How the Poor Fared in a Competitive Model: Assessing the Illinois Selective Contracting Approach

Abstract

Illinois is one of the only two states to use a state-wide selective contracting program to reduce state medical assistance costs for inpatient hospital care. The Illinois Competitve Access and Reimbursement Equity, or ICARE, program was implemented in June 1985. A key goal of the program was to shift patient care out of higher-cost teaching hospitals to lower-cost community hospitals. But data from ICARE's first year of operation suggest that the savings attributable to the program resulted from lower per diem rates and lower utilization, rather than from shifting care to less costly settings. At the same time, the program did disrupt patterns of patient care, with hospitals forced to ration care. The first year of ICARE operation raises disturbing concerns as to the program's effect on access and quality of care.