Understanding the Illinois Medicaid Redetermination Project

Jonathan Ingram

Director of Research at Foundation for Government Accountability. Lawyer. Libertarian.

Jonathan Ingram
November 21, 2013

Understanding the Illinois Medicaid Redetermination Project

For the past several months, the Illinois Policy Institute has published ongoing updates on the progress of the Illinois Medicaid Redetermination Project, or IMRP, which has garnered significant interest over time. Some people may not remember why IMRP was launched; I do. After all, this was among the many topics I discussed when the Medicaid...

For the past several months, the Illinois Policy Institute has published ongoing updates on the progress of the Illinois Medicaid Redetermination Project, or IMRP, which has garnered significant interest over time. Some people may not remember why IMRP was launched; I do.

After all, this was among the many topics I discussed when the Medicaid reform working group invited me to present to them last year. The project largely owes its start to state Rep. Patti Bellock, R-Hinsdale, who had filed similar stand-alone legislation that was later incorporated into Public Act 97-689. Bellock, who has been a leader on Medicaid reform for many years, also worked with Institute staff and former senior fellow John Stephen, a national Medicaid expert who also contributed to Gov. Pat Quinn’s 2009 blue-ribbon committee charged with identifying long-term solutions to the state’s financial crisis, when drafting the legislation and related amendments.

IMRP was designed to help root out waste, fraud and abuse in the Medicaid program by requiring enhanced eligibility verification for those enrolled in the program. Medicaid has long been a prime target for wasteful spending, winding up on the U.S. Government Accountability Office’s list of high-risk programs year after year. According to the U.S. Department of Health and Human Services, eligibility determination errors account for most of Medicaid’s improper payments.

Illinois law already required state workers to perform annual eligibility checks to ensure that those receiving Medicaid benefits were actually eligible for the program. But, as the Auditor General reported earlier this year, state workers consistently failed to ensure the program’s integrity.

That report found that several cases were missing documentation in their eligibility files in fiscal year 2012, the year before the state began the IMRP. Some files were missing evidence that income had ever been verified. In some cases, state workers didn’t bother to collect paystubs at all, but simply “verified” the applicants’ wages verbally, through handwritten notes or by comparing it to previous applications. Other files were missing evidence that the state workers had verified Social Security numbers, citizenship or residency. In fact, some files were missing the redetermination applications altogether.

And those problems were just for the annual checks that the state workers bothered to do at all. The Auditor General also noted that between 15 percent and 20 percent of Medicaid cases were overdue for their annual redetermination throughout the year. The delays for these cases ranged anywhere from three months to more than five years.

So lawmakers took action. They ultimately enacted a law that required enhanced verification of income, residency and identity information for individuals on Medicaid. This reform was structured in a similar manner as the award-winning integrity program that Pennsylvania launched in 2011.

In January 2013, Illinois brought in independent experts to perform the enhanced verification required by the IMRP. Those experts have reviewed nearly 451,000 cases so far. These cases can represent more than one individual. At the end of fiscal year 2012, for example, the state had roughly 1.3 million Medicaid and CHIP case files, though it had nearly 2.8 million enrollees.

Of the cases reviewed so far this year, the vendor has identified more than 223,000 cases that were ineligible for benefits. Another 51,000 cases were eligible for some benefits, but not the benefits they were receiving. For example, some individuals enrolled in Medicaid may only qualify for programs with greater cost-sharing. In other cases, the parents may no longer be eligible for benefits, but their children are. Overall, the review has yielded an eligibility error rate of more than 60 percent.

When the state receives a recommendation from the independent vendor to cancel benefits for a particular case, the state gives the enrollee an additional 20 days to submit documentation showing they are still eligible for benefits. The state then removes individuals from the program after verifying that they are no longer eligible.

So far, the state has only processed about 60 percent of the recommendations it has received. Of the cases it has finalized, more than 53 percent have had eligibility errors. Another 170,000 cases have been completed by the vendor but await state review.

Those attempting to defend the status quo and argue that Medicaid waste is a minor problem are now highlighting the fact that the error rate of the cases the state has processed is lower than the error rate of the independent vendor. Of course, the state is processing recommendations at about half the speed as the vendor, with more cases piling up each week.

They also point to the fact that not all cases recommended to be canceled are actually canceled. While that’s true, many of the state’s disagreements with the vendor concern how many people in the case should be removed from the program. When even one individual in the family’s case remains eligible for some benefits, the case is recorded simply as changed, even if some individuals in those cases are ultimately removed from the rolls. It’s also important to note that the state cancels or changes about 15 percent of the cases recommended to be continued and finalizes cancellations for about 10 percent of the cases recommended only to be changed. Some of the other disagreements with the vendor’s recommendation come from enrollees sending in information after the initial audit had been completed. Other disagreements occur when changes in household size or income occur after the audit was completed, meaning the individuals are now eligible for Medicaid, but were ineligible at the time of the audit. It’s unknown how long some of those individuals were ineligible for benefits before those changed circumstances.

The state defends this high eligibility error rate by insisting that the cases reviewed so far were the low-hanging fruit: those cases that the state thought had a high likelihood of no longer being eligible. They assert that “almost all” of the audited cases were this low-hanging fruit. But Maximus, the independent contractor, has already reviewed nearly 451,000 cases. These reviewed cases represent somewhere around 25 percent to 30 percent of all Medicaid cases. So how much low-hanging fruit is there? Does the low-hanging fruit make up 35 percent of the program? 40 percent? 50 percent? More? And isn’t that entirely indicative of why the IMRP was launched in the first place? The state had been completely inept at ensuring program integrity, even when they apparently knew about what they now consider low-hanging fruit.

According to the state, each additional case reviewed has a lower likelihood of error as the case before it, given that they are moving down the list from higher risk to lower risk. But the eligibility error rate among the cases the state has finalized has remained relatively stable since at least June. Keep in mind that nearly three-quarters of all of the cases finalized since the program began have occurred since June. So despite the fact that the cases being reviewed are becoming less and less risky, the error rate remains mostly unchanged.

Maybe the eligibility error rate will eventually decline. But even if it does, the state has already moved forward with cancellations for more than 110,000 cases, likely representing between 175,000 and 200,000 individuals. That’s no small pittance. After all, that’s more people wrongfully receiving benefits in Illinois than the total number of people receiving Medicaid benefits in nine states.

But now these efforts are under attack. The American Federation of State, Municipal and County Employees has initiated a legal challenge which may slow or halt this progress. AFSCME wants the state to terminate its contract with the expert vendor reviewing eligibility and instead hire new dues-paying state workers to do the job. Never mind the fact that state workers’ failure to do the job adequately prompted the state to hire an independent vendor in the first place.

Quinn has announced that he intends to fight the legal challenge, but one has to wonder whether his heart is really in that fight. After all, the gubernatorial campaign season is heating up and AFSCME has donated more than $304,000 to Quinn since 2002. Is Quinn simply going through the motions on fighting this challenge? Will the General Assembly have to finally step in and amend the law to make explicitly clear that this contract and the project can move forward despite AFSCME’s protests?

But one thing is clear: waste, fraud and abuse in the Medicaid program is a significant problem. Lawmakers pushed the IMRP to help address some of these concerns, after years of failure by the executive branch to ensure program integrity.

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