A federal judge in Chicago signaled Tuesday that she would mandate the Illinois state government to pay Medicaid providers faster, bumping more than a billion dollars in late payments to the front of an already long line of unpaid bills.
While no formal decision was made in court, U.S. District Court Judge Joan Lefkow is expected to issue a ruling Wednesday. Her decision could further complicate the state’s struggle to pay down a more than $14 billion bill backlog as the state enters its third year without a budget. The ongoing political war between Democratic legislative leaders and Republican Gov. Bruce Rauner already had the state struggling to prioritize payments to vendors and agencies that provide other critical services.
“I don’t see myself telling the comptroller anything but ‘you have to pay,’” Lefkow said to attorneys in court Tuesday.
Prioritizing Medicaid payments during the budget impasse could have big consequences due to the sheer size of the program: The joint state-federal health care system for poor people represents the single most expensive service Illinois provides. The state partially reimburses doctors who see low-income patients for the health care they provide.
But in court documents filed last month, attorneys for Medicaid patients argued the state is in violation of Lefkow’s earlier ruling because of the late reimbursement payments. The call for faster reimbursements came from doctors, health care organizations and a group of managed care organizations, or MCOs, which all say they may not be able to continue serving Medicaid patients at all if the state doesn’t reimburse them faster.
In sworn statements last month, the MCOs said the state owes them hundreds of millions of dollars. Insurance giant Aetna said the state owes it $582 million, and Meridian said it’s owed $501 million.
The attorneys for Medicaid patients acknowledge the state is months late in paying them due to the increasing backlog of other state bills. But they warn that if payments continue to come too slowly, the state’s Medicaid system would crumble as doctors start to refuse to see low-income patients because they’re not getting reimbursed for it.
“We’re not taking a political position here,” said Tom Yates, an attorney for Medicaid patients who argued for the original consent decree. “This system needs to stay intact while the political parties fight this battle out about the direction of the state. Poor people and normal citizens of Illinois should not suffer because these folks can’t come to a budget deal.”
At stake could be the state’s payments to schools, state employees’ paychecks, pensions and state debt payments, attorneys for the state have said. They argue that if Medicaid moves up on the list of bills to be paid, one or more of those other core government services will be forced to wait longer to get its money.
“If a court rules against us, we will run out of money. And not only that … by default I’ll be in violation of court orders, because there won’t be enough money to cover all of the court-mandated payments,” Illinois Comptroller Susana Mendoza said before Lefkow’s decision.
Lefkow said she’s reluctant to tell Mendoza what other services would have to get bumped down the list to accommodate Medicaid.
Court orders have kept much of the Illinois state government operating despite the lack of a budget, which authorizes the state to spend taxpayer money. Besides Medicaid, judges have also ordered the state to pay state employees’ paychecks and fund the child welfare system.
A Cook County judge recently ordered the comptroller to stop delaying paychecks to state legislators. Meanwhile, social service providers who have not received any state support since January have sued for payments, but judges have ruled that their contracts with the state don’t allow for payments unless there’s a budget.
Tony Arnold covers state politics for WBEZ. You can follow him at @tonyjarnold.