COMPTROLLER MENDOZA'S STATEMENT BEFORE THE HOUSE HUMAN SERVICES COMMITTEES

Thank you, Mr. Chairman and other distinguished members of the Committee, for giving me the opportunity to speak before you today.

Our national healthcare system is undergoing a seismic shift as politicians in Washington, D.C. weigh a repeal of the Affordable Care Act. That debate has received a lot of attention, but massive changes to the healthcare system are underway here as well with Governor Bruce Rauner pushing for an overhaul of the Medicaid system that delivers health care to every corner of the State.

Earlier this year, using his executive authority, the Governor directed his staff to initiate a process to restructure our State’s health care delivery network and shift nearly half a million Medicaid recipients into the crowded managed care organization (MCO) system. The Rauner plan will affect 3.1 million Medicaid recipients as well as every doctor and health care provider in Illinois.

His plan also comes with a huge financial commitment: With an estimated cost ranging anywhere from $35 billion to $40 billion, over four years, it is one of the largest, if not the largest, procurement in State history.

As Illinois’ chief fiscal and accountability officer, my concerns over MCO restructuring start with three issues: timing, transparency and accountability.

Illinois has been without a budget for 23 months. It is in the midst of the greatest financial crisis in its history. The State’s bill backlog exceeds $12 billion and we owe more than $7 billion to healthcare providers, including group healthcare providers, alone. Despite any programmatic changes, nothing alters the fact that the State does not have a budget and the State’s bills to healthcare providers will continue to be paid a year or more behind schedule.

I worry that this undertaking could further limit our ability to support our failing social service agencies, universities and other basic State functions. Right now we need greater flexibility – not fewer resources and options – to navigate the ongoing crisis.

With State finances in disarray, and the future of our national healthcare system uncertain, why is this the time to restructure managed care?

I would argue that this is possibly the worst time to consider a major restructuring in light of the State’s fiscal instability and the instability of health care at the national level.

Since this proposed procurement is overseen by the Department of Healthcare & Family Services as a ‘Purchase of Care,’ it is proceeding outside of the State’s standard procurement code. That means this proposal is not afforded the same independent oversight as, say, a contract to purchase paper clips.

The State’s chief procurement officer isn’t overseeing this procurement and furthermore, as Director Norwood acknowledged during her testimony before the House Health and Human Services Committee, the top three executives from HFS have recused themselves from the process because of their ties to the healthcare industry.

Even now we don’t even know who’s making the decisions about this massive procurement.

I was disappointed to discover that HFS did not learn from the mistakes of the Quinn Administration when it labeled this procurement a “Purchase of Care.” The implementation of similar programmatic changes under the previous administration left a lot to be desired. 

The lack of transparency and of independent oversight led to a lot of problems and confusion for patients, doctors, providers and others touched by the healthcare system.

Why is this administration avoiding transparency for a proposal that will impact health care delivery to millions of Illinoisans?

In a normal budgetary environment, the General Assembly serves as a check on State functions through the appropriations process. However, this rushed procurement will be funded on an ongoing basis through appropriations currently mandated by court order, outside of the purview of the General Assembly. In other words, as long as there’s no State budget, there’s no General Assembly oversight of this critical state function.

Additionally, because the Rauner MCO restructuring plan is an executive order and not a bill, our legislators won’t have an opportunity to debate it much less vote upon it. All of you have been, by design, cut out of the process. It’s an end run around the General Assembly.

So who will be accountable when there is a problem?

I am most concerned about this proposal’s impact on the lives of Illinois’ most economically challenged. Let me remind you about who receives Medicaid: it’s the most vulnerable people in our State. Most beneficiaries are managing serious disabilities and illnesses that severely impact the quality of their lives. These are the very people who can’t afford to hire someone to be their voice. I take it upon myself to be their voice and I would certainly hope that the legislature would do the same.

This much is clear: The current proposal seeks to increase participation in MCOs by about 25 percent over a larger geographic area than what is covered now. At the same time, it seeks to reduce the number of managed care providers by as much as two-thirds.

They say the devil is in the details, and we need to dig into the details of this RFP to determine how this change could impact individuals. For example, the model contract would require that some managed care recipients travel as far as 60 miles to the nearest pharmacy that will serve them. For people who can’t drive or don’t have a friend or relative who can help them pick up their medication, that might as well be 1,000 miles.

The goal should be to help people manage their illness by seeing their doctors and getting their medicine, and not ending up in the emergency room, which, by the way, is both morally and fiscally unsound.

My concern is that every Illinoisan, wherever they live, has access to the same quality of care. It is not right that the people of central and southern Illinois could be disproportionately impacted in a negative way in the rush to ram this through. The people in Marion and Peoria deserve the same consumer protections as people in Winnetka and Chicago.

Medical studies from the early 1990s through the passage of the Affordable Care Act have attributed a death toll to the lack of health insurance coverage.

In April, the governor said the following: “I believe in competition and opening up markets as much as possible. Competition can increase quality and drive down cost. So making sure that people have choices, and they’re not locked into a monopoly or one limited market, I think is generally a good philosophy in every aspect of life, including health care.”

This proposal, by design, limits competition. Studies support the assertion that competition is good for consumers who get to choose from multiple healthcare providers. Insurance premiums have increased at a statistically significant rate over the last three decades, a time of unprecedented healthcare industry consolidation.

The more I look at it, the more I am convinced this is not a consumer-friendly initiative. Everything about it says “top down” when it should be user driven. This proposal appears to favor the giant MCOs and the healthcare conglomerates at the expense of the most vulnerable people in the State of Illinois.

Moreover, there’s evidence that similar initiatives, advanced without appropriate questions being raised, have been met with unforeseen challenges, including reduced access to service, increased administrative costs and massive lawsuits. Instead of learning from those mistakes, the administration is doubling down, and it has all the makings of a botched rollout waiting to happen.

We have an opportunity to do right by those in the Medicaid system. Hearings are a start, but let’s also take time to evaluate the current Medicaid and MCO systems and determine how changes in Washington, D.C. could affect health care here in Illinois. We need time to ask questions and time to get answers. Let’s consider auditing the existing system and fixing what we have, before restructuring it. Then, at a later date, we can consider additional changes that could save money and improve services to managed care recipients.

I’ve personally reached out to representatives in Congress and the Senate to share my concerns about our constituents. I hope others do the same.

Again, as Illinois’ chief fiscal and accountability officer, my concerns over MCO restructuring start with three issues: timing, transparency and accountability. I firmly believe that ramming this plan through without independent oversight is not in the best interest of the state’s more than three million Medicaid recipients.

There’s no legitimate reason to rush. This will have lasting budgetary financial implications for the State and they will not necessarily be good ones.

Again, let me remind everyone, we don’t even have a budget in place and the administration is trying to ram through one of the largest procurements in the history of the state. We need to stabilize the State’s finances first. At that point, if and when it’s necessary to move forward with something of this nature, it should be fully transparent and have proper legislative oversight to ensure it’s done in the best interest of the people of the State of Illinois.

This plan needs to be halted and it warrants more scrutiny. I’m here to ask you, the members of the General Assembly, to join me in asking the governor to scrap this rushed plan and focus on the most important job at hand, which is passing a budget. With passage of a budget, you, the General Assembly, will regain your authority and power to have oversight of initiatives like this.

Thank you again and I am happy to answer any questions you may have.

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