Illinois Medicaid Takes on New Costs

Published June 1, 2006

Illinois’ Medicaid program owes $1.5 billion in late payments to pharmacists, doctors, nursing homes, and others, yet in July 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 “All Kids” 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 delays payments and holds down reimbursement rates.

‘Disenfranchising Poor People’

“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.”

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

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 is 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.”

Spokespersons for the governor did not return calls for comment.

Both Parties’ Lawmakers Worried

Franks’s complaints demonstrate growing bipartisan dismay with the Blagojevich administration’s spending practices, said state Sen. Pamela Althoff, a Republican whose district includes Franks’s House district. 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 missed their April deadline for a budget.

“This is not a partisan issue,” Althoff said. “There are concerns about Medicaid and other spending programs all over the General Assembly. I have never seen such blatant spending with no revenue source to back it up, as we have with this administration.”

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

Failing to Pay Providers

“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.”

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.

“Costs are skyrocketing even with eligibility staying the same,” Dring said.

Steve Stanek ([email protected]) is managing editor of Budget & Tax News.