A mandate that “any contract the Department of Healthcare and Family Services enters into with a managed care organization (MCO) shall be procured in accordance with the Illinois Procurement Code” has passed both houses.
The change, found in SB1446, essentially hits restart on awarded bids to six companies to administer Medicaid to state recipients. Those contracts are worth more than $9 billion over the next four years. That overhaul did not go through the usual procurement process, which sponsor Sen. David Koehler (D-Peoria) said lacked transparency. The bill would force the Request for Proposals (RFP) process to begin again and go through procurement,rather than as a Purchase of Care, exempt from the procurement code. Opponents said this meant millions of dollars in sunk costs and months of wasted time.
In Feb., Governor Bruce Rauner announced an RFP to overhaul the state’s Medicaid managed care program. The goal was to cut down on costs and the number of providers, while increasing managed care enrollment statewide. Comptroller Susana Mendoza and several Democrats blasted the move, saying it would be the biggest contract awarded in state history to not go through the usual procurement process. She added it shouldn’t have been pursued while the state was in the middle of a budget crisis and hundreds of millions of dollars behind on Medicaid provider payments..
MCOs have been under increasing pressure. Medicaid managed care expanded dramatically after 2011, when the state’s Smart Act mandated 50% of Medicaid recipients enroll in an MCO by 2015. Today, about 65% of the state’s 3.1 million Medicaid enrollees are in managed care programs. Rauner sought to increase that portion to 80% and extend coverage to children under DCFS care.
But Koehler said he wanted to ensure the state was getting the most bang for its buck, suggesting administrative costs and the several million dollars going to the private companies operating MCOs deserve a second look.
“Why are we paying 15% (in administrative costs)?… It’s estimated this year we’re going to pay $800 million in administrative fees to MCOs we have currently,” he said. Pointing out the $120 million in Affordable Care Act taxes, he added “All that profit is going outside the state.”
Sen. Dale Righter (R-Matoon) said the horse had already left the barn. Winners were announced on Friday, though contracts have not yet been negotiated.
“This process began in Feb. of this year,” he said. “The language that we’re voting on was filed in the House, not in March or April, but at the end of May. We’re almost over the goal line in this process before there was a decision to file a bill to block the process. That is very bad, very late timing.”
Koehler parried. He filed a bill in the Spring, he said, and was concerned from the start.
Righter asked if Koehler was aiming to help one of the applicants that lost in the contract process.
“I absolutely am not looking out for any special interest in this,” Koehler replied. “That’s the last thing on my mind.”
“Here’s the bottom line: just because it’s late in the game–and I’ll grant it, it’s late in the game–a bad process shouldn’t be pushed forward just because it’s late in the game. This is a $9 billion contract.”
Sen. Kyle McCarter (R-Lebanon) supported the change.
“Am I slowing down the process by voting for this? Perhaps, but I specifically asked the administration, ‘negotiate on our behalf, on the people’s behalf. Let these people cut their fees and get closer to New York at 6%,’” he said, noting the state had to work to plug its deficit.
McCarter filed a separate bill, SB1058, limiting MCO administrative costs to 9%.
Executed contracts were set to begin January 1, 2018, with a four-year term and a four-year renewal. Losing bidders can file a protest until 3:00 p.m. on Aug. 14.