Safety-net hospital group proposes alternatives to Illinois Medicaid cuts
May 5, 2012
Sr. Sheila Lyne and other hospital officials speak at a news conference at which they announced a plan to save Illinois $1.4 billion in Medicare costs.

By Monica M. Walk

The State of Illinois is ignoring available revenues and allowing ineligible individuals to remain on Medicaid rolls, according to a coalition of seven urban hospitals, known as the Association of Safety-Net Hospitals, which recently put forth a plan noting several strategies they say could save the State $1.4 billion in Medicaid costs—without cutting reimbursements to providers or service to patients.

The group’s suggested money saving measures came in response to the State’s proposed $2.7 billion cut in the Medicaid budget. The association on March 28 called for enacting its savings plan “immediately,” but as of press time “Nothing is happening,” said Sr. Sheila Lyne, president and CEO of coalition member Mercy Hospital and Medical Center. Added Sr. Lyne, “There is no evidence up to this point that they are willing to do anything. It boggles me: who would say ‘no’ if there is revenue?”

Sr. Lyne is referring to revenue from the Federal government, insurers, and drug manufacturers that is available but appears to be unclaimed by the State. The safetynet group is noting $220 million in unclaimed Federal dollars associated with current Illinois Department of Healthcare and Family Services (HFS) plan amendments. These safety-net hospitals were instrumental in developing the original hospital assessment program a decade ago; the program now directs nearly $1.9 billion annually to the poor and underserved and could be augmented by this expansion with Federal revenue.

“Money is on the table to be distributed if we say ‘yes,’” Sr. Lyne said of the State. “Other states do this. It’s not like we discovered it.”

“They—the State—would get money, too” said Mercy CFO Tom Garvey. Of the larger ten-point plan supplied by the safety-net hospital association, collecting available revenues and ensuring
Medicaid eligibility appear to offer the chance to reap significant financial rewards for both the State and the hospitals.

“None of the suggested strategies requires legislation, except the enhanced provider tax,” said Garvey. “They could do them now, except they need staff.”

Scrutinizing where and on whom Medicaid dollars are spent could mean significant savings, the association also emphasized. Medicaid enrollment in Illinois has increased 76%, from 1.5 million people to 2.7 million people, in the eight-year span between 2002 and 2010. The group believes stricter controls on eligibility could save between $400 million and $1.2 billion.

“Our people think 100,000 to 300,000 (individuals) on Medicaid are not truly eligible, so we say we need to clean that up,” Sr. Lyne said, adding that while the State currently may not have enough staff, she believes those hired to complete such a project would gain more money for the State overall and offset the new staff costs.

The safety-net hospitals see more than half a million Medicaid patients each year, employ 12,000 people, and drive more than $700 million in economic stimulus in their communities, according to the association.

“Most other hospitals understand that the safety-net hospitals need this money, and could close,” Sr. Lyne said, adding that these facilities’ abilities to care for much for their clientele rely on Medicaid funding. “No one else really wants to take care of those [Medicaid] patients….in their heart of hearts, they know if we don’t exist they aren’t going to like it. And these patients are in our communities. We should take care of them.”

If the State cuts funding and does not recoupmonies, safety-net hospitals likely will see their ability to serve patients reduced in ways that affect the health of community residents throughout the area. “We’d have to tighten expenses in ways that would cause some programs not to function as well,” Garvey said. “The emergency room already has a long wait. We have a clinic for walk-in patients who don’t have healthcare providers. People will have a harder time accessing services, and it will affect Cook County. We serve many here. So, our response is, why first cut rates when we can do other things?”

Illinois ranks 44th out of the 50 states in its contributions to Medicaid. The State funds 28% of overall hospital costs of treating Medicaid patients, and the hospitals contribute another 33%, according to the association.

Besides Mercy in the Near South area, Chicago Association of Safety-Net Hospitals members are Saint Anthony Hospital on the Near West Side, Norwegian American Hospital, St. Bernard Hospital and Health Care System, Loretto Hospital, Swedish Covenant Hospital, and Ingalls Health System.