SPRINGFIELD — Better late than never – that’s what Illinois hospitals are saying when it comes to their Medicaid reimbursement payments.

By Mary J. Cristobal

SPRINGFIELD — Better late than never – that’s what Illinois hospitals are saying when it comes to their Medicaid reimbursement payments.

The Illinois House Human Services Appropriations Committee is proposing a $463 million payment reduction of Medicaid to hospitals for next year’s budget. But the Illinois Hospital Association is offering an alternative – why not delay reimbursement payments than making deeper cuts?

“The state could extend the payment cycle rather than do cuts across the board,” said Howard Peters, executive vice president of Illinois Hospital Association. “Hospitals would rather be paid timely payments, (and it’s) better to be paid late than taking inadequate payment, because the Medicaid program is already paying less than the cost to deliver Medicaid care.”

Hospitals are familiar with delayed Medicaid reimbursements. Illinois’ Medicaid backlog bill is $448.6 million with the oldest bill dating back to Jan. 3, said Brad Hahn, spokesman for the state’s comptroller’s office. Illinois’ total backlog of unpaid bills is hovering around $4.5 billion for the same period.

“It’s not a new notion that the state would pay slower,” Peters said. “So when we say, ‘We would agree to extend the payment cycle,’ that’s been what’s more normal than a prompt payment approach.”

State Rep. Patti Bellock, R-Westmont, said the House Human Services Appropriations Committee is taking everything, including suggestions, into consideration to meet service providers’ needs.

“Well we don’t like to (delay payments) but to extend the cycle out that is what the hospitals have asked us to do rather than taking more cuts,” said Bellock, a committee member. “By extending the (payment) cycle out, (the state would save) around $250 million.”

But because of the 2009 American Recovery and Reinvestment Act, the federal government matched Illinois’ Medicaid payments by 59 cents on every dollar until March, and then the match dropped to 57 cents per dollar. In June, the federal match returns to 50 cents, said Hahn. The “enhanced” match has brought an additional $2.6 billion to the state within two years.

“That’s why we have to try to make up for that, and that’s why we have to come in and have to come up with such steep cuts,” Bellock said. “It was wonderful to have that money in the last couple of years, but now it’s like falling off the edge of the cliff. So we really need to tighten our belts and do the best with what we can.”

If the $463 million payment cut takes place, then Medicaid services also would be cut, said Mark Reifsteck, president and chief executive officer of the Southern Illinois Division of Hospital Sisters Health System. Reifsteck oversees St. Elizabeth’s Hospital in Belleville and St. Joseph’s Hospital in Breese and Highland.

“Chances are we would look to limit our exposure to that patient population even more so and they’re already underserved,” Reifsteck. “So the reductions in payments to hospitals will just cause hospitals to further reduce the provision of services to that population of patients wherever they can.”

Reifsteck said the state has caught up with its Medicaid payments in March for his hospitals even though payments started off as slow in the beginning of the year. He did not provide a dollar amount.

Tim Moore, chief accounting officer for Blessing Hospital in Quincy, said he’d prefer a delayed Medicaid reimbursement rather than cuts, which would affect the hospital’s services.

“I urge lawmakers to understand that we can only bear certain limits on extensions,” Moore said. “We also have bills to pay.”

Illinois still owes Blessing Hospital in Quincy about $5 million in Medicaid payments.

Bob Rosenberger, senior vice president and chief financial officer for Centegra Health System for the McHenry and Woodstock hospitals, said he won’t need to close programs if the additional cuts are implemented. Rosenberger was not able to provide the dollar amount the state still owes his hospital, but he said the state is behind on its Medicaid payment by 60 days.

Because the McHenry and Woodstock hospitals do not rely on Medicaid payments as much as some other hospitals in the state, Rosenberger said a delayed payment would not be an inconvenience.

But like any other business, hospitals also need to borrow to make up for the state’s late payments.

“There’s only a couple of places where you can make it up; of course you would borrow to do that,” said Reifsteck, of the Hospital Sisters Heath System. “Some hospitals don’t have enough reserves to fund their cash flow.”

State Sen. John Sullivan, D-Quincy, said the idea of delaying Medicaid reimbursements is a short-term fix.

“Of course this backlog of unpaid bills (is) part of this whole discussion, because we aren’t paying our bills from last year, and now of course we’re talking about extending the payment cycle into next year,”

Sullivan said. “(And) we haven’t addressed this backlog for the current year, so it’s not a good situation.”
The state’s backlog of bills are expected to balloon up to $8 billion by the time a new state budget goes into effect in July, according to the comptroller’s office.

Kent Redfield, professor of political studies at the University of Illinois at Springfield, said delaying Medicaid payments is not a good idea given the state is in so much debt already and that the state needs to make significant cuts for next year’s budget.

“You can’t avoid the pain. It’s better to get it over it now,” he said.

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