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What does $15 billion in overdue bills mean for doctors and hospitals in Illinois?

Illinois may finally have a budget, but it could take months, even years, for the state to pay down its $15 billion in overdue bills.

What does that mean for health care providers? Be patient. You're in for a long wait.

Of the bill backlog that swelled amid the state's epic budget war, about $3 billion is owed to health insurers contracted to cover the bulk of the state's Medicaid recipients. That debt has created a domino effect: Insurers have slowed or completely stopped making payments to doctors, who have struggled to pay their staff and been forced to turn away the state's most vulnerable patients.

One downstate physician has purchased property across the state border in St. Louis to open another practice in preparation for leaving Illinois.

There's some relief coming, albeit slowly. Overdue bills owed to the health insurers are among those costing Illinois taxpayers the most because they accrue interest. So they will be among the bills Illinois Comptroller Susana Mendoza plans to pay off first as more money flows into the state, her spokesman Abdon Pallasch said.

Here's where the dollars will come from. As Illinois lawmakers ended a two-year budget impasse last week and approved a $36 billion spending plan, the deal involved a 32 percent income tax hike.

The increase is estimated to generate an additional $5 billion a year, mainly through employers that withhold taxes from their workers' paychecks, said Terry Horstman, a spokesman for the Illinois Department of Revenue. The changes in the tax rate are expected to take effect over the next few weeks, Horstman said.

The state also has an option to borrow up to $6 billion to help pay down the backlog of bills, but it's not clear if Gov. Bruce Rauner will do so. A spokeswoman for the Republican governor declined to comment. Rauner vetoed the budget and tax hike, but was overridden by the Democrat-controlled General Assembly.

Mendoza might also be able to pay down the bill backlog by borrowing money from funds earmarked for other purposes, such as roads, Pallasch said.

Having a budget doesn't put everyone at ease. Dr. Timothy Wall's pediatric practice is one of the largest private providers of Medicaid managed care in DuPage County, and insurers owe it more than $1 million. He's put off vaccinating children after their first birthdays because the insurers stopped paying for the expensive shots, and he's stopped taking patients covered by Family Health Network, one of the biggest Medicaid insurers in the state. He might do so soon for patients covered by Meridian, another large carrier.

"The worst thing for us is we're having to limit new patients," Wall said in an interview.

In a June letter he wrote as part of a lawsuit to compel Mendoza to pay Medicaid providers more, he said that his practice might have to look for an outside buyer by this fall.

A spokeswoman for Family Health Network declined to comment. That Chicago-based health plan is owed more than $260 million from the state, and it largely stopped paying doctors in February. Since then, many providers terminated their agreements with Family Health Network, including seven hospitals and their affiliated physician groups, and more than 200 other primary care and specialty physicians, the insurer's general counsel wrote in a letter that's part of the Medicaid lawsuit.

"These defections mean that 227,000+ Medicaid beneficiaries served by FHN suffer from substantially reduced access to healthcare services by they need," John Allen, the general counsel, wrote.

A spokeswoman for Meridian did not respond to a request for comment. Meridian and Aetna each have threatened to leave the Illinois Medicaid health insurance program over the state budget crisis. Meridian is owed at least $591 million, and Aetna is owed at least $698 million. A spokesman for Aetna declined to comment.

The bottom line for insurers and doctors alike: Your bills won't be paid as quickly as you like, but money eventually will be on its way.


Crain's Chicago Business

Crain's Chicago Business team

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