Illinois lawmakers seek more info on Medicaid contract

SPRINGFIELD, Ill. (AP) — Gov. Bruce Rauner's administration says a $60 billion package to provide health care to millions of low-income Illinois residents will save $1 billion over current expenses, while critics deride it as a "stealth deal" that they say is costing more than they expected.

The administration agreed to a four-year, roughly $15 billion annual contract with seven managed care organizations that will handle Medicaid coverage for 2.7 million Illinois residents beginning Jan. 1.

Rauner's administration predicts savings of up to $300 million a year, largely because insurers have agreed to accept lower payments from the state. But lawmakers of both parties have complained about the procurement process that led to the deal.

Rep. Greg Harris of Chicago, the House Democrats' budget expert, will conduct a hearing Thursday in Chicago to get answers about the deal and a side contract that the Department of Healthcare and Family Services signed with a consultant to shepherd the pact.

The annual contract with the managed care organizations will cost the state 43 percent more than the $10.5 billion Illinois currently pays for Medicaid. But John Hoffman, spokesman for the Illinois Department of Healthcare and Family Services, points out that the program will cover 800,000 more people.

"This transformation will offer quality care to vulnerable residents while ensuring sustainable costs for taxpayers," Hoffman said.

The plan will shift administration of health care from the state to private insurers. The administration contends that will lower medical costs because private insurers focus more on prevention. The state's program, called HealthChoice Illinois , will cover nearly 90 percent of the state's 3.1 million residents eligible for Medicaid.

Putting more Medicaid clients in managed-care coverage was the aim of a 2011 state law.

While lawmakers have complained that the contract wasn't done through the standard bidding process, the Department of Healthcare and Family Services insists the process was "competitive and transparent" and that the agency utilized the "purchase of care" procedure that's been used for decades for such contracts. Although bids were not required, the agency solicited them from contractors seeking the work, Hoffman said.

Critics, including Democratic Comptroller Susana Mendoza, say they hadn't expected the contract to cost as much as it did. She said in a statement that Rauner should have followed "an open and transparent review. He refused and we are now saddled with a massive stealth deal with an outrageous price tag."

Hoffman said Healthcare and Family Services Director Felicia Norwood had never provided a cost estimate.

Last spring, House Democrats used the impending deal as leverage in their budget negotiations with Rauner. In exchange for business-practice changes the GOP governor had long demanded, Democrats insisted on a traditional procurement process for the managed-care agreement. Negotiations went by the wayside, however, when Democrats who control the General Assembly adopted an income-tax increase and an annual budget over Rauner's vetoes.

Conservative Rep. David McSweeney is interested in the answers too.

"I want a full explanation of why the MCO (managed care organization) contracts were not competitively bid using the procurement code," the Barrington Hills Republican said. "I also want a detailed explanation of why the administration recently creased the MCO cost estimate."