4 insurers out of running for Rauner's Medicaid overhaul

More than 200,000 Illinois Medicaid beneficiaries are about to see a major shake-up of the program, with several insurers now out of the running to be part of Gov. Bruce Rauner's overhaul plan.

On Monday, the state released a list of insurers that responded to a request for proposals to participate in the state's re-imagined Medicaid managed care program. In Medicaid managed care, private insurers administer Medicaid benefits, whereas the state administers benefits in traditional Medicaid.

Four of the current 12 insurers that are part of Medicaid managed care in Illinois — Family Health Network, Humana, Cigna-HealthSpring and Community Care Alliance of Illinois — did not submit proposals by the state's deadline. The state received one application from a company not in the program, Trusted Health Plan.

In all, nine insurers, including eight returning ones, submitted proposals. Rauner has said he plans to narrow the program to no more than seven insurers.

He also plans to expand Medicaid managed care programs to cover 80 percent of those on Medicaid, in every county, as well as to children under the care of the Department of Children and Family Services. Now, about two-thirds of all Illinois residents on Medicaid — about 2 million people — are in Medicaid managed care programs.

Rauner announced the overhaul in February, saying the changes would streamline the program's administration and improve health care for many of the state's poorest residents. He said the reorganized program would focus more on coordinating care for patients and paying doctors and hospitals for results rather than just for services.

Felicia Norwood, director of the Illinois Department of Healthcare and Family Services, has said that narrowing the number of companies would eliminate some of the administrative headaches the program has created for providers and be less confusing for patients.

Before Rauner announced the overhaul in February, some central Illinois hospitals had already dropped out of Medicaid managed care plans, leaving Medicaid beneficiaries in some counties without options.

Some state officials and lawmakers have criticized the revamp.

State Comptroller Susana Mendoza wrote a letter to Rauner earlier this month expressing concern, writing that the proposal would cost the state as much as $9 billion a year — likely the largest procurement in the state's history.

"Illinois is in the midst of the greatest fiscal crisis in its history," Mendoza wrote, noting the state hasn't had a budget for quite some time. "We are effectively seeking to restructure the State's largest budget item without a budget. Why are we making this monumental change during this period of unprecedented upheaval?"

Mendoza's office said in a report earlier this month that the shift has the potential to lead to confusion among patients and providers.

Mendoza called it "troubling" that the General Assembly would have no oversight of the spending.

She also worried that at least one large Medicaid managed care organization, now providing Medicaid coverage to more than 225,000 residents, might have to close, taking with it at least 500 jobs. A spokesman for Mendoza's office confirmed she was referring to Family Health Network, which operates in Cook County, among other places.

Sen. Omar Aquino, D-Chicago, and others conducted a news conference earlier this month in which they alleged the request for proposals was written to exclude insurers that can't operate statewide, like nonprofit Family Health Network.

Aquino also worries Family Health Network's exit from the program could hurt the five Chicago safety net hospitals and systems that he said support the nonprofit: Sinai Health System, Norweigan American Hospital, Presence Saints Mary and Elizabeth Medical Center, Saint Anthony Hospital and St. Bernard Hospital.

"These safety net hospitals are losing out tremendously," Aquino said Tuesday. "The effects that may have on them could be huge. That could be loss of services, loss of employees. They might have to take drastic measures."

But Rep. Tom Demmer, R-Dixon, who's supportive of the overhaul, said the Department of Healthcare and Family Services "tried to put this plan together with a good balance between Cook County-only plans and plans that were going to provide throughout the entire state."

In all, the four insurers that didn't submit proposals now handle benefits for about 250,000 Illinois residents, according to Mendoza's office.

Healthcare and Family Services did not respond to questions Tuesday about exactly how Medicaid beneficiaries may switch plans once new Medicaid managed care insurers are selected.

Attempts to reach Family Health Network and the Illinois Association of Medicaid Health Plans for comment were unsuccessful.

lschencker@chicagotribune.com

Twitter @lschencker

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