The federal government wants to know why Cook County Health's Medicaid managed care plan hasn't paid hundreds of millions of dollars it owes doctors for treating low-income patients.
CountyCare had about $350 million in unpaid claims as of last month. The insurer—one of six administering Medicaid benefits under Illinois' $12.5 billion managed care program—is required to pay claims within 30 days, but it takes 110 days on average.
The backlog has gotten the attention of the Centers for Medicare & Medicaid Services, which funds a portion of the joint federal and state health insurance program. The federal agency recently asked for an explanation of the delays and what the state is doing about CountyCare's unpaid claims, Crain's has learned.
CountyCare CEO James Kiamos blames late payments on Cook County government, which receives Medicaid payments from the state that are earmarked for doctors and hospitals serving CountyCare patients and is supposed to forward the money to the health plan. But before the federal and state Medicaid dollars are passed along to CountyCare, they go into a general Cook County account, mingling with other funds that are used to pay a range of county expenses.
Cook County Chief Financial Officer Ammar Rizki says Medicaid dollars from the state are not being diverted to other purposes.
"All the money goes into one bank account, but the accounting system knows how much is attributed to those three agencies"—CountyCare, Cook County Health and county government, Rizki says. "From a cash-flow perspective, bills are being paid based on what the day's priority is."
"On any given day, I have a number of priorities I have to meet," such as utilities and payroll, Rizki explains. "I look at whatever the most urgent priority is that day and make sure we manage our cash accordingly."
Rizki blames payment delays on the state, which is roughly 45 days behind on payments, an improvement from delays that occurred during the budget impasse under Gov. Bruce Rauner.
Illinois Department of Healthcare & Family Services spokesman John Hoffman says in an email that the department processes CountyCare payments "on a schedule similar to other plans" and that it's "prepared to explore options that will make sure (Medicaid managed care) members continue receiving quality health care."
Meanwhile, doctors and hospitals are awaiting payments from CountyCare, which covers 15 percent of the state's Medicaid managed care enrollees. The delay is especially hard on small health care businesses and cash-strapped safety-net hospitals that treat large numbers of poor patients on Medicaid, which pays less than Medicare and commercial insurance.
CountyCare got more than 30 complaints from hospitals—including Rush University Medical Center and St. Anthony Hospital—and other health care providers between August and January alleging it owes them money, according to data Crain's obtained through a Freedom of Information Act request. Some complaints said providers hadn't been reimbursed for medical services in more than 90 days; others referenced hundreds of thousands of dollars in unpaid claims. One from the health plan's pharmacy benefit manager, MedImpact, references outstanding invoices for administrative fees, pharmacy claims and interest payments.
Cook County Health board members said during a board meeting last month that late payments from both the state and the county are causing the delays. However, Kiamos said during the meeting that "it's more of a funding issue up through county government." He added that "the state is not the reason."
Just days after the board meeting, CMS asked the state for more information on CountyCare's backlog, including what's causing CountyCare to fall behind on payments and what the state is doing to resolve the situation, according to an internal state health department email obtained by Crain's.
In a statement, Healthcare & Family Services, which oversees Medicaid, acknowledges "we have been in contact with Federal CMS, explaining the circumstances, and will continue updating the status.
The pattern of delayed payments from CountyCare to health care providers was first highlighted by Cook County Independent Inspector General Patrick Blanchard in a June report, which found that CountyCare had about $700 million in unpaid claims at the end of fiscal year 2018, compared with only $14 million outstanding from the state.
In response, Cook County Health retained consultancy Deloitte to audit its finances. The Deloitte report acknowledges that the county has not always had the cash necessary to pay CountyCare on time. It says the lack of available cash is due to lower premiums and delayed payments from the state, "as well as other cash flow and appropriation authority constraints at Cook County and (Cook County Health)."
The report concludes that "the delays in cash flow and cash shortages are expected to remain the case unless Cook County and (Cook County Health) can determine how funds can be made available to pay claims more timely."
With a $2.8 billion budget, Cook County Health is one of the largest public health systems in the nation, operating Stroger and Provident hospitals, as well as clinics across the county. Leaders say CountyCare, which covers many patients treated at county-owned hospitals and clinics, has provided more than $1 billion in revenue to the health system over the past five years."
The safety-net system, which treats patients regardless of their ability to pay for care, expects to spend roughly $590 million in fiscal 2020 on uncompensated care, which includes charity care and bad debt.
CountyCare revenue "is what has allowed us to keep up with increased charity care with fewer and fewer local tax dollars," former Cook County Health CEO John Jay Shannon wrote in a statement in September, before he left the post.