Gov. J.B. Pritzker plans to clawback roughly $450 million over several years from insurance companies, but critics say it isn't enough. (Credit: Getty file photo)
Gov. J.B. Pritzker plans to clawback roughly $450 million over several years from four Medicaid insurance companies, but critics say it isn't enough. (Credit: Getty file photo)

Illinois plans to recoup about $180 million from four Medicaid insurance companies this year after the businesses saw a surge in profits during the early stages of the COVID-19 pandemic — the first of several such payments the state could seek. 

Gov. J.B. Pritzker’s office says the refunded money, which is expected to amount to $450 million over several years, will be used to fund programs to hire and train more health care workers across the state as the industry faces shortages and retention issues. 

But critics of the move say the state should seek more money from the insurance giants given the large profits they made.

Managed care organizations, or MCOs, offer their own networks of doctors and hospitals that provide services for a set monthly fee. The goal of those organizations is to provide better health care to Medicaid recipients, sometimes at a lower cost to the state. 

In Illinois, the MCOs that will have to repay the state are Aetna, Blue Cross Blue Shield, Meridian and Molina. Combined, they’ll repay the state about $184.3 million. Those MCOs were paid nearly $16 billion in 2020. 

Cook County’s CountyCare program, another MCO in Illinois, does not owe the state money, according to information from the state’s department of Healthcare and Family Services.

The repaid funds from Aetna, Blue Cross Blue Shield, Meridian and Molina are possible because of a program called a “risk corridor,” a tool the state can use during times of instability for financial protection. 

The corridor was implemented to protect the state if MCO usage was below established rates and to protect those plans if the MCOs saw a substantial uptick in use early in the pandemic when it was still unclear how medical spending would be affected.

Since those four plans did not meet the state spending thresholds for patient care in 2020 they’re on the hook for a refund. 

A spokesman for Blue Cross Blue Shield acknowledged the refund is due to “unused medical expenses.” Should the company owe money again for 2021 or 2022 “we’ll settle up,” he said. 

Spokespeople for the other companies did not respond to requests for comment by publication.

Pritzker directed the state’s department of Healthcare and Family Services to reinvest $450 million in anticipated repayments from those companies to a program called Healthcare Works Illinois. The goal of that plan is to “preserve and grow the healthcare workforce,” according to a breakdown of Pritzker’s proposed 2024 budget.

The program will provide funding for continuing education training for health care workers, providers and others. The funds will be available to hospitals, clinics, behavioral health providers, home health workers and others in health care.

Jamie Munks, a spokeswoman for HFS, said now that the figures are finalized Illinois “is working with federal partners to determine a plan for reinvesting these dollars in a way that will benefit the Illinois Medicaid program and its customers.”

Calculations are not complete for 2021 and 2022.

“HFS continues to work with our federal partners on a plan for redirecting these funds, but the bottom line is the MCOs will need to repay this money to the state, and reinvesting these dollars in preserving and growing Illinois’ health care workforce will be very beneficial,” Munks said in a statement.

State Rep. Fred Crespo (D-Hoffman Estates) said that while it’s “nice to see the governor’s office sees the value in clawing back some of the money MCOs are getting … $450 million is nothing.” 

He and Sen. David Koehler (D-Peoria) sponsored a bill two years ago to “clawback” 20% of all COVID-era profits from Medicaid providers, which went nowhere.

“The MCOs are getting record profits …,” Crespo said. “I think it could, and should, be more because, at this dollar amount, it doesn’t really impact the MCOs that much and that’s how they got HFS to go along with it … we can clawback more and that’s my goal in negotiations.”

Crespo said he thinks the state should claw back twice the planned amount, meaning $800 million to $1 billion over the next several years. That would be “fair and it would relieve some of the pressure on the general fund,” he said.

He has staff members working with the Pritzker administration and with the state Senate to work on the governor’s plan to spend the money refunded by the MCOs and potentially increase that clawback amount. 

Koehler said the legislators’ weren’t expecting the bill to be “met with such resistance” by the state’s managed care organizations.

“I don’t think anything has really changed (since we introduced the bill),” Koehler said. “Those record profits, the windfall, has been there for some time … and really, not only should we claw these funds back, we should figure out why there’s something to clawback … the whole thing should be looked at but I support the direction that the governor is going in.”

Emails obtained through public records requests found the state’s top Medicaid insurance lobbyist working closely with the governor’s administration to derail the legislation. 

“The governor’s office also has many concerns with the (bill) language,” wrote Samantha Olds Frey, the state’s top Medicaid insurance lobbyist, in an email from early 2021 obtained by the Better Government Association. “They asked that I send over our high level list of concerns, so they can review them and include them in their analysis.

“We are also working with HFS and our communications team to push back with the press,” Olds Frey wrote in a separate email to industry executives.

Those emails were part of a 2021 BGA investigation, which also found the four for-profit insurance companies that will have to repay Illinois collected hundreds of millions of dollars in extra profits during the COVID-19 pandemic for the Medicaid programs they oversee. Many of those services were never provided to patients, the investigation found.

The BGA reported at the time Meridian Health Plan of Illinois, IlliniCare Health Plan, which rebranded to become Aetna Better Health of Illinois in 2021, and Molina Healthcare of Illinois reported a combined $282 million increase in profits in Illinois during the pandemic’s peak. 

Theresa Eagleson, director of HFS, told reporters at the time the agency could recoup “a significant amount of money from the plans,” but admonished a reporter for considering only a snapshot of the insurance firm’s revenues.

“I don’t think it is fair to take a partial-year look or a short-term look at something when all these numbers and all these projections are annual in nature, and there’s still a lot of billings and reporting and reconciling to do,”  Eagleson said in the April 2021 interview.

“I’m not saying that we don’t see this potentially occurring. I’m saying we don’t have a process in place to recoup it until … all the information is in.”

Rachel Hinton is a 2017 graduate of DePaul University where she served in various roles at The DePaulia, DePaul's student paper. She was the chief political reporter for the Chicago Sun-Times before joining the Better Government Association in January 2022.