A Medicaid eligibility verification project has come to a partial stop in Illinois, amid one of the largest expansions in the program's history.
An arbitrator ordered the Illinois Department Healthcare and Family Service amend and phase out a $77 million contract with the company Maximus to review the eligibility of 2.7 million Medicaid beneficiaries, after the American Federation of State, County and Municipal Employees Council 31 sued, arguing that the outsourcing violated collective bargaining contracts and should be limited to state employees.
Under the new agreement, the state will redirect and hire new caseworkers for the redetermination project by April, with Maximus continuing its eligibility data analysis until June 2014.
Governor Pat Quinn and DHFS director Julie Hamos supported the contract but agreed to a compromise with the union in late December without appeal, hoping to build on the process used so far.
"This ruling provides the best and most efficient way forward for taxpayers at this time and continues our momentum in rooting out waste, fraud and abuse," Hamos said in a media release. "We are committed to preserving the Illinois Medicaid program at a lower cost to the state while providing healthcare for our neediest low-income children and families."
While Maximus was set to be due a portion of the contract next year, the state and the company will be working on amending the terms.
In a review of 497,000 cases, Maximus initially flagged about 300,000 beneficiaries as potentially ineligible based on insufficient documentation, and the DHFS ended up cancelling coverage for about 100,000 so far, although little data has been released on those beneficiaries and the costs they were incurring.
Representing Illinois DHFS workers, AFSCME Council 31 executive director Henry Bayer criticized the methodology used in the redeterminations, arguing that it has led to high error rates. Bayer also criticised the decision to outsource the re-screening program, authorized under the 2012 Save Medicaid Access and Resources Together Act, as the state sought to find $1.6 billion in Medicaid savings.
"The backdrop to the Maximus contract was a backlog in Medicaid eligibility redeterminations caused by staff shortages," he said in a media statement.
The order from the arbitrator allows the state to continue some of the screening processes Maximus was using for reapplications, and to let Maximus make preliminary determinations through the end of June.
The policy change comes as Illinois is expecting to enroll as many as 342,000 more people in Medicaid under the Affordable Care Act. Those enrollees are going to be almost entirely covered by the federal government. But Illinois state health leaders and lawmakers are devoting increasing scrutiny to Medicaid spending as they face an even more daunting budget problem, $100 billion in unfunded pension liabilities, and may end up revisiting the issue if the 2012 initiatives don't deliver the full $1.6 billion in projected savings.
In early 2013, before the lawsuit, DHFS director Hamos estimated that the savings from the eligibility redetermination project would yield about $150 million, about half of what the Quinn administration originally estimated.