Mismanaged managed care

Mismanaged managed care

A state audit shows that the Illinois Department of Healthcare and Family Services cannot account for how money was spent in its massive Medicaid program.

Those who are skeptical about the ability of government to effectively manage huge programs got some additional ammunition last week.

The state auditor general's office released the results of an audit it performed on the state agency overseeing the multibillion-dollar Medicaid program and came up with some disturbing news.

It concluded that the state's Department of Healthcare and Family Services failed to properly oversee the spending of more than $7 billion in payments to managed-care organizations that contract with the state to administer benefits for Medicaid recipients.

Just to give readers an idea how big the state's Medicaid program is, here's a mind-numbing statistic to consider. One in four Illinois residents is a beneficiary of this staggeringly expensive social welfare program.

Medicaid and public pension costs are the two most expensive programs the state oversees.

Indeed, the rising costs of Medicaid and public pensions consumes so much money that it's becoming increasingly difficult to fund core state programs, including K-12 and higher education, public infrastructure, law enforcement and mental health.

At Gov. Bruce Rauner's direction, the state is moving toward managed health care as a cost-saving measure.

To start with, the program covered roughly two-thirds of Medicaid recipients in 30 counties. It's being expanded to cover most Medicaid recipients in each of the state's 102 counties.

But the audit, the results of which are not being disputed, revealed that the department simply wasn't up to the job. Either that or it didn't even try. Who knows what's really going on inside mindless, cumbersome bureaucracies that operate with prehistoric technology tools and a stunning lack of accountability.

At any rate, the audit revealed that the department couldn't produce data it was contractually required to collect. But that shortcoming barely scratched the surface in terms of the bureaucratic failure.

The department couldn't provide reliable data on claims it paid to managed-care organizations, on claims that the organizations denied, on administrative and care costs the organizations incurred and what the organizations spent on legitimate health care costs as opposed to business costs.

Indeed, there is so much information that the department couldn't produce, it's hard to imagine what important information it did produce.

Frankly, the findings come across as borderline total system failure. One wonders, of course, if there was any fallout within the department over this management disaster.

The idea behind the managed-care program is that it will reduce costs and improve care. But crucial to that claim is the skill with which it is managed, and a major component of management is acquiring information that reveals the benefits, or shortcomings, of moving from one plan to another.

State officials have estimated the expanded managed-care program will save the state $1 billion once it's in place. That would be good, although it's a pittance compared with the estimated four-year cost of $63 billion.

Department officials tried to downplay the audit's findings, stating that recommended fixes already were being put it place or will be put in place.

"We have been continuing to establish effective systems to accomplish (program goals) ...," a department spokesman said. "We are monitoring administrative costs, have put processes in place to remove duplicate clients and recoup overpayments from previous years, will provide clear instructions to managed-care plans regarding reporting of denied claims and will monitor contracts to ensure compliance."

That is, of course, what the department was supposed to do in the first place.

Since policy affects politics, Democrats were quick to heap the blame for this management failure on Gov. Rauner and his advocacy of the managed-care model.

But he's hardly the first to suggest that managed care is a better, less costly way to deliver health care to those in financial distress.

Then again, he comes from the private sector, where the price of total failure is bankruptcy. There's no similar kind of accountability in the public sphere, where bureaucracies set their own rules.

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