Featured Health Business Daily Story, Sept. 14, 2017

For Medicaid Revamp, Illinois Selects Six MCOs....Aetna Isn’t One (with Table: Market Share of Illinois Medicaid HMOs)

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Subscribe today!

By Lauren Flynn Kelly, Managing Editor
August 24, 2017Volume 23Issue 16

As part of a major overhaul of its managed Medicaid program, Illinois intends to combine multiple managed care programs and extend them statewide through contracts awarded to five managed care organizations, down from 12 that currently serve the program. The state will contract with CountyCare Health Plan under a separate option to cover only Cook County. The Illinois Dept. of Healthcare and Family Services (HFS) on Aug. 11 unveiled its intent to award the statewide contracts to Blue Cross and Blue Shield of Illinois, Meridian Health Plan and the Illinois subsidiaries of publicly traded insurers Centene Corp., Molina Healthcare, Inc. and WellCare Health Plans, Inc., which all currently serve the state (see table, this page).

Aetna Inc. was the only publicly traded MCO that bid but did not win a recommendation, continuing a “string of relatively recent contract losses across its Medicaid business,” observed Credit Suisse securities analyst Scott Fidel in an Aug. 14 research note. Those include losses in Missouri, Nebraska and Pennsylvania — all states where it was also an incumbent, he pointed out. Credit Suisse estimates that Illinois Medicaid represents approximately $750 million in annual revenue for Aetna, based on a $290 per-member per-month rate. “However, the ultimate impact on [earnings per share for Aetna] is likely not material, as [Illinois] Medicaid margins have been anemic due to the dicey fiscal situation in the state,” he wrote, citing a 116.3% medical loss ratio that Molina reported in Illinois for the second quarter as an example.

Medicare Advantage News

Illinois Faces Budget Woes

The new contract recommendations also follow Aetna’s recent threat to pull out of the state program if it was not paid the roughly $700 million it claims to be owed. According to the Chicago Tribune, the state has about $15 billion in overdue bills, including $5 billion in unpaid group health insurance claims and $3 billion in overdue payments to Medicaid MCOs. A federal judge ordered the state to clear two-thirds of that Medicaid debt by June 30, 2018; the state comptroller late last month released $740 million in funds to partially pay it down. When reached by AIS Health, an Aetna spokesperson said the insurer has no comment on the latest contract loss or any possible plans to protest.

Meanwhile, Cigna Corp. and Humana Inc. did not submit themselves for consideration “as they both have very small market share positions in the current program,” observed Fidel. Anthem, Inc. and UnitedHealthcare, Inc., which do not currently hold Medicaid contracts in Illinois, had expressed interest at a bidders’ conference in early March but were not on the final list of bidders. According to HFS, nine MCOs ultimately bid for the reprocurement. The two other plans excluded from the selections were NextLevel Health, which exclusively serves Medicaid recipients in Cook County, and Trusted Health Plan, Inc., a Washington, D.C., Medicaid MCO that does not currently serve the state. NextLevel is appealing the state’s decision, according to Crain’s Chicago Business.

When asked why bids submitted by Aetna and NextLevel were not adequate for re-selection, an HFS spokesperson responded, “Using best practices from Illinois and other states, a multi-agency evaluation team of professionals thoroughly reviewed every aspect of all the proposals. This included experts on quality, managed care, health care delivery, information technology, finance, and other areas relevant to managed care in Illinois. Plans were chosen through a competitive and transparent process.”

But Democratic lawmakers in the state want to “unwind that process” through a bill that would amend the Illinois Procurement Code governing state contracting to include contracts with MCOs, reports Crain’s. The bill passed through the general assembly two days after the bid selections were unveiled and is likely to be vetoed by Gov. Bruce Rauner (R), whose Medicaid reboot could cost the state up to $13.5 billion a year. That’s up from the current $10.5 billion annual cost, but the state expects to save approximately $1 billion over four years partly because the MCOs would be paid lower rates, added Crain’s.

The new streamlined program will extend mandatory managed care from the current 30 counties to all 102 counties in Illinois, incorporate value-based payment models, further integrate behavioral and physical health services by combining its three current managed care programs that serve different populations, and extend the program to cover special needs children (MAN 3/30/17, p. 4). Including the addition of foster care youth who will be covered under a separate contract by Centene’s IlliniCare subsidiary, HFS aims to include 80% of the 3.1 million Medicaid-eligible adults and children in the state in managed care.

Upon successful negotiations with each MCO, the contracts are slated to start on Jan. 1, 2018, and run for four years, with options to renew for up to an additional four years. Bid protests must be received by Aug. 25.

Visit http://tinyurl.com/ma42dm6.

Market Share of Illinois Medicaid HMOs, June 2017

Plan Name

Enrollment*

Market Share

Counties Served

Meridian Health Plan

376,685

20.00%

27

Blue Cross and Blue Shield of Illinois

343,221

18.23%

6

Aetna

220,878

11.73%

9

Family Health Network

219,294

11.65%

6

Centene Corp.

205,810

10.93%

12

Molina Healthcare, Inc.

159,095

8.45%

19

WellCare Health Plans, Inc.

144,803

7.69%

14

CountyCare Health Plan

141,154

7.50%

1

NextLevel Health

54,167

2.88%

1

Community Care Alliance of Illinois

7,868

0.42%

9

Humana Inc.

5,099

0.27%

6

Cigna Health and Life Company

4,668

0.25%

6

Total

1,882,742

*Enrollment data refers to the state’s Integrated Care Program (ICP) and Family Health Plan/Medicaid expansion populations.

SOURCE: MMM, Medicare and Medicaid Market Data, AIS’s newly revamped interactive database and newsfeed on the public-sector markets. Visit https://aishealthdata.com/mmm for more information and a free demo.


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