Judge to Illinois comptroller: State must pay Medicaid providers more

A federal judge has ordered that the Illinois comptroller negotiate with Medicaid providers to ensure they collect their share of Illinois' $14.9 billion in unpaid bills.

In a state reeling from two years without a budget, these insurers—which oversee two-thirds of the state's Medicaid recipients—have been caught in the middle. That's created a domino effect, prompting the insurers to delay payments to doctors who treat the poor and disabled. The doctors, in turn, have cut back access to patients.

A group of nonprofits and attorneys sought to make the state abide by previous court orders that require paying Medicaid providers. U.S. District Judge Joan Lefkow agreed on Wednesday, noting that state Comptroller Susana Mendoza, who pays the state's bills, has made other payments in full, including to the state payroll and pensions.

"Although the court means no disrespect to the comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court's previous orders," Lefkow said in her ruling.

"Counsel for the classes have represented that they do not at this time demand or seek immediate payment in full," Lefkow continued. "They contend that payments to (insurers that oversee Medicaid patients) must be sufficient to sustain the services to members of the classes. This is a reasonable position."

In May, Mendoza told Crain's editorial board that if insurers won, she would lose what little discretion she has to decide who gets paid first. Now she prioritizes payments for agencies that care for the most vulnerable populations, including children and people with disabilities.

In a statement about Lefkow's ruling, Mendoza said attorneys on both sides will continue discussions.

"The lack of a budget for the last two years has created a situation in which we now have more court-ordered and state-mandated payments than we have revenues to cover them," Mendoza said. "The real solution to this crisis is a comprehensive budget plan passed by the General Assembly and signed by the governor. Now."

The case Lefkow ruled on traces its roots to 1992. That's when two separate cases (which combined in 2015) called for Illinois to be required to pay Medicaid providers so that they didn't cut off access to enrollees. Cook County children on Medicaid were a particular focus.

Today, the case includes all the state's more than 3 million Medicaid recipients. It landed back in court as the state's cash crunch grew and payments slowed to insurers, which likewise slowed down payments to doctors, says Tom Yates, executive director of the Legal Council For Health Justice. The Chicago nonprofit is one of three organizations or law firms representing the state's Medicaid recipients.

Physicians have been getting some money, but only up to 30% of what they're owed, Yates says. As a result, they have exhausted credit limits, had trouble making payroll and cut back on the number of Medicaid patients they see.

He said he sympathizes with Mendoza, but notes that Medicaid providers are just as important as other vendors waiting for state dollars.

Attorneys have until June 20 to negotiate a deal.

"Judge to Illinois comptroller: State must pay Medicaid providers more" originally appeared in Crain's Chicago Business.