Medicaid 59: A detailed list of reforms

In February, Gov. Quinn told lawmakers that the rendezvous with reality had arrived. He informed them that they must “reduce expenditures” in the Medicaid program by $2.7 billion this year. Soon thereafter, lawmakers in the House committed to reducing “the accrual of Medicaid obligations” by $2.7 billion. The following proposal meets this goal without steep...

In February, Gov. Quinn told lawmakers that the rendezvous with reality had arrived. He informed them that they must “reduce expenditures” in the Medicaid program by $2.7 billion this year. Soon thereafter, lawmakers in the House committed to reducing “the accrual of Medicaid obligations” by $2.7 billion. The following proposal meets this goal without steep cuts to reimbursement rates, without new taxes and fees, without early implementation of the Affordable Care Act and without new mandates on private insurance.

The first eight reforms are eight specific reforms that Illinois can and should implement immediately. These reforms are already being done in other states and by the federal government. They have led to substantial savings, just by ensuring that the right services are delivered at the right time and the right place. These are structural reforms to how Medicaid operates and are intended to make the program more efficient. Savings figures reflect conservative estimates of line-item reductions, based upon actual savings seen by states implementing these reforms and Illinois’ actual line-item expenditures.

The remaining 51 were proposed by Gov. Quinn and the Medicaid working group. Savings figures reflect the Department of Healthcare and Family Services’ estimates of line-item reductions.

The total savings of this proposal is $2.788 billion. This figure accounts for any duplicative reforms between the working group’s proposals and those of the Illinois Policy Institute. For further questions, please contact:

1. Aggressively manage utilization of pharmaceutical drugs. Contract with pharmacy benefit management entity and implement further utilization management, including generics-first for all initial and naïve use, prior approval for multiple agent use, and bringing dispensing fees, ingredient costs and drug utilization in line with Medicare, Medicaid managed care plans and commercial insurance plans. Potential savings: $200.0 million 
2. Implement comprehensive bidding for durable medical equipment. Comprehensively bid to single or multiple vendors with capped payments and volume pricing methods. Potential savings: $45.0 million
3. Rebalance long-term care. Emphasize community-first standardized and uniform assessments for all new nursing facility eligible enrollees. Work with families, patients and facilities to gradually transition a portion of those better suited to home-based and community care.Potential savings: $350.0 million
4. Implement acute care utilization management. Implement aggressive inpatient and outpatient management based on clinically unnecessary admissions, avoidable readmissions within 30 days of discharge, identification of medical errors and inappropriate use of services. Potential savings: $350.0 million
5. Implement case review, intensive case management and care coordination for high-cost cases. Utilize statistical review of high-cost cases to identify cost drivers and anomalies and immediately implement alternative methods of lower cost care where reasonable. Potential Savings: $50.0 million
6. Implement independent, standardized and uniform assessment. Implement active assessment and utilization management, case planning and individualized budgets based on assessment identification of acuity level within long-term care, developmentally disabled and behavioral health populations. Potential savings: $350.0 million
7. Implement data analytics and transparency tools. Utilize services to steer beneficiaries to low global-cost providers for all non-emergency, elective inpatient and outpatient services. The state should begin this program on a voluntary participation basis, providing clients with incentives to use the service, while seeking federal approval for mandatory participation in the program.Potential Savings: $185.0 million
8. Strictly enforce eligibility rules and implement front-end and back-end electronic verification system for all new and renewing applicants. Verify eligibility for all applications and redeterminations, cancel non-eligible cases and strictly enforce eligibility rules. Potential Savings: $360.0 million
9. Reduce eligibility to 133 percent of the federal poverty level for FamilyCare adults. Reduce eligibility to 133 percent of the federal poverty level and eliminate coverage for those above 133 percent of the federal poverty level. Potential Savings: $49.9 million
10. Eliminate coverage for all General Assistance adults. Eliminate state-only program that receives no federal matching dollars. Potential Savings: $16.7 million
11. Terminate IL Cares Rx program.  Eliminate state-only program that receives no federal matching dollars. Potential Savings: $72.2 million
12. Terminate REACH Program. Program is already at risk of losing federal match. Potential Savings: $3.0 million
13. Eliminate group psychotherapy for nursing facility residents. Despite some controls, there continues to be overuse of this service. Potential Savings: $14.3 million
14. Eliminate pediatric palliative care services. Eliminate new, optional service that has not yet taken effect. Potential Savings: $4.5 million
15. Limit adult eyeglasses to one pair every two years. Limits would be in line with other payers.Potential Savings: $0.5 million
16. Eliminate adult chiropractic services. Eliminate optional service that lacks appropriate review and management. Potential Savings: $0.9 million
17. Change delivery of adult speech, hearing and language therapy services. Set annual maximums of services per year and reimburse only through home health providers. Potential Savings: $0.4 million
18. Change delivery of adult occupational therapy services. Set annual maximums of services per year and reimburse only through home health providers. Potential Savings: $0.6 million
19. Change delivery of adult physical therapy services. Set annual maximums of services per year and reimburse only through home health providers. Potential Savings: $2.5 million
20. Implement hospice utilization controls. Reduce optional hospice services by approximately 10 percent. Potential Savings: $10.0 million
21. Eliminate adult dental services. Eliminate optional service for restorative treatments. Potential Savings: $51.4 million
22. Eliminate new dental grants. Eliminate state-only grants that receive no federal matching dollars. Potential Savings: $1.0 million
23. Limit adult podiatry services. Retain adult podiatry for nail maintenance and other foot conditions for persons with diabetes, but eliminate service for other adults. Potential Savings: $5.2 million
24. Implement home health utilization controls. Reduce home health expenditures by approximately 10 percent. Potential Savings: $11.0 million
25. Require prior approval for wheelchair repairs. Expand current administrative rules on prior approval for wheelchair repair. Potential Savings: $0.8 million
26. Change delivery of detox services. Limit readmissions within 30 days and authorize only 12.5 hours of observation. Potential Savings: $25.5 million
27. Change utilization of elective c-section deliveries. Limit scheduled c-sections prior to 39 weeks unless medically necessary. Potential Savings: $2.9 million
28. Change delivery of bariatric weight loss surgery. Adopt Medicare standards for utilization control.Potential Savings: $3.0 million
29. Change delivery of coronary artery bypass graft procedures. Require prior approval for coronary artery bypass graft procedures. Potential Savings: $2.6 million
30. Change delivery of ambulance services between 24-hour medically monitored institutions. Repeal recent law and rules requiring full ambulance for transportation between facilities.Potential Savings: $1.5 million
31. Change delivery of pharmaceutical drugs in Long Term Care settings. Implement Medicare rule to dispense pharmaceutical drugs in supplies of less than 30 days for long-term care patients.Potential Savings: $0.2 million
32. Implement utilization controls on pharmaceutical drugs. Limit optional service to four prescriptions per month without prior authorization. Potential Savings: $180.0 million
33. Implement medication therapy management demonstration program. Incentivize pharmacists to provide consumer education and care coordination services. Potential Savings: $0.5 million
34. Change claims process for pharmaceutical drugs. Reject claims where patient has third-party payer that has not been billed as primary insurance. Potential Savings: $40.0 million
35. Change protocols for treating hemophilia patients with clotting factor products. Targets condition with greater disease management and reduced spending on blood factor. Potential Savings: $12.0 million
36. Change protocols for HIV medications. Implement prior approval for combination HIV medications and require utilization of individual drugs separately when possible. Potential Savings: $3.0 million
37. Change protocols for hospital outpatient drug reimbursement. Reimburse outpatient drugs separately in order to collect maximum manufacturer rebates. Potential Savings: $20.0 million
38. Change protocols for cancer medications and biological agents. Implement prior approval, utilization limits and pricing strategies on certain physician-administered drugs. Potential Savings: $5.0 million
39. Change protocols for transplant medications. Implement prior approval for branded immunosuppressives with generic equivalents. Potential Savings: $2.7 million
40. Offset veterans’ benefits through VA. Move services to federal VA for qualified veteran clients.Potential Savings: $2.0 million
41. Reduce non-emergency transportation utilization. Implement utilization controls for non-emergency transportation for long-term care residents. Potential Savings: $4.0 million
42. Implement co-pay on all services. Implement $3.60 co-pay on all services except generic pharmaceuticals and emergency room services for non-emergency conditions. Implement $2 co-pay on generic pharmaceuticals. Implement $10 co-pay on emergency room services for non-emergency conditions. Potential Savings: $49.9 million
43. Implement heightened asset testing for nursing facility applicants. Tighten asset levels for nursing facility eligibility. Potential Savings: $3.0 million
44. Implement cost sharing for medically fragile and technology dependent waiver services. Implement cost-sharing for medically fragile and technology dependent home services and incentivize consumer-directed care. Potential Savings: $15.0 million
45. Eliminate managed care organization wrap-around. Eliminate wrap-around for managed care organizations’ utilization of federally qualified health centers with managed care rates built upon full federally qualified health center costs. Potential Savings: $13.2 million
46. Reduce long-term acute hospital rates. Reduce recent law’s increase in rates for ventilator-dependent patients. Potential Savings: $30.0 million
47. Eliminate Excellence in Academic Medicine grants. Eliminate extra payments to eleven teaching hospitals. Potential Savings: $13.8 million
48. Reduce return on investment in nursing facility capital rate. Lower return on investment percentage to 4 percent from 11 percent. Potential Savings: $71.1 million
49. Eliminate add-on for developmentally disabled nursing facility rates. Terminate 1990s policy for additional payment rates with no service requirements. Potential Savings: $0.5 million
50. Eliminate bed-holding payments in long-term care. Eliminate reimbursements to nursing facilities and supportive living facilities for holding beds for Medicaid clients during periods of absence. Potential Savings: $8.3 million
51. Delink supportive living facility rates. Delink rates from nursing facilities rate increases funded through new nursing facility taxes. Potential Savings: $20.8 million
52. Reform power wheelchair reimbursement rates. Change reimbursement rates to actual purchase price. Potential Savings: $1.9 million
53. Change pharmaceutical reimbursements for PHSA 340B providers. Limit reimbursements to actual cost for providers receiving federal discounts under Section 340B of the Public Health Services Act. Potential Savings: $10.0 million
54. Enhance third-party liability collections. Implement 2011 Medicaid reform law to enhance current collection efforts. Potential Savings: $10.0 million
55. Implement recovery and payment recapture audits. Implement RAC audits to supplement Inspector General’s reviews. Potential Savings: $21.9 million
56. Implement intensive care coordination for high-risk pregnancies. Reduce costs and improve outcomes for low birth weight babies. Potential Savings: $25.0 million
57. Eliminate AllKids application agent payments. Stop paying agents for enrolling people in AllKids.Potential Savings: $0.9 million
58. Implement care coordination. Implement Phase II of integrated care program, dual eligible capitation demonstration and innovation programs. Focus on most expensive clients with complex health needs. Potential Savings: $16.1 million
59. Implement moratorium on institutional admissions. Implement moratorium on admissions to institutions for mental diseases for state-only program that receives no federal matching dollars.Potential Savings: $36.9 million