
Why is anybody surprised when another layer of administration (MCOs) causes the costs to go up and the services to go down? The only money being saved is by refusing services or refusing to pay for them.
- Sue - Wednesday, Apr 3, 19 @ 3:27 pm:
No worries- in 2021 we will all be operating under Medicaid for all
- Chip - Wednesday, Apr 3, 19 @ 3:31 pm:
Agreed with GADawg. They implemented a system to control the state’s costs, then gave a flat fee to a private entity which has an incentive to not pay out. The new entity also drives up administrative costs, as well as wants to take its own fee off the top.
At what point do we clearly state that basic healthcare cannot be in the hands of for-profit businesses, period?
- Honeybear - Wednesday, Apr 3, 19 @ 3:32 pm:
Sue you do realize that we are talking about human beings right? Do you understand how callous and uncaring you sound?
- JS Mill - Wednesday, Apr 3, 19 @ 3:39 pm:
=The state explained the move as a way to provide “enhanced health coordination and quality services at sustainable costs.”=
That is a load of manure. It is a cost cutter, period. Not better or enhanced care or anything else unless you count enhanced revenue for the managed care companies.
=Do you understand how callous and uncaring you sound?=
Honeybear, with respect, @Sue does not care unless it impacts her directly. In fact, I am guessing she enjoys it. Sad.
- Union thug - Wednesday, Apr 3, 19 @ 3:40 pm:
Surprise. Program pushed by last guy doesn’t help the people the program is suposed to…
- LTSW - Wednesday, Apr 3, 19 @ 3:43 pm:
If the Galesburg hospital’s assessment payments went down it should mean they have a low Medicaid utilization rate. If the hospitals are so cash poor, how come they all seem to be constructing new buildings.
Managed Care has its issues, but the state really needs about a 100 more Medicaid auditors if we go back to the old fee for service system.
- LTSW - Wednesday, Apr 3, 19 @ 3:47 pm:
Union thug, the push to managed care was begun with the passage of the SMART Act during the Quinn admin.
- Anonymous - Wednesday, Apr 3, 19 @ 3:48 pm:
“They implemented a system to control the state’s costs, then gave a flat fee to a private entity which has an incentive to not pay out.”
That’s not how that works. And much of the information about denials being pushed by the IHA such as the supposedly 26% denial rate is just wrong. Even the IDHS says it’s 11%.
- Flynn's Mom - Wednesday, Apr 3, 19 @ 3:58 pm:
Thanks Rauner.
- Da Big Bad Wolf - Wednesday, Apr 3, 19 @ 4:08 pm:
My understanding is hospitals are making the 26% denial claim. Then the hospital has to pay administrators to dispute the denials. The final number ends up in a quarterly state report several months later at 11%.
- Al - Wednesday, Apr 3, 19 @ 4:08 pm:
Contrary to what you may think, the program is working as planned and is a huge success; Rauner got paid. US Attorney please investigate the Rauner administration including payments off shore.
- Chicagonk - Wednesday, Apr 3, 19 @ 4:16 pm:
I’m sorry, but the hospitals need to look in the mirror before casting all of the blame on the MCO. A lot of these hospitals are poorly run and have sloppy billing procedures. It shouldn’t be too hard to make money as a hospital considering it is currently acceptable to bill $30 for an ibuprofen tablet and $300 for saline solution, fully expecting the MCO to negotiate “savings” that allow them and the MCO to both make a lot of money. If the hospitals want to argue for reforming that broken system, I am all ears, but complaining that they aren’t getting reimbursed for sloppy work when the system is designed for them to make a lot of money is ridiculous.
- Huh? - Wednesday, Apr 3, 19 @ 4:16 pm:
I wonder if the vogons at HCI recite poetry for added torture when denying a claim.
- Annonin' - Wednesday, Apr 3, 19 @ 4:27 pm:
This is shocking to think something created by PQ and enhanced by GovJunk does not work. Rationing always works. Get with it.
- Da Big Bad Wolf - Wednesday, Apr 3, 19 @ 4:55 pm:
==It shouldn’t be too hard to make money as a hospital==
I wouldn’t be so sure about that dear.
- Sue - Wednesday, Apr 3, 19 @ 5:22 pm:
Honey bear- sorry I was just referring to what virtually every Dem running for President is promising to do. The only difference between Medicare and Medicaid is reimbursement rates. Nd my guess is given what healthcare changes the Dems are campaigning on that 5 years out the nations hezlthcare system will look a lot like this Illinois program looks like
- Union thug - Wednesday, Apr 3, 19 @ 5:39 pm:
Sue, Medicare and Medicaid are vastly different. Please use Google
- Big Jer - Wednesday, Apr 3, 19 @ 5:48 pm:
Sue– to me this is not a Democrat vs Republican Issue.
I will tell you the same thing I told my upper income class chiropractor when she made a snarky comment about Medicare for All.
Healthcare costs in the US are extremely out of control and millions of people cannot afford healthcare in this country. Also every other developed country in the world has cheaper healthcare AND better outcomes.
I told my chiro that if she agrees that healthcare costs are out of control then Medicare for All is ONE solution. If anyone does not like Medicare for All then I would ask them to come up with an alternative.
Again this is not a Dem vs Repub issue but a human decency issue. So Sue if your not a fan of Medicare for All then what are your alternatives???
Also I pray that you are never on the outside of healthcare and without a employer healthcare or huge medical bills that you cannot afford.
- m4a - Wednesday, Apr 3, 19 @ 6:47 pm:
We desperately need Medicare 4 All.
- thoughts matter - Wednesday, Apr 3, 19 @ 10:21 pm:
Managed care is only good if the people running it make appropriate decisions.
As to Medicare for all- the SJ-R has a financial guru column. This week he discussed Medicare for all. According to him: There are 125 health insurance companies in the US. 125 payroll, maintenance, marketing, IT departments. Quite a few more than 125 buildings many of which are pretty swanky. All 125 want to make their shareholders a profit. How much more money could go towards health care in a single payer system without taking more money in premiums ( taxes in a single payer system). Best financial argument towards single payer I’ve ever heard.
- Da Big Bad Wolf - Thursday, Apr 4, 19 @ 9:25 am:
Blue Cross Blue Shield has a palace on the river in the Loop. Their name is on every Divvy bike. If you turn on the radio their name is on the LED where the artist’s name usually appears.
A good slogan for Blue Cross Blue Shield: We pay everyone but your doctor.