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Hospitals Urge Illinois House to Reject Devastating Medicaid Cuts

Thursday, May 12, 2011 General News J E 4
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Proposed $463 million payment reductions to hospitals will jeopardize patient access and care

NAPERVILLE, Ill., May 11, 2011 /PRNewswire-USNewswire/ -- The Illinois Hospital Association (IHA) is calling on the Illinois House of Representatives to reject deep reductions in Medicaid payments to hospitals that would undermine the state's health care delivery system and jeopardize patient access to quality care. The House Appropriations-Human Services Committee is scheduled to consider a budget amendment (House Amendment #1 to House Bill 3717) late Wednesday afternoon that includes a $463 million reduction in Medicaid payments to hospitals (on an annualized basis).

"These drastic cuts are wrong and unnecessary, and will only harm patients, hospitals and the health care delivery system," said IHA President Maryjane A. Wurth. "Many hospitals across the state are already struggling to survive in the current economic downturn."

A recent IHA survey found that nine out of ten responding hospitals would have challenges meeting day-to-day operations, and nearly two-thirds would be forced to cut services and lay off staff, if $300 million in Medicaid cuts were imposed under the Governor's budget proposal.  A new IHA analysis conducted this week found that the much larger Medicaid cuts of $463 million, coupled with a $200 million cut to hospitals under proposed reductions in the Workers' Compensation medical fee schedule, would result in a nearly 40 percent increase in the number of Illinois hospitals operating in the red.  That would mean nearly half of the state's 200 hospitals would be operating at a loss.

"These Medicaid cuts would be devastating, forcing many hospitals to eliminate health care services and jobs, and in some cases, close," said IHA Executive Vice President Howard Peters. "Health care 'deserts' will result, with services no longer available in many parts of the state for everyone, not just Medicaid patients."

These state cuts would be in addition to the $8 billion in federal Medicare reductions to Illinois hospitals that began last year under the health care reform law and that continue for another nine years.

IHA is also urging the Illinois House to use the revenue projections of the highly respected, nonpartisan Commission on Government Forecasting and Analysis in setting appropriate spending levels for the state budget.  The Commission this spring issued a state revenue projection of $34.3 billion, more than $1 billion above the estimate now being used by the House.  Over the past decade, the Commission's revenue forecasts have been highly accurate – on average, being within 1.4 percent of the actual revenues generated in those years.

"Using understated revenue projections will lead to unnecessary and harmful spending cuts that will hurt our state's most vulnerable populations, including the young, the elderly, the disabled, expectant mothers, and the newly employed," said Wurth.

IHA has offered a series of recommendations to the General Assembly on better alternatives to blunt cuts that will generate substantial cost savings for the Medicaid program and additional revenues for the state. The cost savings, amounting to more than $100 million, would result from various approaches, including reducing preventable readmissions and unnecessary utilization.  

IHA also supports the use of interfund transfers that would allow the state to quickly obtain $90 million in additional federal Medicaid funds by maximizing the state's temporarily higher matching rate under the economic stimulus law. The House recently approved House Bill 2934 on a unanimous vote of 118-0 to authorize such transfers.  The bill is now pending in the Senate.

About the Illinois Hospital Association

The Illinois Hospital Association, with offices in Naperville, Springfield and Washington, D.C., is an advocate for 200 hospitals and health systems and the patients and communities they serve. For more information, visit www.ihatoday.org.

SOURCE Illinois Hospital Association

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