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CountyCare's loss is County health system gain

Saturday, June 21, 2014
Crain's Chicago Business
by Andrew L. Wang

For the Cook County Health and Hospitals System, there's no gain without pain when it comes to managed care.

The system's CountyCare program, its first stab at a Medicaid managed care program, spent more money than it brought in during the first six months of fiscal 2014, but much of that expense went to reimburse care that the system itself provided.

The result: Even though CountyCare lost about $21.9 million for the six months ended May 31, the health system gained $137.2 million because many of those patients sought care at county hospitals and clinics, county health officials say.

The six-month results speak to the promise of the program, a brainchild of former CEO Ramanathan Raju that is seen as crucial to the financial survival of the health system, and to the county itself, which subsidizes the system with tax dollars.

“Before CountyCare, this organization historically had been spending $500 million to $600 million a year for uncompensated care. This was an opportunity for us to bring in resources to offset those significant dollars,” interim CEO Jay Shannon said today at a meeting of the health system board's finance committee. “The fact is that CountyCare brought in more than $100 million in payments that this health system would not have received without it.”

The county receives a fixed fee — about $632 per member per month — to cover the medical care and administrative expenses of the roughly 95,000 patients in the program.

The program currently is in a two-year-old pilot phase in which it is paid by the federal government to care for patients newly eligible for Medicaid under the Affordable Care Act. On July 1, it will transition into a so-called managed care community network under the auspices of the state, which will distribute payments. The finance committee approved the health system's contract with the Illinois Department of Healthcare and Family Services at this morning's meeting. The contract must still be approved by the full board later this month.

HOW THE MONEY WAS SPENT

Under a law signed by Gov. Pat Quinn in 2011, the state is trying to move 50 percent of the roughly 3 million Medicaid beneficiaries into a managed care program by next Jan. 1. The state wants to slow utilization and spending on care and give incentives to hospitals and providers to better manage the health of large populations of patients, addressing ailments before they require high-cost care.

For the six-month period, expenses were high, county officials concede. CountyCare brought in $313.6 million in total revenue, $291 million from fees. It spent about $32.9 million on administrative expenses, which includes payments to outside vendors to operate the program, and $302.6 million on claims payments — for services, drugs and other clinical costs.

About 42 percent, or $126.5 million, was paid back to the health system for medical care at the county's two hospitals and dozens of clinics. An additional $10 million went to health system pharmacies. The balance of claims expenses was paid to other providers in the CountyCare network, including community outpatient health centers.

County officials say they claims are high, in part due to the cost of providing care for many patients who had not had access to medical care before.

“It takes a while to get them into care, to get them stabilized, to get their health under control,” said Steven Glass, system director for managed care. “Are the costs going to be high? Absolutely. Will it always be this high? No.”



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