Cutbacks At Loretto Hospital As Insurers Delay, Reject Payments
CEO George Miller Jr. recently gathered a small group of employees in the Loretto Hospital intensive care unit he plans to close.
The hardwood floors and paint job looked fresh. The unit was renovated in the last decade.
But Miller said the hospital, a community anchor on the West Side that treats mainly low-income patients, isn’t getting paid fast enough for the work doctors do. Insurance companies, including Cook County’s government health insurance plan, owe the hospital about $13 million, Miller said.
So he’s moving Loretto’s intensive care unit to another part of the hospital, shrinking the number of floors where patients receive care from five to three, and laying off some workers. He said he doesn’t yet know how many people will lose their jobs.
“We can’t have multiple units open and provide care and not be reimbursed,” Miller said. “Until we get money, we have to consolidate services.”
Miller’s frustration is common among doctors and hospitals across Illinois. Former Republican Gov. Bruce Rauner largely privatized the Illinois Medicaid health insurance program, which is for people who are low-income and disabled. So now hospitals and doctors mainly bill private insurers with lucrative state contracts to get paid for the medical care they provide.
Doctors and hospitals have complained for years that insurers are slow to reimburse, if they pay at all.
The transparency fight continues
State lawmakers are once again pushing for new laws that would hold private Medicaid insurers more accountable and transparent. The bills under consideration would require insurers to reimburse hospitals and doctors faster, and report medical claims they receive and pay.
But time is running out. The Illinois legislative session ends May 31.
Illinois Comptroller Susana Mendoza, who pays the state’s bills, joined Miller at Loretto as he talked about the ripple effect of not getting paid on time.
“When the providers call our office and say, ‘Hey, where’s our money? We haven’t been paid in months.’ We respond: We already paid it out,” Mendoza said.
She wondered aloud: “Where’s the money going?”
Samantha Olds Frey is executive director of the Illinois Association of Medicaid Health Plans, the main lobbying group for private Medicaid insurers in the state. She says insurers do account for every state dollar they get and spend with the Illinois Medicaid agency. But it’s hard to break that down into a clear report for lawmakers and the public, she said.
“I don’t think the issue is a lack of transparency,” Olds Frey said.
For Loretto specifically, Olds Frey disputes that insurers owe the hospital around $13 million. Insurers have frequent meetings with Loretto, go over claims that were submitted incorrectly and pay out settlements on others.
Loretto’s game plan
Miller said he already was working on a plan to wind down services at Loretto and provide more care in the community as insurers across the country want patients treated in cheaper, outpatient locations. Think a doctor’s office or an urgent care center instead of an expensive hospital.
But the cash crunch from insurers not paying on time and denying claims fueled Loretto’s consolidation efforts, Miller said.
Private Medicaid insurers take on average five months to reimburse Loretto, and they deny about a quarter of claims the hospital submits, Miller said.
Of the $13 million tab, Cook County’s insurance program called CountyCare owes Loretto the most, around $4 million, Miller said.
In a statement, county health system spokeswoman Caryn Stancik said CountyCare prioritizes paying hospitals and clinics that largely treat low-income patients, even when the state is slow to pay CountyCare.
Plus, the health plan pays Loretto and other hospitals in its network in some cases before they file claims to get reimbursed. Loretto gets about $400,000 a month this way.
“As a provider-led plan working in the safety-net space, there is no plan in Cook County that is more sensitive to the challenges of a community hospital than CountyCare,” Stancik said in the statement.
Kristen Schorsch covers Cook County politics for WBEZ. Follow her @kschorsch.