Safety net hospitals call for crackdown on Medicaid eligibility

By Jamey Dunn

The state’s safety net hospitals say Illinois should crack down on Medicaid eligibility instead of cutting rates paid to health care providers or services to those who truly need the program.

“Every day, I see people in my office, and I can’t imagine why in the world they are on the Medicaid roles. They have income, they have the means to obtain insurance,” Mark Newton, president and chief executive officer of Swedish Covenant Hospital in Chicago, said at a recent Illinois House committee hearing in Chicago. “We have employees who elect not to take the coverage and go on Medicaid,” Newton said. “If an employer is offering health insurance today, why is somebody allowed to go on Medicaid?”

Newton said his workers also see indications of potential fraud. He said patients with pacemakers come in with their pacemaker registered under one name and their Medicaid coverage under another name. “Now how does that happen?” he asked.

Newton joined a group of the so-called safety net hospitals, which are located in low-income and medically underserved areas of the state, that put forth a list of suggestions as the state looks to cut $2.7 billion in Medicaid growth. Administrators of hospitals in the association say that without the care they provide, many Illinoisans would find themselves in health care deserts with no other options nearby. Many of the hospitals are also the largest employer in the areas they serve.

One of the key components of the proposal from the Illinois Association of Safety-Net Hospitals is tightening they way the state checks eligibility. The group estimates that100,000 to 300,000 patients currently on the Medicaid rolls earn too much to qualify for the program and that $400 million to $1.2 billion could be saved if Illinois took more steps to ensure that all who are receiving Medicaid benefits actually qualify for them. “The system is not being administered effectively to put those dollars where they’re going to have the most impact,” Newton said.

But the state has already hit roadblocks on efforts to determine eligibility. It took a year for the federal government to approve a plan to check state records to ensure that applicants are residents of the state. The feds have yet to make a decision about another provision that would require applicants to regularly provide proof of income. The association also says Illinois should capture more federal matching dollars and determine if some patients or services may be covered by alternative options, such as the federal Medicare program. The plan also calls for charging a $10 copay to patients who go to the emergency room for nonemergency care. A federal waiver would be required for such a move. Overall, the group says the proposal could save about $1.4 billion. The hospitals are calling on lawmakers to consider the proposal before cutting provider rates or care to patients.

Administrators from the safety net hospitals said that reductions to provider rates and services covered by Medicaid could leave the already fragile institutions “near or at complete breakdown.” Dennis Ryan, vice president of external affairs at the Holy Cross Hospital, said his institution on the south side of Chicago  already came “perilously close to closure” four years ago. “Lives and well beings can be at stake, and undue cost cutting risks are both unethical and immoral,” Ryan said. “You cannot fly an airplane without a wing.” Providers said that the looming $2.7 billion in cuts is already affecting their operations by making it difficult to borrow money to cover budget shortfalls. “A number of banks are now telling us that they will not extend letters of credit because Illinois is not the place that they want to do business,” Newton said.