Quinn preparing backup plan to pay Medicaid vendors - Cicero, IL - Cicero Life
By DEAN OLSEN
THE STATE JOURNAL-REGISTER : Posted May 01, 2011
SPRINGFIELD -- Worried that Illinois will miss out on additional federal matching funds, Gov. Pat Quinn’s administration is preparing an alternative method of quickly paying $750 million in overdue Medicaid bills owed to hundreds of health-care providers statewide.
The Illinois Finance Authority, an agency under Quinn’s control, would administer a program in which large private investors such as banks would put up the cash to pay the bills and later be repaid by the state.
Quinn would prefer that the overdue bills be paid through an $8.75 billion borrowing plan he has proposed to the Illinois General Assembly, said Kelly Kraft, spokeswoman for the governor’s budget office.
But that plan has stalled in the legislature, and Quinn doesn’t want Illinois to lose out on a higher-than-normal federal match for Medicaid expenses, Kraft said. The enhanced match expires June 30.
“This is another option,” she said of the cash-flow plan involving the finance authority.
1-2 percent monthly interest
The finance authority’s Medicaid Vendor Payment Program — apparently the first of its kind in the nation — would create an incentive for investors to become involved. Investors would receive the 1 percent to 2 percent monthly interest payments the state would otherwise owe vendors whose Medicaid payments are more than 60 days late.
Vendors that volunteer for the program would be paid 90 percent of what they are owed within a few weeks of signing up for the program. They eventually would receive 100 percent, after the state pays off the debt to the investor, state officials said.
The program was given preliminary approval by the authority this month, but hasn’t yet begun. Vendors who would qualify also haven’t been notified.
But Quinn wants to have the program ready as a backup, because vendors shouldn’t have to essentially extend the state credit by enduring months of delayed payments, said Christopher Meister, executive director of the authority.
“There’s a recognition that the state of Illinois collectively is treating its vendors as if they were providers of financial services and not goods and services, and that’s a problem, and I think Gov. Quinn recognizes that,” Meister said.
Avoids legislature
Unlike the $8.75 billion borrowing plan, the authority’s vendor payment program doesn’t need approval from the General Assembly, Kraft said.
Doctors, hospitals and nursing homes, which already are being paid within 30 days because of money the state receives from the federal economic stimulus program, wouldn’t qualify for the vendor payment program, she said.
But certain other vendors would qualify, including pharmacies, medical equipment suppliers, laboratories and transportation providers.
Daryl Barth, who owns Orthotic and Prosthetic Associates of Central Illinois, 355 W. Carpenter St., said Medicaid owes him more than $250,000 for services provided to low-income patients up to six months ago.
His business fits and fabricates orthopedic braces and artificial limbs.
The payment delay is the longest Barth has experienced in his 30-plus years in business, a problem compounded because the sagging economy means more patients are covered by Medicaid.
“It’s just getting more and more difficult for us to treat public-aid patients,” he said. “It’s upsetting from a business standpoint. It’s unsustainable in the long term.”
Skeptical
Barth said he would consider taking part in the vendor payment program, but remains skeptical.
“It’s just my experience with the state,” he said. “They’ve not been real helpful to us as a vendor or provider.”
The vendor payment program is modeled after a program the state used to pay $300 million in non-Medicaid bills last year, Kraft said.
Quinn ratcheted up pressure on the General Assembly on the issue of bill payments last week.
His administration distributed a memo to some lawmakers outlining a plan in which monthly payments from the state income tax that are sent to municipal governments would be temporarily suspended.
That plan would need General Assembly approval. But it would require only a simple majority, unlike the borrowing plan, which would need a super-majority.
The plan calls for the suspension to end when lawmakers give the go-ahead to at least a $4.5 billion borrowing plan, Kraft said.
Ernie Slottag, a spokesman for Springfield city government, said Springfield receives $2.74 million a year from the state income tax.
Dean Olsen can be reached at (217) 788-1543.
Medicaid Vendor Payment Program
What: An alternative method for the state to quickly pay $750 million in outstanding Medicaid bills.
How: The Illinois Finance Authority would assign the bills to selected banks and other large financial institutions that would put up cash to pay the bills. The investors would be repaid with state funds later. Investors also would receive the 1 percent to 2 percent monthly interest payments that the state normally pays vendors whose claims haven’t been paid for more than 60 days.
What’s next: The final go-ahead from Gov. Pat Quinn’s administration. Legislative approval isn’t needed.
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