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Medicaid is a joint state and federal program providing health care coverage to eligible pregnant women, senior citizens, parents, and persons with disabilities. Federal law requires certain individuals to be covered, including low-income families and children. Eligibility is based on residency and modified adjusted gross income, but income eligibility for persons with disabilities and persons 65 and older is determined using Social Security income methods.
For every $1 Illinois spends on most Medicaid-eligible programs, the state receives a roughly $0.50 reimbursement from the federal government. The Illinois Department of Healthcare and Family Services primarily administers Illinois' Medicaid spending, though some Medicaid spending also occurs through the departments of Human Services and Aging. While spending occurs in several funds, the majority comes from the General Revenue Fund and Healthcare Provider Relief Fund and includes spending on Managed Care Organizations. For an enhanced review of Managed Care Organizations spending click here.
Managed Care is a way to organize payments for Medicaid where a Managed Care Organization (MCO) is contracted by a state to provide Medicaid services through a risk-based system for a pre-set premium, known as a capitation payment. This system is called "risk-based" because MCOs are at financial risk for the services outlined in their Medicaid contracts with the states, since they are responsible for contracting with providers directly. If the price contracted with the provider is greater than the annual capitation payment, then the MCO would have to absorb the loss. Since 2018, Illinois has worked toward having MCOs provide 80 percent of the state's Medicaid coverage. This shift in coverage from direct fee-for-service to managed care for Illinois Medicaid has resulted in a dramatic shift in Illinois expenditures on MCOs.