The Fiscal Year 2012 budget total for the Department of Healthcare and Family Services is $14.689 billion, which is an increase of $360 million or 2.7% over Fiscal Year 2012 total funds of $14.309 billion.

Stimulus is Gone and the Crisis is Now

There is tremendous uncertainty in the Department of Healthcare and Family Services budget in FY13.  The following are key points related to the growing crisis:

• The Department has not provided a budget that details funding assumptions for individual provider groups but has instead chosen to reflect a lump-sum appropriation for all GRF medical lines.
• The Governor insists there will be no additional resources made available to pay Medicaid bills in his budget summary.
• The Department will end FY12 with over $1.8 billion in unpaid bills, which is over $1.5 billion higher than one year ago.
• The Department estimates an FY13 liability of approximately $11.5 billion, which is more than $600 million over the FY12 figure of almost $10.9 billion. 
• The Administration readily admits the FY13 request of $6.6 billion GRF for the Medicaid program is $2.7 billion short of expected liabilities for the year.  This number could go several hundred million dollars higher. 
• $2.1 billion in GRF-related funds are requested in FY13.  This is $600 million below the FY12 level and reflects the elimination of the one-time FY12 supplemental that was passed in the fall veto session. 
• If no changes are made to the program for FY13 and the requested appropriation is all that is made available to pay the bills, the State will end FY13 with a $4.5 billion backlog. 
• A $4.5 billion backlog would result in an average 143 day payment cycle with some providers waiting well in excess of 200 days to be paid.
• The Department estimates an enrollment of over 3 million individuals in FY13.  This is 158,000 more than were on the rolls in FY12.
• The Department is reducing its GRF funded headcount by several hundred but is requesting a net headcount increase of 41 in FY13.  HFS will argue that the additional headcount is needed to enact Medicaid Reform.

The Big Liability Reduction List

• As a result of the crisis, a new Medicaid Reform Group has been put together to find $2.7 billion in liability savings for FY13. 
• The Department has provided a list in Power-Point format only of $3 billion in potential liability reductions.  If the Administration is true to its word and no additional funding is forthcoming, the General Assembly and Governor will have to agree to 90% of the reductions on the list or find other cuts.
• A few items on the potential liability reductions list include:
• $814 million in optional prescribed drugs – could also do a partial reduction;
• $550 million in 6% rate cuts;
• $74 million elimination of the All Kids program;
• $72 million elimination of Illinois Cares Rx.
• Meetings on liability reductions are in the early stages and are ongoing.

Other Steps

• Eligibility levels beyond those discussed (Family Care rolled back from 185% to 133% of the Federal Poverty Level and elimination of All Kids) will have to be considered. 
• The Aid to the Aged, Blind and Disabled population makes up less than 20% of the overall population but represents almost 60% of the costs.  It is almost a certainty that this population will have to be looked at if the State is serious about reducing liability.

More Issues   

• It’s no secret that implementation of last year’s reform is not going well.  The Department has shown little desire to implement any of the reforms called for in P.A. 96-1501 except for its experimental Coordinated Care (managed care) program.
• Healthcare and Family Services has made news recently for a sternly worded letter that informed the Obama Administration that Illinois was going to implement the reforms that the federal CMS said it would allow us to implement.
• Note that the reforms CMS said Illinois should implement are at odds with the intent of P.A. 96-1501, which intended for those seeking taxpayer funded healthcare to be responsible for proving their eligibility.  The federal government has stated that the State is responsible for disproving an applicant’s eligibility but is apparently not allowing Illinois to move forward with that process. 
• While the Administration is insisting that we must take drastic measures to reduce liability and control the growth of the program, it has submitted a waiver to the federal government requesting that Cook County be allowed to advance the Obamacare Medicaid expansion from January 1, 2014 to July 1, 2012. 
• This waiver request violates two significant provisions of the Medicaid Reform bill (program expansion ban and presumptive eligibility except for pregnant women ban).
• The Cook County waiver would make up to 250,000 people eligible for Medicaid.  The Administration insists there will be no cost to the State because Cook County will continue to cover half of the cost while the federal government matches the rest.