Milking Medicaid: State-contracted insurance firms balk at paying frontline medical providers, threatening the viability of leading hospitals and clinics, and imperiling Illinois’ entire Medicaid program.

The privatization of Illinois’ health care system for the poor has shifted hundreds of millions of dollars in profits to insurance companies and away from frontline medical providers, a Better Government Association investigation has found.

The four-month examination — including dozens of interviews and a review of thousands of previously unpublished documents — reveals a system largely bereft of government oversight in which for-profit insurance companies routinely deny, delay and reduce reimbursements to providers who treat low-income families, foster children, pregnant women and the elderly.

The result is a state Medicaid program run as an insurance industry profit center, while service for the needy falters. The four nationwide insurance companies — called managed care organizations, or MCOs — last year were paid a record $16 billion from taxpayers.

The financial strain on frontline health care providers — along with the state’s failures to intercede on their behalf — has prompted thousands of complaints to state officials and lawsuits alleging the MCOs’ pursuit of corporate profits have put many providers on the edge of bankruptcy.

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Milking Medicaid: The state health care agency has a revolving door for executives from the insurance industry.

The upper echelon of the state agency charged with overseeing Medicaid is peppered with representatives of the for-profit insurance industry state officials are supposed to be policing, a Better Government Association investigation has found.

An examination of state contracts, salary data, pension statements, court records and internal correspondence identified more than a dozen top-level Medicaid officials in Illinois who have current or recent financial ties to the giant insurance companies now managing the $16 billion per year taxpayers spend to provide medical care to people who cannot afford health coverage.

Officials such as the state deputy administrator who runs Medicaid after a 20-year career as an Aetna senior executive, or the state’s “expert adviser” on Medicaid policy, who is also an Aetna lobbyist, or the consultant who advises state officials while taking fees from the insurance companies.

The BGA disclosures about potential dual loyalties come at a time when struggling health care providers complain the state’s faulty oversight of Medicaid brings record-level profits to insurance companies, even as they deny and delay claims.

The state’s top health care official rejects the suggestion that taxpayer money is being mismanaged or that conflicts of interest are undermining the agency’s objectivity at a time when the COVID-19 pandemic is putting the state’s health care system under stress.

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