As part of an ongoing process to streamline its managed Medicaid program, the state of Illinois is in the midst of soliciting bids from insurers who will compete for a limited number of statewide contracts to serve a larger swath of Medicaid enrollees and meet certain quality objectives. Starting in 2018, the program will extend managed care to all 102 counties in Illinois, incorporate value-based payment models, enhance the integration of behavioral and physical health care and feature a competitive bidding process to serve a specified set of populations, including special needs children who are being added to the covered population.

But the new program also will limit the number of contracted insurers from the current 12 to between four and seven, which the state says will simplify the managed care program and reduce complexity and provide greater efficiency for both providers and enrollees. Three to five plans will be awarded contracts to serve all five geographic regions, offer a designated set of services and cover specific populations. The other one to three organizations, which will be contracted under a separate option to cover only Cook County, must be government-owned or minority-owned organizations as defined in the RFP. The initial term of the contact will be four years, with options to renew twice in increments of two years.

The Illinois Dept. of Healthcare and Family Services (HFS) on March 10 held the first round of conferences with potential bidders, at which 26 companies signed in. Fifteen of those were managed care organizations, including Anthem, Inc. and UnitedHealthcare, Inc., which do not currently hold Medicaid contracts in Illinois. Other interested firms included vendors such as behavioral health and telehealth providers.

According to the RFP posted Feb. 27, the streamlined program will further integrate behavioral health and physical health services by combining its three current managed care programs that serve different populations, such as dual-eligible adults who are receiving long-term services and supports in an institutional care setting and through a Home & Community-Based Services waiver, and will extend the program to cover special needs children. It also will expand mandatory managed care from the current 30 counties to all 102 counties in Illinois, for all defined populations, and will reach approximately 127,000 additional expansion adults for a total of 577,000 statewide. Including the addition of foster care youth who will be covered through a separate contract, the state aims to include 80% of the 3.1 million Medicaid-eligible adults and children in the state in managed care.

New Contracts Could Cost $15B

Illinois under former Gov. Pat Quinn (D) in 2014 began a major transition of Medicaid enrollees into capitated managed care, with an initial goal of placing 50% of Medicaid beneficiaries into managed care. As of January 2017, 65% of Medicaid beneficiaries were enrolled in managed care. But during that transition, the state reportedly hasn’t seen much in the way of savings, although HFS Director Felicia Norwood indicated the state was able to cut spending by about $60 million when it reduced the number of health plans from about 30, according to Crain’s Chicago Business. Assuming that Gov. Bruce Rauner (R) achieves his goal of getting 80% of Medicaid beneficiaries into managed care, the total value of the managed care contracts is an estimated $15 billion, adds Crain’s.

The RFP also calls for the development of innovative value-based payments with insurers and providers working together to improve quality. Moreover, MCOs will be required to provide certain activities and services through the state’s developing “integrated health homes” model that will further align behavioral and physical health care in a way that promotes accountability, rewards team-based care and shifts away from fee-for-service toward a system that pays for value and outcomes, according to a presentation posted to the HFS website.

While the state has not disclosed any projected savings associated with program reform, Rauner stated during a news conference in February that “there’s clearly significant savings to be had.” And HFS spokesperson John Hoffman suggests to AIS Health that a “greater focus on prevention and enhanced care coordination and offering services that are evidence-based and data-driven will improve healthcare delivery while ensuring sustainable program costs.”

The state in 2017 anticipates spending more than $10 billion on Medicaid managed care, which includes federal support. Under changes that were proposed in the recently tabled American Health Care Act, Illinois could lose at least $40 billion in federal funding for Medicaid over 10 years, reports The Chicago Tribune.

When asked how Republican-proposed changes to the current funding mechanism for Medicaid could potentially alter Illinois’ plans to expand its managed Medicaid program, Hoffman responds: “Medicaid has constantly evolved, and Illinois regularly adapts to new rules and directives from the federal government. The pressing challenges facing the Illinois healthcare system and Medicaid program will also remain regardless of potential future changes. As always, we will continue to closely monitor potential changes in federal policy and seek to add our voice and experience to the dialogue.”

The deadline for full bidder proposals is May 15; awards will be unveiled by June 30.

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