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posted: 3/28/2012 7:19 PM

Urban hospitals propose Illinois Medicaid plan

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Associated Press

A coalition of Chicago-area hospitals that serve the poor called on Illinois officials to go after more federal money before cutting their Medicaid funding, a proposition dismissed by state health officials as based on unrealistic assumptions.

Leaders of the Association of Safety-Net Hospitals released a plan Wednesday that aims to bring Illinois' Medicaid program $1.4 billion closer to a balanced budget. They said the state could bring in $110 million more each year in Medicaid money from the federal government than it does now.

"This is free money. Yes, free matching money for dollars Illinois is already spending. And Illinois is woefully inadequate at securing it," said Mark Newton, CEO of Chicago's Swedish Covenant Hospital.

The state needs to be more aggressive in securing federal matching money for up to 10 programs that now await federal approval, Newton said.

But the state's top Medicaid official disputed the group's claims. Illinois Department of Healthcare and Family Services Director Julie Hamos said the bulk of unclaimed federal matching money is for a portion of the All Kids health insurance program for children in higher income families. That's a program the legislature may want to target for cuts, she said.

"I wish we had found $100 million in new money, but that's not it," Hamos said.

The hospital group also proposed stricter enforcement of Medicaid eligibility rules, estimating that up to 300,000 people are receiving Medicaid benefits for which they aren't actually eligible because they make too much money or live in another state. The group estimates that costs the state $720 million annually.

"Every 12 months, the state mails a letter to redetermine Medicaid eligibility. If you don't respond to the letter, the state allows you to remain on the program," Newton said.

Hamos said the state has federal approval to do better oversight of Medicaid residency requirements and is "working hard to get approval for income verification." A Medicaid overhaul law passed last year requires the stricter eligibility enforcement.

But she disputed the hospital group's estimate on how much will be saved by tighter controls of eligibility.

"They made some grand assumptions here," Hamos said. She added that she finds some of the group's ideas interesting, but is wary of "unrealistic numbers" that won't solve the Medicaid budget crisis.

Gov. Pat Quinn has called for $2.7 billion in cuts to the state's projected Medicaid spending to save the program from collapse.

Experts say a cut that large can't be achieved without cutting the rates paid to hospital to serve Medicaid patients, and some safety-net hospital executives said Wednesday such cuts would force them to reduce services and threaten their continued existence.

"We are the last line of defense against vast health care deserts in Illinois," said Sister Shelia Lyne, CEO of Chicago's Mercy Health and Hospital System.

The safety-net group also proposed requiring $10 copays from Medicaid patients who use emergency rooms for nonemergency treatments, enhancing prenatal care for pregnant women to avoid the cost of birth complications and being more aggressive at billing insurers when patients have other coverage.

The Illinois Hospital Association supports the coalition's ideas, said association spokesman Danny Chun.

"We're pretty much on the same page," Chun said. "We've said blunt overnight cuts aren't the way to go."

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