Illinois names 6 insurers to take part in overhauled Medicaid managed care

Aug. 12--More than half a million Illinois residents on Medicaid are about to see major changes in their coverage as the state slashes in half the number of insurers in its Medicaid managed care program.

The Illinois Department of Healthcare and Family Services announced Friday that it has selected six insurers to be part of Gov. Bruce Rauner's planned overhaul of the program, down from the 12 now participating. In Medicaid managed care, private insurers administer Medicaid benefits, whereas the state administers benefits in traditional Medicaid.

The state has selected BlueCross BlueShield of Illinois, Harmony Health Plan, IlliniCare Health, Meridian Health Plan, Molina Healthcare and CountyCare Health Plan to participate for the next four years.

That means Aetna Better Health of Illinois and NextLevel Health have not been selected for the program. Aetna previously had threatened to exit the program if the state couldn't figure out how to pay it. An Aetna spokesman declined to comment Friday.

Trusted Health Plan, which would have been new to the program, also was not selected.

Four other insurers -- Family Health Network, Humana, Cigna-HealthSpring and Community Care Alliance of Illinois -- did not submit bids to be part of the reimagined program.

"By operating with an ideal number of plans, overhead costs will be reduced while we make sure every beneficiary receives powerful choice," said Felicia Norwood, director of the Department of Healthcare and Family Services. "This means more of the program's money going to real people instead of bureaucracy."

Together, the six insurers that are no longer participating in the program currently cover more than 500,000 Illinois residents on Medicaid, the joint federal and state insurance program for the poor. Those people will have to switch plans.

Rauner announced plans in February to revamp the program to cover 80 percent of those on Medicaid in every county as well as 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 managed care programs. The governor's plan also included slashing the number of insurers participating in Medicaid managed care.

Rauner said at the time that the changes would streamline the program's administration and improve health care for many of the state's poorest residents. Advocates of the changes also say they'll help to reduce administrative headaches for providers and make the program less confusing for patients.

In recent months, some Medicaid managed care organizations have struggled to keep hospitals in their networks. Though the state has started paying Medicaid managed care organizations more in recent weeks, they are still owed about $3.5 billion.

State Comptroller Susana Mendoza has denounced the revamp as costly and likely to lead to more, not less, confusion for patients and providers. She also criticized the selection process as lacking transparency.

The state now spends about $10.5 billion on Medicaid managed care. That amount is expected to climb to between $12.8 billion and $13.5 billion next year as the state adds hundreds of thousands of people to the program, according to the state.

The new contracts, however, are expected to lead to savings of $200 million to $300 million a year, according to the Department of Healthcare and Family Services. That's partly because insurers agreed to be paid less money per beneficiary, department spokesman John Hoffman said.

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