Crespo, Koehler Call for Claw Back of Managed Care Profits to Aid Health Care Services Strained by Financial Uncertainty

SPRINGFIELD, Ill. – In response to decreased utilization of health care services through managed care organizations (MCO’s) throughout the COVID-19 pandemic, state House Assistant Majority Leader Fred Crespo, D-Hoffman Estates, and state Senate Assistant Majority Leader Dave Koehler, D-Peoria, filed legislation today to claw back excess profits and reallocate funding to critical health care services.

“While safety net and critical care providers are struggling to remain open and serve their communities, MCO’s are continuing to receive over a billion dollars in state and federal funding each month,” said Crespo. “Residents across Illinois are making significant sacrifices in order to protect themselves and their communities, and we’ve even seen the auto insurance and cable television industries return unused money to consumers. It is unacceptable that MCO’s are profiting off of taxpayer dollars that aren’t being used. Clawing back some of the funding that MCO’s have received throughout the pandemic and reallocating those dollars to health care providers in low-income and rural communities could help hospitals remain open amid ongoing financial instability that has been exacerbated by the pandemic.”

Hospitals across the state are facing an unprecedented decline in outpatient procedures and elective surgeries as a result of the pandemic, contributing to severe financial strain on health care facilities that serve Illinois’ most vulnerable populations. Conversely, MCO’s in Illinois have benefitted from these declines, as capitated payments have continued despite decreased utilization of these health care services.

In response, Crespo and Koehler introduced House Bill 5867 and Senate Bill 4027, respectively, to claw back a portion of capitated payments made to MCO’s throughout the pandemic. From an estimated monthly payment of $1.7 billion, a 20 percent return would yield $340 million per month that can provide needed relief to hospitals and other health care facilities that have been hit hardest by the COVID-19 crisis, as well as behavioral health care and substance abuse programs. In addition, recouping these funds can provide relief to health care service providers that may be impacted by state budget deficits. The legislation would require the underutilized funds from MCO’s to be returned to Medicaid programs to ensure they are still able to be matched with federal dollars.

“While insurance companies and managed care organizations see record setting profits at the height of a global pandemic, rural communities across the state are experiencing unsustainable strain in their health care system due to lack of resources,” said Koehler. “The money recouped through this legislation would provide immediate relief for downstate hospitals that have been devastated by COVID-19.”

“Minority communities have been disproportionately affected by the pandemic and its devastating impact on their health and economic wellbeing,” said Jose Sanchez, President and CEO of Norwegian American Hospital in Chicago. “It’s only fair that the Medicaid managed care organizations provide desperately needed relief to our communities by sharing part of the record profits they have made during the COVID-19 pandemic.”

For more information on House Bill 5867, please contact Crespo’s office at 630-372-3340 or visit https://ilga.gov/legislation/billstatus.asp?DocNum=5867&GAID=15&GA=101&DocTypeID=HB&LegID=127542&SessionID=108.