* 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.”