Illinois Legislation Targets Medicaid Managed Care Claim Denials

June 2019 ~

Following the unanimous approval from the state Legislature (59-0) and House Appropriations-Human Services Committee (19-0)  to move the bill forward, the Illinois House voted to pass (116-0) a health care reform package that would require Medicaid managed care plans to pay claims within 30 days or face a penalty.

Senate Bill 1321 (SB 1321), if finalized, would also require the state to publish Medicaid plan medical loss ratios, improve the beneficiary eligibility renewal process, and mandate the establishment of a provider complaint portal allowing physicians to submit unresolved insurance claims.

The state’s Medicaid managed care program was originally designed to improve people’s health and control costs by ensuring all care is appropriate and high quality. Under the current program’s parameters, the state pays private insurers a set amount per member per month rather than paying for each medical service provided.

SB 1321 aims to improve aspects of the program that seem to be causing hospitals the most grief, including requiring insurers to pay complete claims within 30 days or face a penalty. The bill also aims to improve the medical redetermination process, which reviews eligibility for the state’s nearly 3 million Medicaid beneficiaries, to help avoid and prevent lapses in coverage.

If finalized, it would require Healthcare & Family Services (the state department in charge of overseeing the program) to calculate and publish each Medicaid managed care insurer’s medical loss ratio, the percentage of premium dollars used to pay claims and improve quality.

A representative from the Illinois Association of Medicaid Health Plans states that the Department of Healthcare & Family Services has been working closely with the association to develop standardized guides to help lower claim denial rates. “When properly implemented, managed care offers Medicaid members enhanced health coordination and quality services at sustainable costs,” said department spokesman John Hoffman. “While we are seeing the promise of these goals beginning to be met, we also understand that the previous administration did not adequately develop some components of the program, which we are working to correct as promptly and effectively as possible.”

“I think most of us came into this legislative session with a sense that the state’s Medicaid managed care program was on life support – that it had failed to realize the promise of increased care coordination, improved patient outcomes, greater efficiencies or cost savings,” said Gross. “The program was crippled with increasing administrative burden, lack of standardization and uniformity of rules, and insufficient oversight, which led to unacceptable payment delays and initial claim denials for medical services of 26%,” said Illinois Health and Hospital Association Senior Vice President-Gov’t Relations, David Gross, at the hearing.

“All of this together put extreme financial pressure on hospitals, and jeopardized access to care for all, especially for low-income and vulnerable communities in urban and rural Illinois. The program was in crisis, and providers asked the Legislature and the new administration to step in and help restore the strained relationship between the MCOs and healthcare providers. With SB 1321 that work has begun.”

Source(s): Illinois Health and Hospital Association; Senate Bill 1321; Crain’s Chicago Business; Chicago Tribune; Health Markets;