Fiscal Fitness: How States Cope

Illinois Medicaid makes bold move with its managed care expansion

Major Medicaid reform legislation signed by Illinois Governor Pat Quinn in January 2011 is projected to save $624 million to $774 million over five years, reports Theresa Eagleson, administrator of the Division of Medical Programs for Illinois' Medicaid agency.

"The biggest portion of that savings comes from better coordination of care, and the lower payment rates in the end for institutional services, both hospitals and nursing homes," says Ms. Eagleson.

There is a wide range in the estimated savings because it's not yet known what form the care coordination will take, says Ms. Eagleson. "Illinois is a very diverse state. We don't think that the same form of care coordination is going to work in every area, so we can't put an exact number on it," she explains.

Currently, the $15 billion per year Medicaid program serves 2.8 million recipients, says Ms. Eagleson. Although 1.8 million are enrolled in Illinois Health Connect, a primary care case management program, only 200,000 are enrolled in comprehensive managed care plans.

Under the new law, at least 50% of Medicaid and Children's Health Insurance Program (CHIP) recipients will be enrolled in comprehensive managed care plans by Jan. 1, 2015, says Ms. Eagleson.

Cost savings are estimated over a 5-year period, says Ms. Eagleson, because "these result from better quality of care, and it takes time to achieve those savings."

Moving toward integrated care

An Integrated Care Pilot program is under way in Illinois' suburban Cook county and surrounding counties, for the elderly and disabled population. "That is our first move toward integrated care," says Ms. Eagleson. Two managed care companies were competitively procured, she says, and the agency is working on getting contracts signed.

"It's mandatory managed care, but with a lot different parameters on it than traditional managed care, at least in our state," says Ms. Eagleson. "There is a lot of money tied to performance outcomes."

These include clients getting certain medical tests done in a timely fashion, satisfaction with the type of services they are getting, their ability to function independently in the community, and follow-up visits occurring within a certain amount of time after a hospitalization.

"We are tracking all kinds of performance outcomes. We are actually tying dollars to the plans," says Ms. Eagleson. "They will be passing that on to the provider community, in order to incent different behaviors. That is the building block for the 50% goal in our legislation."

The legislation defines coordinated care as having many different components, notes Ms. Eagleson, including use of electronic health records and looking at the person holistically. "It has either a full-risk capitation option or a partial-risk option," she adds. "That is a big component of our Medicaid reform bill."

IT challenges

The law includes provisions for development of a new Medicaid Management Information System (MMIS) incorporating Medicaid Information Technology Architecture standards, and new eligibility, verification, and enrollment systems. These will be integrated with the MMIS and with health insurance benefits exchanges to be implemented in 2014, says Ms. Eagleson.

"If that is approved federally, we can get up to 90% match to that," says Ms. Eagleson. A comprehensive IT plan is being developed for how all the state's agencies, including the Medicaid program, will coordinate, adds Ms. Eagleson.

"We already have an RFP on the streets for a planning vendor for that," she says. "It is still in the development stage right now. We understand it's coming quick."

Short-term savings

The law also provides for residency verification, identification of third-party liabilities, and civil monetary penalties enforceable through lien authority to deter fraudulent applications, notes Ms. Eagleson.

Ms. Eagleson says that Maintenance of Effort requirements, under both the American Recovery and Reinvestment Act and the Affordable Care Act, were carefully considered. "We don't want to lose any federal match. We are not trying to change any eligibility thresholds," she says. "We are just trying to tighten up how we validate whether somebody is eligible for the program."

Residency will be verified, in order to eliminate the passive redetermination which occasionally occurs, she says. A recipient "lock-in" program will discourage drug-seeking behaviors by limiting clients to designated providers, in order to control program abuse, says Ms. Eagleson.

The legislation includes tightening of pharmacy utilization review, and separate legislation reduces the amount paid in prompt pay interest to pharmacy and nursing home providers, she reports.

"Those are some short-term savings that will help pay for the upfront costs, that we hope will create long-term savings," says Ms. Eagleson.

Care will be better integrated for Medicaid clients, says Ms. Eagleson, with better coordination across agencies. "We are breaking down barriers between provider types and state agencies. We are really reforming the way the system works," she says. "Better coordination leads to better outcomes, which leads to less cost."

New populations

Illinois has had a primary care case management system in place for some time, notes Ms. Eagleson. "We've had a voluntary plan for pretty much anyone, except those who are federally excluded from being in mandatory managed care. But we are not a state that has heavily used managed care companies with capitated plans," she says.

When a decision was made to take bold steps toward integrating care, says Ms. Eagleson, the population in the Integrated Care pilot was chosen, consisting of 40,000 seniors and disabled clients.

"We are one of the first states, I think, to do something that big," says Ms. Eagleson. "We are phasing it in by services." First, the more traditional services of hospital, pharmacy, physician, and mental health services will be provided, she explains, followed by long-term care services.

"We have been working really closely with all kinds of stakeholders on that," says Ms. Eagleson. "People want to make sure that the client's needs aren't lost in this. We are really trying to measure outcomes for the individuals we are serving."

While a small number of states have expanded Medicaid managed care, and many are considering doing so, says Ms. Eagleson, long-term care services haven't been included. "There are some states who started this before us, but not with the complex elderly and disabled population," she explains. "To get to 50%, we have to go further than that, too. We are not solely focusing on seniors and people with disabilities. That was just our first step."

Contact Ms. Eagleson at (217) 782-2570 or