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State fears Medicaid cuts

Thursday, February 01, 2007
Chicago Tribune
by Crystal Yednak

Tribune staff reporter Mickey Ciokajlo contributed to this report

Illinois public hospitals could lose $623 million annually, including as much as $235 million for the Cook County hospital system, under a change to Medicaid rules being pushed by the Bush administration, state officials said Wednesday.

Such a cut would be nearly one-third of the $724 million proposed for the Cook County system's 2007 budget.
"It would be catastrophic," said Dr. Robert Simon, interim chief of the Cook County Bureau of Health Services.

"It would mean closing hospitals, closing clinics, or the Board of Commissioners would have to generate revenue some other way," he said. "You can't make additional cuts. You really can't. I mean, the budget is too austere as it is. It would mean cutting essential services."

Gov. Rod Blagojevich fired off a letter to President Bush Wednesday, joining officials of other states in blasting the proposed rule.

"It is time for the federal government to recognize the commitment by states around the country to expand health care to those who need it, and increase--not cut--federal support of those efforts," Blagojevich said.

The rule comes as the Bush administration moves to shift the uninsured into private medical policies and thus reduce reliance on government programs. Last week, in his State of the Union address, Bush proposed giving states "affordable choice grants," a move aimed at helping more of the uninsured get affordable medical coverage.

Public hospitals now can receive more than the standard Medicaid rates, which helps offset the enormous cost of the services they provide to the uninsured and for other expenses. The state also can draw a federal match on each extra dollar spent. The proposed rule would do away with that system, capping reimbursements at the standard cost of the service.

Health care advocates say the rule change targets hospitals and clinics that are least able to shift the costs onto private payers.

Federal officials say the states may defend the current system because they are using the money to provide services for the uninsured and for other public health goals, but that doesn't address the concern that the federal government may be paying more for Medicaid costs than it should.

"While some health care providers may lose revenues in light of this rule, those revenues were likely in excess of cost," the proposal stated.

Officials estimated that the regulation change would result in a $3.87 billion in savings over 5years. The regulation is set to go into effect Sept. 1.

Larry Gage, president of the National Association of Public Hospitals & Health Systems, said the only option to prevent the rule from taking effect is for Congress to step in.

"This goes way beyond what the federal government needs to do to correct what they perceive to be abuses of the program," he said. "It could have a crippling effect on the health safety net."

Blagojevich also criticized the Bush administration for making the change through the rulemaking process, circumventing Congress.

"Any changes that your administration wants to make to the federal health care funding structure should undergo review and approval by our elected members of Congress," Blagojevich said in his letter.

A spokeswoman for U.S. Sen. Dick Durbin (D-Ill.) said the senator is taking a closer look at the issue and will work to address it.

"Capping Medicaid payments means Cook County Hospital will be forced to deny critical care to many of the needy and uninsured in the Chicagoland area," Durbin said in a statement Wednesday.

Anne Marie Murphy, director of health care programs for Blagojevich, said the rule could harm efforts by states such as Illinois to expand access to health care for those who now go without. Blagojevich is expected to unveil a plan shortly to improve coverage for uninsured adults.

"The current reimbursement rate recognizes the full extent of costs incurred by public entities that provide vital health care services to Illinois residents," Murphy said. "The only effect that cutting funding for these public hospitals will be is that Illinois' health care system is undermined."

For the current fiscal year, Illinois expects to spend $12 billion in state and federal dollars for Medicaid, state officials said.

Ken Robbins, president of the Illinois Hospital Association, said the rule change would have the opposite effect of the goals articulated by the president in his speech last week.

"If the goal is to expand access to care for the uninsured and to give states more flexibility in dealing with their uninsured and Medicaid population, to then make a huge reduction in the federal funds available for that purpose, I find to be very confused public policy," Robbins said.

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