Illinois Wins Federal Nod for Medicaid/Medicare Coverage Plan

By Jon Kamp

Federal authorities have signed off on an Illinois program that will launch later this year to link Medicare and Medicaid coverage for more than 135,000 patients on both government health programs.

The approval solidifies a demonstration program that promises new business for several health insurers--including Molina Healthcare Inc. ( MOH ), Centene Corp. ( CNC ), Aetna Inc. ( AET ), Humana Inc. ( HUM ) and Cigna Corp. ( CI )--picked by the state last November to cover so-called dual-eligible patients. Insurers are slated to start coordinating care for dual patients in the Chicago area and central Illinois in October.

The state is one of about two dozen aiming to test ways to better cover patients who qualify for both Medicare and Medicaid due to age or disability, plus lack of financial resources. The states' goal--working with the federal government with some help from the health-care overhaul law--is to streamline a sometimes-confusing system while improving care and restraining costs.

Friday's approval from the Centers for Medicare and Medicaid Services is just the fourth thus far, following approved projects in Massachusetts, Ohio and Washington. Critics have questioned whether the federal government is shifting too many patients into unproven systems in these demonstration programs, rather than slowly testing new coverage ideas. But states share Medicaid costs with the federal government, and they've been eager to jump on board in search of savings.

There are risks involved for health plans because dual patients tend to have complex and costly medical problems. Still, managed-care firms are jockeying for position to win contracts in hopes of tapping a huge, emerging market. There are about nine million dual patients nationally racking up at least $300 billion in annual spending, outpacing costs for average members in either Medicare or Medicaid.

In addition to the publicly traded health plans, Illinois also picked a few private plans to cover dual patients there.

"This federal approval represents a major step forward for our efforts to transform Illinois'Medicaid system from a program that simply pays medical bills, to a wellness system," Illinois Gov. Pat Quinn said in a press release. "By aligning these two programs, we will provide seamless, coordinated care and create an incentive for health care providers to do a better job of keeping people healthy and treating them when they become sick."

Write to Jon Kamp at jon.kamp@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

  (END) Dow Jones Newswires
  02-22-131658ET
  Copyright (c) 2013 Dow Jones & Company, Inc.