Stop bleeding safety net hospitals

Illinois’ reboot of Medicaid managed care has delivered a kick in the teeth to hospitals that serve the state’s most vulnerable patients.

Launched early last year, HealthChoice Illinois expanded Medicaid managed care from just 30 counties to the entire state. Under managed care, Illinois pays private insurers a fixed fee to cover medical care for patients who rely on Medicaid, a joint federal-state health insurance program for people of modest means. The state explained the move as a way to provide “enhanced health coordination and quality services at sustainable costs.”

But the costs of HealthChoice quickly became unsustainable for hospitals with large numbers of Medicaid patients. As my colleague Stephanie Goldberg reported in Crain’s this week, those hospitals are now spending more to collect the same amount of money—and in some cases less—from Medicaid managed care insurers.

That’s unacceptable. These “safety net” hospitals already struggle to make ends meet. Medicaid pays lower rates than private insurance and Medicare, leaving hospitals with little or no financial cushion to absorb rising costs and claims rejections.

Yet the state of Illinois, facing its own fiscal crisis, has increased financial pressure on institutions that play an essential role in public health. Hospitals say onerous HealthChoice paperwork requirements have forced them to hire more administrative staffers to wrangle payments from managed care companies. They also say HealthChoice insurers are rejecting 26 percent of claims, depriving hospitals of payment for hundreds of millions of dollars’ worth of services. A state report says the most recent data available shows a denial rate just under 11% during the first quarter of 2018.

A program that drives up hospitals’ administrative costs isn’t making healthcare more efficient, effective or affordable. The state might be saving money, but only by shifting costs onto hospitals.

Safety net hospitals can’t afford the additional costs of HealthChoice as currently structured. And Illinois can’t afford to lose more safety net hospitals. In some city neighborhoods and rural areas, they’re the only source of healthcare for communities with high rates of serious medical conditions such as diabetes and hypertension. If safety net hospitals close, more patients in those areas won’t get care, overall health in Illinois will deteriorate, and ripple effects will reach every corner of the state.

The Illinois Association of Medicaid Health Plans, a trade group representing insurers, didn’t respond to my questions for this column. But executive director Samantha Olds Frey told Goldberg that hospital staffers just need more training in HealthChoice claims procedures. She defended the program as an attempt to “bend the cost curve” through preventative care and other measures.

So far, costs are bending in the direction of hospitals, a predictable result given the economic dynamics at play. The state is offloading the risk of rising health care costs to insurers, who in turn pass that risk along to hospitals—imperiling the most critical link in the health care chain.

Lawmakers and state officials who crafted HealthChoice should have anticipated this outcome. Now it’s time they stepped in to prevent the program’s flaws from metastasizing into a full-blown crisis among safety net hospitals. The state should act quickly to streamline administrative procedures that have proven so costly for hospitals under HealthChoice, and establish guidelines to prevent unreasonable denials of Medicaid claims.

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via Crain’s Chicago Business

April 2, 2019 at 03:23PM

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