Aetna Better Health threatens to terminate Medicaid contracts in Illinois over $698M in unpaid bills

Illinois statehouse courtesy

Illinois’ budget woes have caused Aetna Better Health to give notice that it could terminate its five Medicaid contracts unless the state pays up.

Aetna Better Health, a subsidiary of Aetna, is owed $698 million in back payments, according to the declaration filing by Laurie Brubaker, CEO of Aetna’s Medicaid business.

Providers could also suffer if the state doesn’t pay. Aetna Better Health may no longer be in a position to pay providers the full amount owed, Brubaker she said. In turn, providers may stop serving the Medicaid and Medicare population.

At least two other Medicaid MCOs in the state have slowed or stopped payments to their providers, Brubaker said.

Illinois has been operating without a budget for two years as a showdown ensued after the election of Republican Governor Bruce Rauner.

The state has racked up $15 billion in unpaid bills and owes Medicaid managed care organizations such as Aetna Better Health, $3.1 billion, according to the filing.

Aetna Better Health filed the termination declaration on June 29, a week before the Illinois House finally passed a $36 billion budget by overriding the veto of the governor.

In its notice of intent, Aetna left room to rescind its decision to terminate the contracts should the state take care of its Medicaid funding crisis.

“If Aetna Better Health is compelled to exercise its termination rights under the state contracts, it would do so with the hope that those terminations would ultimately be unnecessary upon an interceding, mutually agreeable resolution of the pending Medicaid-funding crisis before year end – either through a Fiscal Year 2018 budget or through state compliance with this court’s orders,” Brubaker said.

The state needs to pass a 2018 budget on or before July 1 that secures a reliable revenue stream or Aetna Better Health may terminate its contracts on or before December 21, she said.

Aetna Better Health is owed $698 million in bills that have been piling up since October 2016.

The money owed to Aetna Better Health is for unpaid premiums, $13 million in interest, plus estimated charges for beneficiary and rate discrepancies that have yet to be resolved, according to the notice.

An additional $115 million will come due under the contracts each month, Brubaker said.

Aetna must advance cash to Aetna Better Health to sustain operations.

The state continues to make some Medicaid payments. Illinois has paid Aetna Better Health about 20 percent of what it is owned for 2017, about $21.5 million versus the approximately $115 million that comes due each month.

The vast majority of the money being paid – 95 to 100 percent – has been funded by the federal government. This is from the ACA-expansion rates and the Medicare portion under a dual-eligibles contract.

Aetna Better Health has about 235,000 Medicaid beneficiaries in Illinois under four contracts for which it is paid capitated monthly payments and another for which it receives compensation from the state upon completion of certain tasks and benchmarks.

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