SPRINGFIELD – Democratic state leaders said Tuesday that Illinois’
“managed care” Medicaid system is threatening the viability
of hospitals and access to health care in many parts of the state, and
they are pushing legislation they say would reform the system.
“We have a broken managed care program in Illinois, and it’s
threatening the very future of our health care providers and the patients
they serve all around this state,” Senate Majority Leader Kimberly
Lightford said during a news conference unveiling the legislation.
Under the managed care system, which Illinois launched in 2011, insurance
companies are paid a flat, per-patient monthly fee to manage the care
of most Medicaid recipients. These managed care organizations, or MCOs,
are required to reimburse health care providers and make sure patients
receive follow-up care with specialists, therapists or rehabilitation
facilities following a medical procedure.
In theory, the managed care system is supposed to improve patient care
and lower costs by avoiding preventable emergency room visits or hospital
But Lightford, a Democrat from the western Chicago suburb of Maywood, argued
that neither of those goals has been achieved. Instead of managing care,
she argued, the MCOs are merely managing costs through excessive denials
of claims and delayed payments, especially for facilities known as safety
net hospitals, which serve large numbers of Medicaid and uninsured patients,
and small, rural “critical access” hospitals that have 25
or fewer beds.
“Instead of coordinating care and services and saving the state money,
the MCOs get their savings by denying claims submitted by hospitals by
an average 26 percent statewide,” Lightford said.
Prior to managed care, when the Medicaid program operated on a traditional
fee-for-service basis, Lightford said the denial rate was closer to 2
or 3 percent.
In addition, she said, even when claims are approved, many hospitals have
to wait as long as 150 days to get paid.
Lightford and Rep. Camille Lilly, a Chicago Democrat who is vice chair
of the House human services budget committee, are sponsoring legislation
that would require MCOs to make expedited payments to critical access
and safety net hospitals. It would also require MCOs to promptly prepare
follow-up care management plans after a patient is discharged from a hospital,
and to update their health care provider rosters on a weekly basis to
prevent unnecessary claim denials.
Officials at MeridianHealth, one of the MCOs that works in the Illinois
Medicaid program, defended its company’s track record and disputed
the contention that it denies 26 percent of initial claims.
“Working through the Illinois Association of Medicaid Health Plans,
Illinois managed care organizations helped create a unified billing guide
to streamline access to billing information,” the company said in
an email statement. “Our success is confirmed by our reporting to
the Illinois Department of Healthcare and Family Services that illustrate
Illinois MCOs have a claim denial rate of less than 11 percent.”
Lightford also said she believes there is support within the General Assembly
for abandoning the managed care model and returning Medicaid to the traditional
“We’d like to try with the reforms and see if we can work with
the MCOs, but I wouldn’t discard that coming in the future if that’s
what’s needed,” she said.