CHICAGO (WTW) — Given the state's financial predicament, lawmakers will need to consider every possible strategy for cutting the state's Medicaid budget this year, Illinois Department of Healthcare and Family Services Director Julie Hamos says. Those strategies include shrinking payments to doctors and hospitals, trimming benefits and lowering the number of people eligible for the health care program that now covers 2.7 million poor and disabled Illinoisans.
And that, she predicted, won't be easy. "They'll have to face down all the providers and advocates," Hamos said last week in an interview with The Associated Press.
Gov. Pat Quinn, Hamos' boss, says he will address the state's Medicaid spending problem in his budget address later this month. Hamos previewed his call for reforms by warning that a crisis looms if lawmakers don't do something to address the program's unsustainable growth.
The Medicaid budget, currently at $14 billion including federal dollars, is a perennial challenge. The current state contribution is $8.6 billion, but Illinois has repeatedly paid some of the costs out of future budgets, contributing to a buildup of late payments to doctors, pharmacies and nursing homes. The backlog of unpaid Medicaid bills is expected to reach $1.8 billion by the end of the fiscal year, meaning it will take even longer for doctors to be paid.
A recent Civic Federation report projected the backlog could reach $21 billion by the end of fiscal year 2017 — even with an assumption that the state appropriation for Medicaid would increase by 2 percent annually.
Hamos has overseen the Healthcare and Family Services Department — and therefore the Medicaid program — since April 2010. Before that, the Democrat served in the Legislature for more than a decade. Below are edited excerpts of what she told the AP:
Q. What proposals will you have for the Legislature to hold down costs in Medicaid?
A. We're heading toward a crisis in the Medicaid program and the Legislature, and the governor, I'm sure, will be looking to us for new ideas for containing the Medicaid budget. ... These will be tough decisions for the Legislature. They'll have to face down all the providers and advocates.
Q. What options does the state have for cutting costs by reducing the number of people covered by Medicaid? Aren't we prohibited by federal law from tightening current eligibility requirements?
A. Last year, in the Medicaid reform law, the Legislature turned the All Kids program into a "most kids" program. They capped children's eligibility at 300 percent of the federal poverty level. That could go lower, I suppose.
And their parents are in a program called Family Care that's currently at 185 percent of the federal poverty level. Last spring, we suggested they might want to cut adults down from 185 percent to 133 percent. This is what the Affordable Care Act (President Barack Obama's health-care overhaul) is going to provide (in 2014).
The Legislature didn't want to do that. They didn't want to throw people off the program. We didn't either.
Our enrollment growth in Medicaid is directly attributable to the bad economy. ... Nobody wants any of these changes.
Q: Is it more difficult to cut payment rates to doctors and nursing homes, or to cut eligibility, or cut benefits?
A: They're all equally difficult.
Remember last year the governor stepped up to the plate and proposed a 6 percent rate cut across the board (for health-care providers). As it went through the (legislative) sausage grinder, the Senate cut that 6 percent down to 3 percent. We were, of course, taking the governor's position. Three percent went over to the House and the House wouldn't even accept the 3 percent. I really don't know what they'll have the ability to do (this year).
The Civic Federation's projections are so bleak, they will have to take action.
Q: A state Medicaid reform law, passed last year, attempts to save money by requiring that by 2015 at least 50 percent of the state's Medicaid recipients be moved into managed care, a coordinated system to control costs by eliminating unneeded care. That has led the state to create a "Care Coordination Innovations Project." In January, your department solicited detailed proposals from health-care providers who want to participate. What are the details of that?
A: I'm very excited about it. Illinois Medicaid is transitioning from a classic fee-for-service model to one where care coordination is the rule of the day. What we are offering to the provider community is the ability to put together networks of care and show they can manage the care before we go to the potential next step: using managed-care companies (contracted by the state).
We are asking for the most innovative models possible in program design and in funding approaches. It requires providers to build their own networks. At a minimum, the provider network must include primary care, one hospital or more, and behavioral health care. (The program would share savings with providers like hospitals and doctors and give the state the ability to withhold fees if they don't meet certain quality standards.)
Sixteen percent of our clients are seniors and people with disabilities and they account for 60 percent of the costs. It makes total sense to focus on these clients to see if there's a better (and less costly) way.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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