Date: January 30, 2020
To: Enrolled Hospitals: Chief Executive Officers, Chief Financial Officers, and Patient Accounts Managers
Re: Change to Managed Care Organization (MCO) Hospital Access Program
Beginning in 2016, the Illinois Department of Healthcare and Family Services (HFS) had a portion of the hospital assessment funding to be paid to providers through the Medicaid Managed Care program. These dollars, which had been previously paid to hospitals under the fee-for-service program, were shifted to reflect the increasing enrollment of Medicaid beneficiaries into Medicaid MCOs and to address fee-for-service upper-payment limit pressure.
Hospital providers throughout the state will continue to receive these assessment-related funds under the current assessment plan; however, some important changes have occurred, as detailed below.
A new Medicaid managed care rule, (42 CFR 438.6) published in July 2016 by the federal Centers for Medicare and Medicaid Services, defined and placed limitations on provider payments that are passed through Medicaid MCOs. The rule required that such payments not specifically tied to services for enrollees must be capped and phased out over a 10-year period. The rule also created a new type of payment called directed payments. This mechanism does allow the state to direct certain payments to certain providers in limited circumstances.
In early 2019, federal CMS informed HFS that it must be compliant with the MCO Hospital Access Program payments for calendar years 2018 and 2019, and all years moving forward. To comply, HFS retroactively converted MCO Hospital Access Program payments into an allowable combination of pass-through payments and the new directed payments in such a way that the two payments equaled past amounts received by providers.
Moving forward for the first six months of calendar year 2020, HFS is committed to a process where the combination of directed payments and pass-through payments will continue to equal as closely as possible the total amount of MCO Hospital Access Program payments hospitals have been receiving monthly. Beginning in February, hospitals will be receiving directed payments and pass-through payments directly from the MCOs and can expect the same timing and procedures as are occurring now.
The current methodology for the hospital assessment dollars is set to be updated by July 1, 2020. In the coming weeks, HFS will provide additional information to hospital providers about the updated assessment methodology and the corresponding impact on MCO pass-through and directed payments for the second half of calendar year 2020.
Questions and comments can be directed to HFS.Hospitals@Illinois.gov.