Quick Hit Matthew Blake Wednesday April 4th, 2012, 4:44pm

Community Hospitals Fight $2.7 Billion In Proposed Medicaid Cuts

Representatives from some of Illinois’ largest hospitals said today that they risk shutting down if Springfield cuts $2.7 billion from Medicaid. Even members of Gov. Pat Quinn’s administration testified at an Illinois House Health Care Availability and Accessibility hearing in Chicago that the proposed cuts are severe.

“Our psychiatric services are vulnerable,” testified Debra Ferguson, deputy director of the Illinois Department of Human Services’ mental health division.

Quinn, Speaker of the House Michael Madigan (D-Chicago) and other state leaders have spent this year squarely focused on Medicaid costs as the source of the state’s budget shortfall. Quinn proposed a fiscal year 2013 budget with $2.7 billion in unspecified Medicaid cuts, and the House included this $2.7 billion figure in the budget it passed last week.

The $2.7 billion really is closer to $1.3 billion in savings, as the federal government reimburses states for slightly more than half of the costs of Medicaid. Medicaid primarily serves poor, elderly and disabled patients; and it is the primary source of health care for about 2.7 million Illinois residents.

A group calling themselves the Association of Safety Net hospitals argued Wednesday they are already losing money, and this cut level could be fatal to both themselves – and the communities they serve. “We are the last line of defense against vast health care deserts in Illinois,” testified Sister Sheila Lynne, the president and CEO of Mercy Hospital in Chicago.

“We are the only hospital on Chicago’s Southwest Side,” said Dennis Ryan, vice-president of external community affairs at Holy Cross Hospital in Chicago. “We are perilously close to closure due to unreimbursed care.”

“Where will ambulances take stroke and cardiac patients?” Ryan exclaimed. “Will Walgreens and CVS set up tents in Marquette Park each month and hand out band aids?”

Hospital representatives also asserted that they are often the largest employers in the communities they serve. “We employ approximately 800 individuals and 65 percent of those individuals actually reside in our community,” said Jose Sanchez, chief executive with Norwegian American Hospital in the Humboldt Park neighborhood.

The safety net hospitals proposed a more modest Medicaid reduction plan of $1.4 billion in cuts, or about $700 million in state savings. The majority of the savings would be realized from kicking off the rolls people who fraudulently use Medicaid or currently make too much money to qualify for the program. A smaller component saves money by taking better advantage of federal assistance.

A Quinn administration official testified that the association’s proposals are under review.

What the administration itself proposes for cuts are also under review – Medicaid patients and providers are still waiting for the governor and also a legislative advisory task force to give specific proposed cuts.

State officials walked a tightrope in their testimony, acknowledging difficulties in properly funding Medicaid providers, while also not opposing Gov. Quinn’s budget proposal. “We are always somewhat concerned about reductions in Medicaid, because most people with developmental disabilities get their basic care from Medicaid programs,” said Kevin Casey, director of the division of disabilities at the Department of Human Services.

A wild card in the Medicaid debate is whether the U.S. Supreme Court overturns the Affordable Care Act. ACA substantially ramps up federal assistance to state Medicaid programs in 2014 – under the stipulation that states do not reduce current eligibility levels.

If the Supreme Court rules ACA unconstitutional, it could mean that the state will explore the possibility of saving money in the short-term by pushing people off Medicaid.

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