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Illinois Medicaid Moves To Managed Care

Apr 29, 2014

This story was produced in partnership with the

Sherry Loveless can see the promise of managed care right through her bedroom door.

Saddled with multiple disabilities, Loveless, 61, has been stuck in her Rockford bedroom for months because the doorway is too narrow for her wheelchair to squeeze through. When she moved into the house in December, firefighters carried her to the bed.

But next month, thanks to a restructuring in Illinois' Medicaid program, a renovation project is scheduled to widen the door and build a ramp that will allow her access to the outside.

The nonprofit that's now in charge of Loveless' health and well-being, Community Care Alliance of Illinois, also is making it easier for her to obtain medications for her arthritis, hypertension, diabetes and chronic obstructive pulmonary disease, as well as transportation to medical appointments.

The idea is that by investing upfront in Loveless' quality of life and better managing her ailments, she'll be healthier in the long run and save both the company and the government money.

While most patients won't get this degree of personal attention, hundreds of thousands of Medicaid recipients in Illinois are being shifted into some kind of managed care this year as part of a sweeping overhaul intended to fix a program widely acknowledged to be broken.

Medicaid traditionally reimburses hospitals, physicians and other providers for each service they perform, a system that rewards volume instead of quality. Now many will receive a fixed monthly payment for each patient they supervise, allowing them to profit if they keep people healthy.

The shift will change the way patients interact with the health care system, which in the past largely left people to fend for themselves and often resulted in substandard care and expensive hospital visits.

And by following other states into a managed care model, Illinois has a chance to reduce waste and duplication in its $15 billion Medicaid program, which consumes a large portion of the state's cash-strapped budget.

"I'd consider this to be the most significant redesign of the Medicaid program in its history," said Julie Hamos, director of the Illinois Department of Healthcare and Family Services, who called care coordination key to solving many of the program's major problems.

Under state law, at least half of Illinois' roughly 3 million Medicaid recipients must move into managed care programs by Jan. 1, including an estimated 350,000 who are expected to gain coverage this year under an expansion of eligibility allowed by the Affordable Care Act.

Managed care, Hamos said, "is the direction that the whole world is going" and, if done right, will produce "healthier people, lower costs and a more efficient delivery system."

To participate in a managed care program in Illinois, a health plan must provide a vast range of services, including hospitalization, primary care, specialty care and mental health services. In exchange for this greater access, patients must accept limits on which doctors and hospitals they can visit.

But some also will receive perks like unlimited prescription drugs, free transportation, financial counseling, cellphones to call doctors and care coordinators, even gift cards for seeking preventive care.

Because health care providers have more of a financial stake in their patients' well-being, some people — particularly those with chronic or multiple health conditions — can expect physicians and other employees to become more involved in their daily lives.

Care coordinators will be checking whether patients take their medications and attend medical appointments. They'll be conducting more in-home visits. In Loveless' case, Community Care Alliance hopes that putting about $6,000 into her home renovation will pay off in lower health care costs over the long term.

The cost "is less than the cost of one month of nursing home placement for an individual, which is really what (Loveless') alternative option is," said Anne Downs, a coordinator working with the Rockford woman. "By making this investment upfront, we're saving money in the long run and the enrollee is safer."

For Loveless, the project offers a small amount of independence that she's coveted for months. Her goals are simple: She wants to join her congregation on Sundays instead of speaking with church leaders by phone. She wants to visit a store, something she says she hasn't done in nearly eight years. Above all, she just wants to go outside.

"I think I'll just sit for a while and look across the street," she said.

The shift to managed care will take various shapes in Illinois, with different health plans for disparate parts of the Medicaid population. Some plans will be run by insurers like Aetna, Blue Cross and Blue Shield of Illinois and Humana; others will be run by networks of hospitals and health systems.

The transformation amounts to a giant transfer of financial risk from the government to insurance companies and health care providers. In exchange for assuming that risk, those companies get to keep a portion of any savings they're able to generate by keeping patients healthier and out of the hospital.

Still, the margins are narrow, and there's no guarantee of a profit. Under state contracts, health plans must spend at least 88 percent of the funds they receive on health care and related services; unspent money must be returned to the state. Profits come from the remaining 12 percent, after overhead costs are covered.

If a health plan's costs exceed payments from the state, it must absorb the loss, not taxpayers.

While critics worry that health plans will ration services to pad their financial statements, health plan administrators say it wouldn't be smart to cheat patients out of care, as poorly managed health conditions will cost more in the future.

"Our framework is that if you get the right care at the right time and in the right setting, you will keep (patients) out of the hospital and emergency room," said Concetta Zak, vice president of health care management for Community Care Alliance, which is covering 1,500 patients in the Rockford area. "By keeping (patients) healthy within their illness or situation, we are then maybe achieving savings, but we're not seeking (solely) to crunch costs."

The state launched its push into mandatory managed care programs for Medicaid patients in 2011 in suburban Cook County and the collar counties. Two insurers, Aetna and IlliniCare, took on Medicaid's most-expensive patients, a category traditionally known as the "aged, blind or disabled."

Each company enrolled about 18,000 patients and receives monthly fees from the state ranging from about $120 per month for a patient with fewer needs to $3,750 for someone in a nursing facility. State data show that Illinois has paid each insurer slightly more than $740 million as of April, with some of it coming from the federal government.

In 2012, the program's first full year, Aetna reduced emergency room visits by 56 percent for its patients and improved quality metrics in 20 of 21 categories measured by the state, said Sanjoy Musunuri, chief executive of Aetna's Illinois Medicaid unit.

"When we get a list of our members who go to (a hospital emergency room), we call them and ask why, what happened?" Musunuri said.

Aetna assigns one of its 120 care coordinators to assess whether the patient might need a follow-up appointment with a primary care physician, a review of medications or social support like financial planning or nutrition assistance.

The profit margin may be slim, but "it's something," Musunuri said. "Illinois recognized that the fee-for-service system was not working. We're excited about the way delivery is being transformed in the state."

The major rollout of managed care programs will begin in July, with hundreds of thousands of Medicaid patients slated to receive applications in May that offer several choices of health plans.

Loyola University Health System in Maywood is among the Chicagoland health systems trying its hand as a de facto insurer, starting with a payment of $9 per member per month on top of a traditional fee-for-service system. It is expected to ramp up to a full managed care model by mid-2017.

While the Loyola system does not envision profits from its health plan in the near term, it views the shift to managed care as an unavoidable trend in the industry.

"Something's got to give," said Dr. Keith Veselik, who leads Loyola's primary care department and will oversee its health plan. "Our health care system in the United States does not meet the criteria for having the best care, (though) we spend the most money. If we can move to a system that focuses more on outcomes and prevention, I think that's a move in the right direction."

One of the pioneers in rolling out Illinois managed care as part of the Affordable Care Act was Cook County Health and Hospitals System, the public safety net hospital where historically more than half of patients are uninsured.

Its health plan, dubbed CountyCare, has more than 87,000 members, all of them childless adults who gained coverage via an early expansion of eligibility under the federal health law.

Khadijah Jones, 20, of Uptown, had been uninsured for two years when she answered a telemarketing call advertising CountyCare last year. She would either live with discomfort from occasional illnesses or seek care at various community health centers and emergency departments.

Now pregnant, she sees a midwife regularly at a Heartland Health Center clinic who coordinates her prenatal care and medications.

"I'm more happy because I know I have insurance and I know I'll be accepted," Jones said.

The Cook County system, which is receiving $632 per month per enrollee, can invest savings back into programs and services. Steven Glass, executive director of managed care at the hospital system, said officials hope to reduce the value of free care it provides by as much as 20 percent, easing the burden on county taxpayers.

It's already seeing some progress. In November, about 10 months after launching the health plan, CountyCare was covering about 20 percent of the hospital system's patients, Glass said. That helped reduce the percentage of nonpaying patients from 54 percent to 43 percent.

For years, Rich Romanowski seldom saw doctors despite living with a rare swallowing disease called achalasia that leaves him prone to vomiting and spasms. Romanowski, 62, also has high blood pressure, high cholesterol and diabetes, but without insurance even a $30 visit to a clinic was a financial burden.

Since enrolling in CountyCare last year, Romanowski said he sees his physician at Erie Family Health Center every two to three months. He pays nothing for his five prescriptions or the glucose strips he uses to test his blood sugar.

Romanowski, who lives in the Old Town neighborhood and plays guitar in the local band The Business, said he's thrilled with his care and his new coverage.

After a lifetime of giving — he cared for both of his parents until their deaths and has served for decades as the volunteer choir director at St. Aloysius Church — he said it's nice to be on the receiving end: "Sooner or later, it comes back to you."

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