The New Medicaid Opportunity in Illinois under the Affordable Care Act (ACA)

Medicaid now covers only low-income individuals who meet categorical requirements such as being a child under age 19, are pregnant, are a parent living with a child under age 19, are over age 65, or have a disability that meets the Social Security Definition of disability. The new Medicaid opportunity under the Affordable Care Act (ACA) will allow hundreds of thousands of low-income Illinois residents gain access to comprehensive coverage, including preventative care, prescription drugs, and mental and behavioral health services. The Illinois Department of Healthcare and Family Services (HFS) remains responsible for care coordination and provides for this by using six managed care entities. All Medicaid recipients must choose a managed care entity.

The ACA (Obama Care) requires states to extend Medicaid benefits to all individuals aged 19 through 64 years with income below 133% of the Federal Poverty Level in states that adopt the expansion. Medicaid exists as a federal-state partnership. Illinois currently receives a 50% match for Medicaid, meaning that for every $1 spent on Medicaid, Illinois contributes half, while the federal government contributes the other half.

From 2014 through 2016, the federal government will pay for 100% of the cost for new 2014 Medicaid eligible beneficiaries. Federal match rate reductions will start in 2017, and will never go below a 90% match in 2020, so Illinois will never share more than $.10 on each Medicaid dollar spent.

Illinois will pay for its share of new Medicaid starting in 2017 by:

  • Using monies already spent each year on uncompensated care. The estimated total of uncompensated care would decline by approximately $953 million from 2013-2022;
  • Allowing hospitals, clinics, and other local health care providers to recoup some of their costs, while providing coverage in a more comprehensive manner that includes preventive services;
  • Paying local municipalities and township offices through the general assistance program for the cost of medical care for newly eligible 2014 Medicaid recipients, thereby relieving some financial burden currently carried by these payors.

Many of the individuals who will be newly eligible for Medicaid are already using health care services at hospital emergency rooms and Federally Qualified Health Centers (FQHCs). The new Medicaid opportunity will:

  • Allow individuals access to the entire health care system including access to specialty care and affordable prescription drugs,
  • Help providers of the uninsured by reimbursement for services to allow them to expand their capacity,
  • Significantly increase pay to providers for primary care in 2013 and 2014. The state currently pays Medicaid providers at an inadequate reimbursement rate. The ACA increases Medicaid reimbursement to primary care Medicaid providers.

The new Medicaid opportunity did not change existing rules regarding eligibility for immigrants and non-US citizens. Qualifying enrollees must still be US citizens or a Lawfully Present Resident with at least five years of US residency. According to the Illinois Coalition for Immigrant and Refugee Rights, there are about 490,000 immigrants in Illinois without health insurance, of which 110,000 are naturalized immigrants and 76,000 are legal permanent residents.

Fully implemented, the Medicaid Expansion will extend much-needed health insurance coverage to 17 million uninsured individuals.

Illinois Names Eight Healthcare Plans to
Care for Medicaid and Medicare Clients

The Illinois Department of Healthcare and Family Services (HFS) named eight health plans to partner with the state as it moves the majority of people covered by Medicaid to systems of coordinated care in an attempt to transform its Medicaid system from a program that simply pays medical bills to a wellness system.

Medicare and Medicaid Eligibility

It also involves changes in the way Medicare and Medicaid eligible beneficiaries have their covered services processed. The new project designed for these clients (“dual eligibles”) is a component of the state’s transition to greatly expanded coordinated care for Medicaid clients by 2015. The state estimates that approximately 136,000 seniors and adults with disabilities will be eligible for care under the new processing program. Dually eligible clients account for a high proportion of Medicaid spending, e.g., in 2010, these dually eligible made up 9 percent of the population and 27 percent of the costs of the Medicare/Medicaid programs.

HFS Director Julie Hamos stated, “We know that by aligning Medicare and Medicaid so that they are working together in concert and providing each client with a medical home and a patient-centered team of healthcare experts, we can provide better care and achieve better outcomes while lowering costs for a segment of the population that needs a great deal of care.”

Advocacy Points

The new Medicaid program is free for the state during the first three years (2014, 2015, and 2016). In these difficult financial times, Illinois cannot afford to leave free money on the table. Instead of Illinois paying an average 43% of Medicaid costs, under the new Medicaid plan, after 2016, the state will pay only 5% in 2017, 6% in 2018, 7% in 2019, and then 10% in 2020 and beyond….

It is true that the Medicaid Expansion, by covering new people, will create some new costs to states. Any time a new program starts, it generates attention. However, many conservative leaders use fuzzy math to exaggerate the cost, e.g., counting people who are already eligible for Medicaid in the new Medicaid numbers. Some eligible but unenrolled people may enroll later. This is not a cost of the new Medicaid program but a result of the state’s under-enrollment of the existing Medicaid program.

While the state will have some new Medicaid costs when it implements the new Medicaid program, it will realize financial savings because of a reduction in the uninsured population. This will reduce state dollars needed for programs currently used by the uninsured. Particularly, it will save money for local county and municipal governments. Local community health centers will be able to bill Medicaid for uninsured patients they currently see using state and local dollars.

A workforce with health insurance gets more medical attention, lives in better health and becomes more productive.

The health industry is an important part of state and local economies, and the new Medicaid program will increase business in the health industry and stimulate the state economy.

Individuals below the poverty line often live in very poor health, and Medicaid specifically meets the needs of low-income people with serious health care needs. Medicaid includes protections to limit premiums, deductibles, copays and cost sharing that otherwise make insurance too expensive for low-income people. Default Medicaid rules limit the total cost sharing that low-income families can pay and prohibit premiums in most categories of Medicaid (with some exceptions). Medicaid provides the least expensive way to cover low-income individuals.

Caveats

Managed Care Organizations may have a lot of political clout in your state, and the new Medicaid program population represents new business for them. (Consider the danger of political graft, loss of individual healthcare choice and control.)

At the same time, local groups may be neutral or support the new Medicaid, since it represents coverage for their employees that they will not have to pay for and more community jobs with healthy employees. (This may improve local economical issues.)

Aligning Medicare and Medicaid so that they are working together in concert under a managed care system may work to the client’s ill-treatment. (Danger of managed care strong-armed tactics to save money and loss of client choice of service.)

There are no clear specifics about how the dual-eligible project works. Medicare clients may opt out of the Medicaid managed care entities, but the instructions and consequences for opting out remain uncertain.

Although the Illinois Department of Healthcare and Family Services (HFS) remains responsible for care coordination, using privatized, managed care entities may offset its control over the system, reduce jobs in the government sector and could endanger patients’ right to choose and privacy. Shifting an individual’s healthcare to a large conglomerate that coordinates (controls) all aspects of healthcare endangers privacy rights under HIPAA. Although the HFS Director assured that clients might review their electronic record for errors and omissions, the appropriation does not indicate this right.

The five-year restriction for “Lawfully Present Resident” immigrants insufficiently covers the legal populations who live and work in the United States, placing undue, life-threatening hardship on immigrants.

Medicaid needs to prove “prompt” payment to providers to encourage widespread provider participation and accessibility to service. Furthermore, the current payment backlog needs immediate resolution as a good-faith gesture that the state will pay their bills in a timely manner.

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Mental Health Supplemental Appropriation

The Division of Mental Health within the Illinois Department of Human Services determined that insufficient revenue in certain funds following passage of the FY13 budget existed. Mental health crisis programs and psychiatric services experienced unintended cuts of $12 million because of this revenue shortfall. The supplemental appropriation restored these cuts and prevented further cuts to the behavioral health services.

Across Illinois, supportive housing programs serving individuals and families experiencing homelessness and with disabilities wait for $2.986 million that lawmakers appropriated last spring and did not release because the appropriations bill mistakenly omitted the words “and mental health.” The Department of Human Services, therefore, did not have the authority to spend that money. The supplemental appropriation changed to language to, “The sum of $34,450,000, or so much thereof as may be necessary, is appropriated from the Health and Human Services Medicaid Trust Fund for awards and grants to developmental disabilities and mental health programs.” The language fix does not take funds away from other programs or services, but merely gives the Department of Human Services the authority to spend on supportive housing program.

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