Progress Made with Illinois Medicaid Reforms, But Policy Concerns Remain

Kid playing doctorIllinois’s legislators were hard at work this winter discussing ways to make changes to Illinois’s Medicaid program that would result in short-term savings. Members of Illinois House and Senate’s Special Committees on Medicaid Reform held hearings where representatives from the Governor’s office, the Illinois Department of Healthcare and Family Services (HFS), advocates, providers, and others offered ideas on how to save money by reforming the Medicaid program. Afterwards, the Governor’s office, HFS, and co-chairs of these committees drafted amendment 2 of H.B. 5420, which passed with bipartisan support and was signed into law January 25, 2011. The reforms contained in the new law are expected to save the state hundreds of millions of dollars. Some of these reforms are discussed below.

A few provisions of the new law make changes to the All Kids children’s health insurance program. Starting July 1, 2011, children in households with incomes over 300% of the poverty level (about $66,150/year for a family of four) will no longer be eligible for All Kids. If these children are already enrolled, they will be allowed to stay in the program for one year. Also, starting July 1, 2011, new applicants to the All Kids program will need to provide proof of one-month of income and to verify their Illinois residency. Enrollees in the All Kids and FamilyCare programs will need to recertify their coverage with HFS—to verify income and other eligibility information—in order to stay in the program. HFS will notify current enrollees of these changes within 90 days of the bill becoming law. These provisions changing the All Kids program may not align with national health reform, and it is not yet clear whether they will be approved by federal authorities, since they may implicate the maintenance of effort provision in that law, which applies to procedural changes. 

The new law also requires HFS to conduct an analysis of how All Kids determines eligibility and to submit reports in 2011 and 2012. The law also institutes a two-year moratorium on medical assistance program expansions beyond anything in place on January 1, 2011, with the exception of anything that would jeopardize the federal Medicaid match if it wasn’t implemented. Further, the law extends the sunset date of the bipartisan Covering All Kids Health Insurance Act —which authorized coverage for undocumented children and for those in households with incomes greater than 200% of the poverty level—by five years to July 1, 2016. The extension of the sunset is immensely important to promote the health and well being of Illinois’s children and will help Illinois to maintain its position as a national leader in covering kids.

Other provisions in the new law will improve upon Illinois’s existing information technology infrastructure to allow for data sharing among government agencies. For instance, these provisions will allow HFS and the Department of Human Services (DHS) to access records of other governmental agencies, such as the Social Security Administration, Illinois Secretary of State, Illinois Department of Insurance, and the Illinois Department of Employment Security, to verify eligibility information. These steps will help build a foundation for the enormous information technology infrastructure requirements necessary for the successful working of a state-based health insurance exchange marketplace. The eventual goal is a streamlined and simplified Eligibility, Verification, and Enrollment (EVE) electronic data-sharing system that will fully comply with the Affordable Care Act.

The new law also provides that by 2015, at least half of all Medicaid enrollees will be in a care coordination program—an integrated delivery system with providers that furnish or arrange for the majority of care, including primary care and referrals from those providers, hospital services, dental services, etc. Illinois Health Connect—Illinois’s existing primary care case management (PCCM) program—does not, in its current form, qualify. However, it may qualify at a later date if the PCCM program makes changes that define its services more comprehensively and assumes more risk on behalf of its enrollees. HFS will be required to report to the General Assembly from April 2012 until April 2016 on the progress and implementation of the coordinated care program initiatives.

Medicaid is the primary payer for long-term care, which covers a variety of services needed by people to live independently in the community, such as home health and personal care, as well as services provided in institutional settings, such as nursing homes. The new law makes changes to Illinois’s existing long-term care system to allow for the state to shift Medicaid long‐term services budgets to noninstitutional, community-based settings. The law provides the governor with the authority to redesignate a portion of funds set aside for institutional services to be transferred to community-based, long-term care programs. This reform represents an opportunity for Illinois to address the long‐term care needs of low‐income individuals with chronic and disabling conditions. The law’s provisions affecting long-term care rebalancing, enhancing care coordination delivery systems, and EVE can all be implemented in a way that aligns with parts of the national health reform law, and that they should be done that way.

The law will also make many changes to the way government monitors and enforces Medicaid fraud. It provides for a civil remedy to combat Medicaid fraud, which includes a financial penalty of up to $2,000 for each fraudulent claim for benefits or payments. Illinois will also be repaid 5% interest per annum on the value of benefits fraudulently received.  HFS’s Inspector General’s office will be required to report to the General Assembly 12 months after the law’s effective date on the number of fraud cases identified and pursued and the fines assessed and collected.

In sum, the new law makes progress in necessary areas, especially in implementing national health reform, but may not be best policy in others. The Shriver Center is supportive of many of the measures in the law, including the ones that have the most potential to reduce health care costs in constructive ways, such as long-term care rebalancing. We regret the changes to the All Kids program narrowing eligibility and increasing red tape. We urge the General Assembly to fully fund the staff needed to competently manage the increased bureaucracy. We are hopeful that when EVE is fully implemented, the red tape can be removed.


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