Illinois Health Care Groups Oppose Gov. Rauner's Drastic Cuts to Medicaid and Managed Care

Illinois Gov. Bruce Rauner

great report by Crain's Chicago, By KRISTEN SCHORSCH | Feb 28, 2015

In trying to reduce spending on Medicaid, Illinois Gov. Bruce Rauner is targeting a state experiment that aims to do the same thing.

Rauner wants to eliminate $60 million that hospitals and other health care groups are receiving from the state to coordinate patient care. While the proposed cuts are just a sliver of the $1.5 billion the new Republican governor wants to slash from financially strapped Medicaid, they're sending waves of anxiety through the state's health care industry.

Some of the most prominent health systems in the state, including Advocate Health Care and Ann & Robert H. Lurie Children's Hospital, bet they can keep patients healthier and ultimately save money under initiatives Gov. Pat Quinn launched in the past few years. The cuts could cripple or even wipe out some of these new programs, hospital representatives and industry experts say.

“It's really going to send a chill through this entire transformation process,” says Elyse Forkosh Cutler, president of Chicago-based consultancy Sage Health Strategy.

Under a Medicaid overhaul Quinn backed in 2011, half of the state's recipients had to be in a managed care program by 2015. The state has hit that goal, according to a spokesman, though enrollment continues for the 3.1 million Medicaid members in Illinois. The point of coordinating a patient's care is to surround them with a team of doctors and other providers to keep them healthy and prevent pricey inpatient stays.

Accountable care entities are among the biggest managed care programs. Nine of these entities launched in 2014, including ones led by Downers Grove-based Advocate, Evanston-based North-Shore University HealthSystem and Maywood-based Loyola University Health System. Chicago's Lurie hospital formed another type of managed care program, a care coordination entity, for children with complex needs like cerebral palsy.

Altogether these 17 care entities collectively treat nearly 275,000 people.

The state is providing them $60 million to better coordinate treatment. That includes building an infrastructure to connect providers electronically and hiring coordinators to help identify high-risk patients. Eventually, the state would pay these groups a fixed amount of money per patient per month. The groups would generate revenue by sharing with the state any savings achieved by keeping patients well.

But Rauner is urging the General Assembly to eliminate the fees July 1, about six months to two years ahead of schedule.

The $60 million cut is part of Rauner's proposed $1.5 billion reduction to Medicaid. The agency's proposed budget beginning July 1 would total $19.2 billion. The Medicaid reductions, in turn, are part of his broader effort to fill a $6.6 billion state deficit without raising taxes.

John Hoffman, a spokesman for the Illinois Department of Healthcare and Family Services, which administers Medicaid, says Rauner supports managed care. “We're working with all these providers to find ways to offer quality outcomes and sustainable costs,” he adds.

At Loyola, the accountable care entity has grown to about 25,000. By keeping better tabs on patients, says Dr. Keith Veselik, the entity's medical director, Loyola should cut down emergency room visits, reducing hospital expenses. “That's what the idea of care coordination was all about, having more people who can know the patients, touch the patients more often, troubleshoot problems before they're big problems,” he says.

'VERY DIFFICULT'

Monica Heenan, chief ambulatory executive at Lurie, says the hospital already has invested $1 million in its care entity. Without fees from the state, it would be “very difficult” to provide care coordination services for its fewer than 2,000 members who often have multiple medical conditions. “It's not sustainable,” she says.

Not everyone is worried, however. Dr. Cheryl Whitaker, CEO of NextLevel Health, says the Loop-based managed care group is prepared to scale up regardless of state support. “As the Medicaid dollars get shorter, we have to spend it smarter,” she says.

But the Illinois Hospital Association wants to stay the course. “We committed to this grand innovative new model of health care delivery under certain parameters,” says Danny Chun, a spokesman for the Naperville-based lobbying group. “You're changing the rules in the middle.”

The Quinn administration plan is “going to result in better outcomes, better quality and lower costs,” he continues. “Let's give it a chance to work.”

Contact: kschorsch@crain.com

Ms. Heenan’s surname has been corrected in this updated story.

http://www.chicagobusiness.com/article/20150228/ISSUE01/302289986/illinois-hospitals-health-care-groups-oppose-rauners-cuts-to-managed-care