Illinois Hospital Association

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October 30, 2009

Legislature Approves New Medicaid Stimulus Funds for Hospitals

We are pleased to report that the Illinois Senate and House today approved a legislative package – Senate Bills 1181 and 1265 and House Bill 542 – to pump nearly $1.1 billion in new federal Medicaid funds into the Illinois economy, including $155 million in new Medicaid stimulus payments for hospitals. These bills, which will not require any new state funding, are expected to be signed into law by Governor Quinn.

This is a considerable accomplishment by the hospital community in light of the state’s financial difficulties. Over the past week, IHA has been working closely with the bill’s sponsors, legislative leaders, the Governor’s Office, the Department of Healthcare and Family Services and supporters of the legislation to work out the details of the legislation to protect the interests of our members. The very quick passage of this legislation is remarkable, given that amendments to the bills were just introduced late yesterday and approved before the General Assembly adjourned its Veto Session today.

We greatly appreciate the outstanding response to our advocacy alert by members who contacted their legislators. This is a great example of how the hospital community working together can make substantial progress on a critical issue, even in challenging economic times.

As final steps, the legislation must be signed by the Governor, and CMS needs to approve a state plan amendment before Medicaid stimulus payments to hospitals can actually be paid out. We believe both steps will be accomplished in the near future.

Background:
Under Senate Bills 1181 and 1265 and House Bill 542, the state will create the Health Care Provider Relief Fund to pay claims for various medical assistance programs (including Medicaid, AllKids and FamilyCare). Through accelerated Hospital Assessment Program and quarterly Medicaid payments to hospitals and the paying down of the state’s backlog of medical assistance bills, the state will be able to obtain additional federal Medicaid matching funds under the economic stimulus law. (The state’s FMAP Medicaid matching rate is at an enhanced 61% through the end of 2010.)

Hospital assessment payments will be accelerated from the first six months of 2011 into the last six months of 2010 – allowing the state to spend that money in 2010 while the enhanced federal match is still in effect.  To accomplish this, the proposal will require the state to make two assessment payments per month to hospitals from July-December, 2010. Hospitals will be required to pay their corresponding taxes twice per month during that same time period. Tax payments for the period January-June, 2011 will be canceled.  The regular once-a-month assessment payments will start up again in July of 2011.  The assessment program runs through June of 2013.

Please note that hospitals which pay more in tax than they receive in increased Medicaid payments will NOT have to pay their taxes on the accelerated schedule.

Doubling the hospital assessment payments during the last six months of 2010, with the enhanced federal match, will result in $230 million of additional federal funds available to the State of Illinois under this proposal. Hospitals would receive approximately $155 million of these additional funds – in one-time stimulus payments – with the remainder being used to pay other Medicaid providers.

The legislation will enable the state to pay down a substantial portion of the state’s backlog of medical assistance bills for all providers, including quarterly Medicaid payments to hospitals, resulting in a total of $1.1 billion in new Medicaid funding for the state over two years. As part of the plan to maximize federal funding, the state is awaiting final federal approval of a state plan amendment to receive matching funds for previous FamilyCare claims.