Home medical-equipment vendors worried about Medicaid managed-care reboot

Nov. 19--A company hired to reboot Illinois' Medicaid managed-care program plans significant cuts in payments for medical equipment, a move that providers say will hurt low-income patients and make it harder for them to be cared for at home.

IlliniCare Health, a company based in Elk Grove Village that is part of publicly traded Centene Corp., plans cuts of 10 percent to 50 percent in payments next year to vendors who sell equipment such as wheelchairs, portable oxygen, adult diapers, feeding tubes and ventilators.

Those cuts could push some medical providers out of business and persuade others to not participate in IlliniCare's network, said Kevin Stewart, president of the Great Lakes Home Medical Services Association. He also contended companies that stay in the network might survive by skimping on the quality of supplies or amount of professional support that patients receive.

"Patients are going to be backed up in the hospital, which is going to cost the state more money in the long run," Stewart said.

Medical equipment providers across the country have already been hit with fee reductions through the federal Medicare program's "competitive bidding" program, with 45 percent of supplier companies going out of business or leaving Illinois since 2013, said Kam Yuricich, executive director of the Great Lakes association.

John Hoffman, spokesman for the Illinois Department of Healthcare and Family Services, the agency overseeing the managed-care reboot, said IlliniCare and others with state contracts are paid a fixed amount per patient.

Excessive health-care costs will eat into the companies' profits, so managed-care organizations have a financial incentive to provide good service, Hoffman said.

"The healthier people are, the better it is for the company," he said.

Officials from IlliniCare and St. Louis-based Centene didn't return phone calls and emails from The State Journal-Register last week. A spokeswoman from the Illinois Association of Medicaid Health Plans couldn't be reached for comment.

'Testing the waters'

IlliniCare, based in Elk Grove Village near Chicago, is one of seven managed-care organizations (MCOs) that won state contracts for the Jan. 1 launch of the next phase of managed care affecting more than 80 percent, or 2.7 million, of Illinois' 3.14 million Medicaid recipients.

Durable medical equipment in fiscal 2016 accounted for about $101 million, or one-half of 1 percent, of Illinois' $20 billion-plus Medicaid program. But vendors said home-based services are essential for patients to avoid hospitalizations and readmissions that can be much more expensive for the state.

Members of the Great Lakes association, which covers Illinois, Indiana and Michigan, worry that IlliniCare's rate cuts will be picked up as a model by other managed-care organizations in Illinois and in other states where managed care is being used to contain cost increases in the federal-state Medicaid program.

"They're testing the waters to see whether this works," Stewart said. "It's a dangerous test."

State Sen. David Koehler, D-Peoria, said he introduced Senate Bill 2262 earlier this month to require managed-care organizations pay medical vendors at levels at least equal to the traditional "fee-for-service" rates in response to providers' concerns.

Koehler said he expects the bill to be considered by the General Assembly early in 2018.

Like many Democrats in the legislature, he is skeptical about the state's move to managed care for Medicaid recipients, a trend that has been embraced by Gov. Bruce Rauner and other Republicans.

"This whole thing is a mess, and it's going to cause people who depend on Medicaid to get less service," Koehler said. "We've set this up so MCOs make money by denying services."

Hoffman said Healthcare and Family Services "is committed to ensuring that health plans offer Medicaid members the services and equipment they are entitled to."

"Under managed care," he said, "it is the responsibility of the health plans and providers to negotiate with each other to accomplish this within the framework of contracts, laws and rules overseen by the department."

Cost savings

IlliniCare billed the state for $1.4 billion in services in the fiscal year that ended June 30, Hoffman said. That money went to pay for health care as well as IlliniCare's internal costs and profits.

Healthcare and Family Services estimates that the reboot, dubbed HealthChoice Illinois, will lead to annual savings of $200 million to $300 million.

That's more than $1 billion in total savings during the life of the four-year contract compared with the current managed-care system serving 63 percent of Medicaid recipients, Hoffman said.

However, there is "not a great deal of evidence" that managed care saves money for state Medicaid programs or improves care for beneficiaries, according to Robin Rudowitz, associate director of the nonpartisan Kaiser Family Foundation's Program on Medicaid and the Uninsured.

By shifting financial risk to for-profit companies and other groups, managed care does give states more predictability when it comes to the cost of Medicaid, she said.

Medicaid costs per recipient have been rising less than costs in the private health insurance system, she said.

Healthcare and Family Services officials say the reboot in Illinois is designed so payment of vendors will be streamlined. The process of receiving and acting on complaints will be streamlined, too, Hoffman said.

The Illinois Academy of Family Physicians is "working in good faith" with the state and MCOs on the reboot, and everyone involved seems interested in seeing the initiative succeed, according to Gordana Krkic, the Bolingbrook-based group's deputy executive vice president for external affairs.

Worries at home

Such assurances don't ease the worries of some Illinoisans.

Rebekah Strate, a Murrayville resident, is raising two children with complex medical needs who use equipment to keep them breathing. Strate said she is worried that she will lose her children's current DME provider, Memorial Home Services, in the reboot.

If 9-year-old McKenzie or 10-year-old Miracle don't receive equipment and supplies that work best for their conditions, or if replacements aren't provided right away when supplies run out, the girls can end up in the hospital or worse, Strate said.

McKenzie joined the Strate family as a foster child and since has been adopted. She continues to be covered by Medicaid.

Miracle is still a foster child and is being adopted by the family.

A special provision in the reboot will place all 16,200 children who are in the care of the Illinois Department of Children and Family Services, as well as 23,000 others, including former DCFS wards who have been adopted, into IlliniCare's managed-care network. The children currently are served in the fee-for-service system, no matter where they live in Illinois.

It's unclear whether Memorial Home Services, which currently serves the Strate children, will be part of IlliniCare's network. The contract affecting DCFS clients is expected to begin July 1, 2018.

"Memorial Health System has not finalized contracts yet with any Medicaid managed-care organization, but we are having conversations with most of them, including IlliniCare," Memorial spokesman Michael Leathers said last week. "Three of the four MCOs have not yet provided contract proposals for our review, but we have been and continue to be in discussions with them."

Rebekah Strate, 42, a homemaker, and her husband, Jeff, 45, a pharmacy technician, switched from a national medical vendor to Memorial for the children two years ago after a crisis involving McKenzie.

The national company was slow to provide a new $50 nebulizer for McKenzie for breathing treatments after the old one broke, Rebekah Strate said.

She said the delay resulted in breathing problems for McKenzie, who has a tracheostomy and chronic lung disease, and a subsequent stay in the emergency department of Jacksonville's Passavant Area Hospital. The hospital provided a new nebulizer and apparently billed Medicaid for the equipment and ER visit, she said.

By contrast, a Memorial respiratory therapist has been available immediately by phone, and Memorial has driven equipment and supplies to the family's Morgan County home, rather than wait for the mail, to make sure the children get good service, Strate said.

There are about 1,000 "medically fragile" children in Illinois, like those in the Strate family, who could be put in jeopardy if IlliniCare skimps on care, said Susan Agrawal, a Chicago resident and founder of a support group for parents of kids in the Medically Fragile and Technology Dependent waiver program.

"Companies hope parents and other caregivers will pick up the slack," Agrawal said.

DCFS spokesman Neil Skene said IlliniCare has experience serving clients in the child-welfare system in Washington state, Florida and Texas.

DCFS, through careful monitoring, will work so that the fears voiced by Strate and Agrawal about the Medicaid managed-care reboot don't become reality, Skene said.

"We're going to make sure it doesn't adversely affect any child," he said.

Contact Dean Olsen: [email protected], 788-1543, twitter.com/DeanOlsenSJR.

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About Illinois' Medicaid managed care plan

Medicaid recipients in the Springfield area currently aren't served by IlliniCare or any other managed-care groups, but that will change in 2018.

Managed-care networks stopped operating for the counties of Sangamon, Menard, Logan, Christian, Macon and Piatt earlier this year after companies and health-care providers withdrew.

As in other parts of the state, many providers complained about payment delays and payment denials.

For the six counties including Sangamon, and the other Illinois counties currently in Medicaid managed care, the reboot begins Jan. 1. MCOs are setting up their provider networks, and patients are receiving notices in the mail asking them to choose an MCO or be automatically enrolled in one.

For all other counties, including Morgan, Cass, Macoupin, Montgomery, Mason, Greene and Jersey, the reboot takes effect April 1.

As part of the reboot, the state awarded contracts to seven MCOs, a smaller number than are in the current managed-care system.

Five plans will operate in all 102 counties -- IlliniCare, Blue Cross and Blue Shield of Illinois, Meridian Health Plan, Molina Healthcare and Harmony Health Plan. CountyCare and NextLevel will operate only in Cook County.

IlliniCare currently serves 211,000 in the Chicago, Rockford and Quad Cities areas.

-- Dean Olsen

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