Both houses of the Illinois General Assembly recently voted to approve changes to the way the state divvies up Medicaid funds to its hospitals. The Illinois Medicaid Hospital Assessment Program helps hospitals throughout the state cover the costs of taking care of Medicaid patients.
The amount of money each hospital gets is determined based on a complex formula. The proposed changes to the formula raised concerns from “safety net” hospitals, such as Austin’s Loretto Hospital, about how they might affect those hospitals’ ability to service their low-income populations.
While private hospitals can make up the funding cuts from private sources, safety net hospitals get most of their funding from Medicaid and Medicare, so they have less room to maneuver. The new bill changes that formula, moving it away from lump sums of money toward costs that would be set based on what type of medical procedures the hospital performs and how many times it performed them.
The new formula also gives Illinois hospitals $360 million in new funding, 58 percent of which will go to safety net hospitals. It is not clear how Loretto Hospital will be affected.
The change in the formula comes in response to changes in federal policy. According to a recent AP report, the policy includes not allowing states to distribute funds in lump, static sums. It also required states to move Medicaid recipients to managed care plans that involve private insurers and organizations managing Medicaid coverage on the state’s behalf.
As the bill made its way to the Illinois Senate, safety net hospitals raised concerns about managed care plans, complaining that they are more likely to delay reimbursements. Although that in itself costs hospitals money, the changes to the formula would compound the problem, since one of the factors it would use to calculate hospital payments would be those reimbursements.
The AP reported that this led Illinois state Rep. Greg Harris (13th) to make an amendment adding a provision that would require the state to monitor managed-care providers and track denial claims.
In another change to the formula, the bill directs more money to hospitals that provide mental health services and prenatal care and offer graduate medical education opportunities. As previously reported by Austin Weekly News, Loretto CEO George Miller said that having those opportunities in place at his hospital was one of his priorities, and the hospital already provides some mental health and addiction treatment services.
According to the Chicago Tribune, the bill provides $263 million “to help financially strapped hospitals adapt to changes in their communities’ needs.”
As the bill made its way through the Senate, two South Side safety net hospitals — Roseland Community Hospital and South Shore Hospital — were especially concerned about the impact of formula changes. The former lost $6 million while the latter hasn’t experienced any change in funding, the Tribune reports.
South Shore Hospital CEO Tim Caveney previously told the AP that his hospital needed an extra $3 million to stay afloat. According to the Tribune article, state Sen. Emil Jones III (14th) plans to introduce a bill next month to come up with the funding to help Roseland Hospital.
The Illinois Senate approved the bill by the vote of 53-3. The Illinois House voted 107-7 to approve it, with state Rep. Camille Lilly (78th), who serves as Loretto’s Vice President of External Affairs & Development, casting one of the ‘no’ votes.
Lilly did not respond to a call requesting comment by this issue’s deadline. The bill now goes to Governor Bruce Rauner’s desk. Once signed, it must be approved by the Centers for Medicare and Medicaid Services by June 30.
In a statement released by the Illinois Senate after the vote, state senator Kimberly Lightford (4th), who voted for the bill, described it as a win for safety net hospitals.
“Safety net hospitals play a vital role in our communities and serve some of the most vulnerable populations in our state,” she said. “If their funding is cut, we would see a direct impact on our constituents who depend on them to stay healthy.”
Illinois Health and Hospitals Association, which counts Loretto and Mount Sinai Hospital among its members, issued a statement that also described the change in positive terms.
“One of the key guiding principles for the assessment redesign is preserving access to healthcare for all Illinoisans, especially vulnerable populations in urban and rural communities across the state, including those served by Safety Net and Critical Access Hospitals,” it stated. “We strongly believe the redesigned program achieves this critical goal.”