Rare bipartisan effort in Illinois renews hospital program

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CHICAGO – Illinois Gov. Bruce Rauner signed legislation Monday overhauling the state’s $3.5 billion hospital assessment program, which is used to leverage extra Medicaid matching funds rural and safety-net hospitals rely on to stay afloat.

The redesign of the program that currently uses 2005 and 2009 data is aimed at modernizing the program and how reimbursements are doled out with an eye on meeting the latest rules imposed by federal authorities in order to leverage the funds.

The revised two-year program laid out in Senate Bill 1773 now goes to the federal government’s Centers for Medicare & Medicaid Services for review and approval. The current program expires at the end of June.

“This updated and redesigned hospital assessment program is of critical importance to our hospitals….it will strengthen the backbone of Illinois’ Medicaid program,” said Illinois Health and Hospital Association board chairman Bill Santulli.

All hospitals receive funding under the program which prioritizes safety-net and rural critical access hospitals that will receive more than half of about $360 million in new funding being allocated. While healthcare consolidation has continued amid ongoing operational challenges and Affordable Care Act demands, most rural and critical care access facilities operate on their own and so are most dependent on the extra Medicaid reimbursement.

A special assessment is levied upfront against the state’s more than 200 not-for-profit hospitals and 50 health systems and the revenue is in turn used to generate federal matching funds totaling $3.5 billion.

About $2.8 billion goes back to hospitals for Medicaid services while $750 million goes to the state for Medicaid-related non-hospital services. Several stand-alone Chicago hospitals have expressed concerns over the revisions but they continue to work with lawmakers to improve their funding levels.

“The new program draws down as much federal revenue as we believe is permissible and helps hospitals transition to more effective healthcare delivery models over time,” said Department of Healthcare and Family Service director Felicia Norwood.

Republican and Democrats stood with Rauner at the bill signing. The legislation passed by overwhelming margins in a rare display of bipartisan support that’s been in short supply, highlighted by an impasse that left the state government without q budget for two years.

The impasse ended in July when Democrats — with the help of some Republicans -- passed a budget package with $5 billion in tax hikes over Rauner’s veto.

Several lawmakers said the bipartisan cooperation on the hospital assessment package provides a model for work on a fiscal 2019 budget, but acrimony runs deep and has been amplified by a heated governor’s race.

The state's primary elections are next week and the general election is in November. A handful of candidates are vying for the Democratic nod and Rauner faces a challenge from a state representative.

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