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The missing ingredient in Rauner's Medicaid Rx

Saturday, July 08, 2017
Crain's Chicago Business
by Kristin Schorsch and Sabrina Gasulla

Medicaid’s M.I.A.

Health plans struggle to find their enrollees

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The Rauner administration's push to control the cost of treating Illinoisans on Medicaid has hit a critical snag.

The trouble stems from the state's efforts to shift the bulk of its Medicaid population—about two-thirds of Illinois' 3.2 million Medicaid recipients—to managed care plans run by private insurers. The goal is to wring savings by steering more people toward the doctor's office and away from pricey emergency room and hospital visits, therefore making them healthier while costing taxpayers less.

But the insurers the state has hired are doing a lousy job of tracking down and working with Medicaid recipients who chose them or were assigned to them—though the insurers say the state's far-from-flawless record-keeping doesn't help matters. The state pays them regardless of whether they find people, but Illinois officials do withhold some money that insurers can earn back by hitting certain quality benchmarks.

Within Illinois' largest managed care program, insurers were searching for or trying to build relationships with 1.1 million of their combined Medicaid recipients as of February. That's 63 percent of the people funneled into the program, according to a Crain's analysis of nearly 1,000 of the most recent state records available.

To be sure, the poor and disabled population that Medicaid covers can be difficult to track down. They are often homeless or don't have a permanent address or phone number. They cycle in and out of Medicaid as their income fluctuates. And some people just don't want to be bothered. They're more concerned about finding their next meal and a place to sleep than booking a doctor's appointment.

This doesn't necessarily mean that those Medicaid recipients aren't getting care. Many of them are still racking up bills in the ER, being hospitalized and filling prescriptions. But they're not doing those things through the insurers paid to cover them—and therefore the state isn't realizing the savings, efficiencies and quality of care hoped for when the Medicaid managed care program was launched.

"There are just members who don't want to engage," says Samantha Olds Frey, executive director of the Illinois Association of Medicaid Health Plans, a lobbying group. "So we keep trying. But we can't force them to."

Illinois Medicaid managed care is a complicated, quickly changing initiative. Enrollment has exploded since state law mandated that at least 50 percent of Medicaid enrollees be in managed care by January 2015. While getting hit each month with sometimes thousands of new Medicaid recipients, health plans are required to focus on the sickest, most expensive patients. That leaves people who aren't showing signs of poor health now to potentially fall through the cracks and end up costing the state later.

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Illinois' epic budget crisis, which just ended July 6, only added to the pain. Medicaid health insurers are owed a combined $3 billion of the state's roughly $15 billion in overdue bills. "I wonder if that's creating less of a willingness to find new members" among insurers, says Laura Summers, a senior director who studies managed care at Leavitt Partners, a health care consultancy in Salt Lake City.

And the going may get tougher in the future, as Washington lawmakers eye massive cuts to Medicaid spending that would intensify pressure on Gov. Bruce Rauner to rein in costs here.


Twelve insurers now participate in one of four Illinois Medicaid managed care programs. Crain's data analysis focused on the largest program, which involves nine insurers (a 10th one dropped out in December 2016) and is meant to cover about 90 percent of the state's managed care enrollees. It includes children and their parents, and people who joined Medicaid when it expanded under the 2010 Affordable Care Act.

The insurers are struggling either to find or assess the health of their members—or are not looking hard enough. Crain's analyzed oversight reports the health plans are required to provide to the Illinois Department of Healthcare & Family Services, which runs Medicaid. These documents, spanning 2014 to 2017, provide a monthly snapshot of how well insurers track their members.

Since Jan. 1, 2015, when at least 50 percent of Medicaid recipients had to be in managed care:

Aetna Better Health, an experienced Medicaid provider whose sole contracts in Illinois are with Medicaid, consistently performed the worst, finding just 4 percent to 12 percent of enrollees each month.

Blue Cross, the biggest insurer in Illinois, and CountyCare, a health plan run by the Cook County Health & Hospitals System, consistently performed best, though each peaked at finding 61 percent and 59 percent of enrollees, respectively. (Blue Cross declines interview requests. Cook County Health's managed care chief, Steven Glass, says the system invests heavily in care coordination teams and builds relationships with enrollees rather than reach out from a call center.)

Despite being a Medicaid-focused health plan for 22 years, Chicago-based Family Health Network has never found even half its enrollees. (Family Health declines interview requests.)

Insurers say they are working to find people who are difficult to trace, and state figures don't reflect how many they've found. Another hitch: People aren't considered located if, within 60 days after they enroll, insurers haven't finished a screening to assess the care they need.

Chief among insurers' complaints: Each month they get a batch of new recipients from the state, and their phone numbers or addresses are often wrong. So insurers canvass neighborhoods, call hospitals where patients were discharged and visit pharmacies where they filled prescriptions to get phone numbers or addresses.

To do this, Aetna Better Health, an arm of the Hartford, Conn.-based insurance giant, has enlisted the AIDS Foundation of Chicago and Thresholds, two nonprofits with deep ties to their communities. "We'll give them 200 to 300 names of the people we have no idea how to get a hold of," says Larry Kissner, the health plan's CEO. They usually find at least half.

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Some Medicaid enrollees simply don't want to be bothered, says Sinead Rice Madigan, a vice president at Health Alliance, an insurer in Urbana that left the Medicaid managed care program in December after unspecified financial losses. She notes burdensome requirements: For example, the state stipulates that insurers must contact HIV and AIDS patients at least once a month, and conduct at least one in-person visit every two months. "Many people today with HIV or AIDS live very wonderful and complete lives and don't need to have someone come into their homes every month," Rice Madigan says. "They refused in some instances to be seen."

Robert Mendonsa, who oversees managed care contracts for the state, says Illinois officials have warned health plans to find more enrollees. Some, he says, have improved.

He notes that insurers don't necessarily profit by failing to reach each enrollee, even though they're paid a monthly rate per person either way. That's because the state withholds a percentage of total payments per insurer each month, which they can earn back by hitting quality benchmarks, such as making sure kids are vaccinated on time. In 2015, for example, the state withheld about $63 million and paid out just $12 million.

"It's been a moneymaker for the state, unfortunately," Mendonsa says. "We do set high standards, and we think (the health plans) need to get there."


It's not clear how many people insurers need to find for managed care to be effective. In interviews with more than 30 experts, the consensus was that not everyone needs to be found. People who barely go to the doctor balance out the expenses for those who use medical services the most.

"It's important to find these people and do the outreach, but people have to want that kind of care," says Debra Ryan, a vice president at Skokie health care consultancy Kaufman Hall.

Even though research is mixed about whether managed care actually saves states money, the tactic has exploded nationwide because health plans are typically paid a fixed amount per enrollee, helping states predict their costs for the year. In 2016, Medicaid insured about one in five Americans. Of those, 73 percent were in a managed care program, according to Medicaid Health Plans of America, a trade group based in Washington, D.C.

New York points to this evidence that managed care works: The state shaved 12 percent off its Medicaid enrollees' annual costs from 2010 to 2015 after requiring managed care. The recipe involved giving primary care physicians a bonus for coordinating patients' care, says the state's Medicaid director, Jason Helgerson.

Insurers are doubling down on Medicaid managed care, too. UnitedHealthcare, the nation's largest carrier, this year hired Dr. Jeffrey Brenner to apply managed care concepts honed at his New Jersey practice to the Minnetonka, Minn., insurer's 6 million Medicaid enrollees nationwide. His staff was trained to provide a personal touch—say, going with patients to doctors' appointments and helping set health goals. "We trained our staff . . . to coach and mentor," Brenner says.

Connecticut, however, bucked the trend. It cut ties with insurers in 2012 after seeing double-digit annual cost increases and brought managing care in-house, says Kate McEvoy, its Medicaid director.

In Illinois, Rauner is putting his own spin on Medicaid managed care. His gamble involves increasing required enrollment to 80 percent of Medicaid recipients, shrinking the number of insurers overseeing their care from the current 12, and likely paying insurers more. Nine insurers bidding for the business await their fate. The prize is a piece of potentially $9 billion in contracts a year over four years.

Rauner wants insurers to focus on behavioral health in particular. Here's why: Illinois Medicaid recipients with a mental illness or addiction make up just 25 percent of all people in the program but account for 56 percent all costs.

The governor also is encouraging insurers to forge stronger ties with nonprofits that have connections to hard-to-find enrollees like homeless people or those with expensive chronic conditions. It could be a financial boost for the nonprofits, too.

The AIDS Foundation, Thresholds and Heartland Health Outreach are among the Chicago-based groups interested. They perform these functions now in one way or another.

Floyd Taylor, 49, is a County Care member who suffers from depression. His team of providers includes a primary care physician, a psychiatrist and a case manager from Thresholds, a nonprofit that links people with mental illness to housing, jobs and medical services. - Manuel Martinez
Photo by Manuel Martinez Floyd Taylor, 49, is a County Care member who suffers from depression. His team of providers includes a primary care physician, a psychiatrist and a case manager from Thresholds, a nonprofit that links people with mental illness to housing, jobs and medical services.

Take Floyd Taylor, 49, a CountyCare member who suffers from depression. His team of providers includes a primary care physician, a psychiatrist and a case manager from Thresholds, which links people with mental illness to housing, jobs and medical services.

Lately, Taylor and his case manager, Jessica Roberson, have been working on getting out. A walk here, a grocery run there. Sometimes they just drive around his South Side neighborhood. On these weekly visits, Roberson says she can tell if Taylor hasn't taken his medication or hasn't showered and shaved in days, more so than a doctor who sees him every few months. "I'm actually a little bit more open with Jessica," than with doctors, Taylor says. "She sees me in my element."

Small businesses are cropping up to fill the health plans' pain point, too. Executives at Accord Detective Agency, which escorts care providers to high-crime areas on the South and West sides to see patients, recently launched a new business after hearing from insurers frustrated about not finding enrollees. Accord is staffed with former detectives who tracked missing persons and fugitives. "These are people who have made a career finding people who didn't want to be located," says Jay Padar, a Chicago police sergeant who leads business development at Accord.

Christopher Lister, 58, is a patient at Howard Brown Health in Rogers Park. In 2016, the network of clinics treated 2,578 patients with Medicaid managed care plans. - John R. Boehm
Photo by John R. Boehm Christopher Lister, 58, is a patient at Howard Brown Health in Rogers Park. In 2016, the network of clinics treated 2,578 patients with Medicaid managed care plans.


Rauner's overhaul is tied to getting permission from the feds to invest Medicaid dollars in nontraditional ways, such as for housing and jobs. The Trump administration has yet to sign off on the agreement, though Mendonsa, of Illinois Medicaid, says the state plans to move forward either way.

Meanwhile, he's hoping insurers awaiting checks from the state don't skip out on managed care in the midst of Rauner's reboot like Urbana's Health Alliance did. Aetna, which is waiting for at least $698 million in overdue bills, and Meridian, owed about $590 million, each have signaled they could leave Medicaid in the wake of the state budget crisis.

Nonprofits are in a holding pattern, too, to see if health plans will throw more business their way. They could be in for a treat. If fewer plans get state contracts, and each will be paid more, the amount the state withholds from them each year for missing targets will be ever greater than it is today. Essentially, the plans will have more to lose if they skimp on quality. Finding and engaging their enrollees could become even more crucial.

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