Illinois Legislators Lambaste Governor’s Subsidy Plan

Published June 1, 2006

Illinois’ Medicaid program owes $1.5 billion in late payments to pharmacists, doctors, nursing homes, and others. Yet starting this July, under Gov. Rod Blagojevich’s (D) touted “All Kids” program, the state will begin using Medicaid to offer subsidized health insurance to every child in the state, regardless of family income or legal residency. The program will offer subsidized health insurance to all children in the state up to age 19.

The situation is drawing complaints from medical professionals and lawmakers concerned about a Medicaid burden that continues to grow, even as the state drags out payments and holds down reimbursement rates.

“Our governor has sold out other health care providers to have his All Kids program,” said state Rep. Jack Franks (D-Woodstock). “He wrote in the law that the All Kids providers would be paid in 30 days. People who have been carrying water for Medicaid for years by accepting late payments and low payments, he cast aside. The governor’s position is disenfranchising poor people, because he’s making it so difficult for our pharmacies and health care providers and nursing homes to serve them.”

Blagojevich pushed the All Kids program through the General Assembly during last fall’s six-day veto session. The vote was largely along party lines, as Democrats control the governorship and both houses of the General Assembly.

Bipartisan Concerns

Franks said the Blagojevich administration “keeps pushing back the payment cycle and using that to balance the budget. That means when you start the next budget, you’re behind even more, which isn’t honest and may not be legal.

“The other issue,” Franks continued, “is [the need for] increased reimbursement rates. The state requires people who are getting underpaid to, in effect, give the state interest-free loans. That is bad business and politics.”

Franks’s complaints demonstrate growing bipartisan dismay with the Blagojevich administration’s spending practices, said state Sen. Pamela Althoff (R-Crystal Lake). She noted Franks and the governor are both Democrats and pointed out that Democratic Party leaders shut Republicans out of this year’s budget process and still failed to agree on a budget by their April deadline.

“This is not a partisan issue,” Althoff said. “There are concerns about Medicaid and other spending programs all over the General Assembly.”

Unanswered Questions

One lawmaker with firsthand knowledge about the impact of late Medicaid payments and low reimbursement rates is Senate Republican Leader Frank Watson of Greenville. Watson is a pharmacist and drugstore owner.

“The Blagojevich administration is literally balancing the budget on the backs of these Medicaid providers,” Watson said. “Right now it’s over 100 days delayed payment. It’s creating a financial problem for the entire health care industry. This administration borrowed $1 billion to bring those payments up to some reasonable delay, but that was last August, and now we find ourselves in a similar situation” to what existed before last year’s borrowing.

In addition to the $1.5 billion owed to Medicaid providers, the state owes several hundred million dollars more to construction firms and other businesses that do work for the state, Watson said.

“Now the governor comes along with the All Kids program, which is an insurance program for everyone under 19, including those who are here illegally. Is it realistic?” Watson asked. “What’s the cost? How is it going to be paid for? These are all unanswered questions.

“This administration seems to want to expand the Medicaid base, and that’s what All Kids will be–a Medicaid program,” Watson said.

Payment Problems

Illinois’ Medicaid reimbursement rates to doctors have climbed about 11 percent over the past decade, while office expenses have climbed about 50 percent, said Peter Eupierre, president of the Illinois State Medical Society and an internist in the Chicago suburb of Melrose Park.

“The main problem is reimbursement rates in Illinois are low,” Eupierre said. “And they are late with reimbursements, now about five to six months. Imagine a company trying to stay alive and having to wait six months for customers to pay. We frequently send in a bill, the state finds something to question, and it comes back six months later. So it becomes a year before you’re paid. Sometimes you don’t get paid at all.”

Because of increases in the costs of liability insurance, office staff salary and benefits, rent, and other operating expenses, “many physicians cannot afford to see Medicaid patients,” Eupierre said. “If I see three Medicaid patients and get $30 an hour, I’m getting $90 an hour. It easily costs me $300 an hour to be open. I’m losing $210 an hour. Many doctors in areas where Medicaid is the main population have a hard time staying open or have to see seven or eight patients an hour. I, as an internist, cannot see that many patients per hour.”

Skyrocketing Costs

David Dring, spokesman for state Republican House Leader Tom Cross (R-Oswego), said it is especially irresponsible of the state to increase Medicaid eligibility through the All Kids program when it cannot afford current enrollment costs.

“Something we [Republican lawmakers] have talked about doing is taking a hard look at going into managed care for Medicaid,” Dring said, essentially allowing Medicaid patients to choose a plan and select a primary care physician, who then coordinates their care and refers them to specialists when needed, just as in other managed-care plans. “We have a very small population in managed care. Costs are skyrocketing even with eligibility staying the same. But I don’t see this administration considering managed care.”

Calls to Blagojevich’s office for comment were not returned by press time.

Steve Stanek ([email protected]) is managing editor of Health Care News’ sister publication, Budget & Tax News.