Audit Finds Lax Monitoring of $7B in Illinois Medicaid Payments to Insurers

Illinois Gov. Bruce Rauner’s administration cannot adequately account for more than $7 billion paid to Medicaid insurance providers in 2016, an audit released on Jan. 23 found.

The critical review by Auditor General Frank Mautino comes just weeks after the Republican governor ramped up managed care for Medicaid caseloads to the tune of $60 billion over four years.

It said the Department of Healthcare and Family Services “did not maintain complete and accurate information needed to adequately monitor” $7.11 billion in payments to or by the 12 managed-care organizations, or MCOs, that participated in the fiscal year that ended in June 2016.

The audit also found the department could not provide information to show all claims it paid to providers in 2016; the claims the providers denied; the providers’ administrative costs or the coordinated costs they incurred by splitting coverage with other providers; or the medical-loss ratios which show premium payments are covering claims.

It also highlighted that the agency made multiple monthly provider payments for the same months for the same 302 patients, totaling $590,000.

The newly minted expansion will improve program quality, HFS spokesman John Hoffman said.

“The department rebooted Medicaid managed care to ensure program integrity and accountability, protecting taxpayer dollars while providing quality care for those with limited resources,” Hoffman said in an email. “We have been continuing to establish effective systems to accomplish these vital goals.”

Remedies include monitoring providers’ administrative costs; identifying, removing and recouping duplicative payments; and ensuring providers submit denied-claim data.

The audit, ordered by the Democratic-controlled Illinois House in May, provides additional fire for Democrats critical of Republican Rauner’s rollout of Medicaid managed care.

Rauner is complying with expanded managed care his Democratic predecessor approved in 2011. The idea is that low-income Medicaid clients in managed care are assigned a physician and given guidance that help them focus on prevention, thus lowering costs.

In 2011, the state spent $247 million on Medicaid managed care and $11 billion on traditional fee-for-service care. In 2016, the $7.11 billion in managed care nearly equaled the $7.6 billion for traditional care.

The Jan. 1 expansion, called HealthChoice Illinois, ramps up managed care by 800,000 participants, to 2.7 million, at an annual cost increase of 43 percent to about $15 billion. But Rauner has maintained the arrangement will ultimately save money.

Democrats first argued that HFS should go through a stricter bidding process to hire its providers. They continue to scrutinize the deal because of an incident in Iowa, where a major insurer pulled out, leaving state officials to try to reassign clients with existing providers.