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Cook County Health to buy piece of struggling insurer's Medicaid biz

Wednesday, September 20, 2017
Crain's Chicago Business
by Kristin Schorsch

Struggling Family Health Network is preparing to exit the Illinois Medicaid business and selling a huge piece of it to the Cook County Health & Hospitals System.

Effective Nov. 1, Cook County Health will take on more than 160,000 FHN members who live in Cook County and transition them to the health system's CountyCare Medicaid plan. That will more than double CountyCare's enrollment, which now is roughly 140,000, and make the insurer one of the largest Medicaid managed care plans in Illinois.

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FHN, which now has nearly 220,000 Medicaid members and is one of the largest Medicaid insurers in the state, plans to move its members who live outside of Cook County to another plan by Jan. 1, president and CEO James Kiamos said. He would not disclose which insurer, citing a non-disclosure agreement. Instead, the storied carrier, owned by five local hospitals and health systems that treat a large portion of impoverished patients, will focus on growing its small Medicare Advantage business.

Neither Kiamos nor Cook County Health CEO Dr. John Jay Shannon would disclose the cost of the deal. But Shannon added: "We're competing with national, privately held insurance plans. There are times we've got to act like one." Cook County Health, known as the safety net for the poor and uninsured, is one of the largest public hospital networks in the nation.

The agreement comes amid vast changes in Illinois Medicaid managed care, which Gov. Bruce Rauner is shaking up to squeeze out more savings. In managed care, the state pays private insurers to administer benefits to state Medicaid recipients and to focus on prevention. That involves making sure patients get routine checkups and avoid unnecessary emergency room visits and hospitalizations. The goal is to keep people healthy while saving the state money.

Rauner plans to further privatize Medicaid, with insurers eventually taking on 80 percent of recipients (they now cover about two-thirds of enrollees). Rauner made insurers re-bid for new contracts, and in August, he named six winners, cutting in half the number of existing participants.

Cook County Health was among the winners whose new contracts begin Jan. 1. FHN did not bid. Earlier in the year, FHN's board chairman said he feared the bidding process was locking the non-profit out of a new contract. Lawmakers have rallied to save the health plan.

As FHN looked to its future, Kiamos said the insurer was looking for a seamless transition for members and the physicians who treat them. Both FHN and Cook County Health, a two-hospital system with a network of outpatient clinics and providers at Cook County Jail, are in the Chicago area and have a history of serving low-income patients. Doctors who are part of the FHN network can contract with CountyCare instead, or opt out.

"The biggest priority for us … has been the continuity of care with physicians and members," Kiamos said. "That was one of the main items that made CountyCare the most attractive partner."

Shannon said having more CountyCare members would help balance out the financial risk of taking on sick and expensive patients.

"It's much easier to be able to have an impact on the communities that we serve if we're able to reach out and touch more of those individuals," he added.

FHN is not closing, Kiamos emphasized. The insurer plans to spend the next year winding down its Medicaid business, including paying back doctors who are owed money. In February, FHN's general counsel disclosed in a court filing that the health plan had largely stopped paying physicians amid the state budget crisis. The ripple effect? Several hospitals and hundreds of doctors cut ties with FHN, reducing access for patients.

Meanwhile, Kiamos said he hopes to find jobs for FHN's 380 employees, though some will stay on to help grow the remaining Medicare Advantage business.



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