Governor Quinn's Proposed FY13 Spending Cuts to Reduce Medicaid Liability

Governor Pat Quinn On April 19, Governor Quinn announced his proposed spending cuts and to the surprise of no one, the $1.38 billion in proposed elimination and reduction of human service programs will cut a wide swath of pain across Illinois. A fundamental reappraisal of the delivery of human services in Illinois is long overdue, and the depth and scope of the proposed cuts, seem aligned with the Governor's Budgeting for Results initiative. The Illinois human services budget gap of $2.7 billion necessitates changes, regardless of whether the Republican caucus is willing to support an increase in the cigarette tax (which would raise $675 million in new revenue). It should be noted that the Illinois Department of Healthcare and Family Services (HFS) began FY12 owing over $1.3 billion in unpaid bills from the prior year. Some of the proposed cuts (with savings show in thousands) and their effect on the providers of  long term care services and supports to the older adults of Illinois are:

  • Home health: Assume a 10% reduction through utilization controls. $11,000.0 savings
  • Reduce eligibility requirement for nursing facilities (SNFs) by raising DON score from 29 to 37 for new admissions. The DON assessment, screens seniors and people with disabilities prior to admission to SNFs,  SLFs and community based services. The change would also target applicants for all home and community-bases services (including CCP) offered by Dept. of Human Services and Aging. This would reduce annual admissions to SNFs by 1,000 residents annually. $4,400.0 savings
  • Reduce eligibility for supportive living facilities (SLFs) by raising DON score from 29 to 37 for new admissions. The details are the same as above and would reduce annual admissions to SLFs by 1,300 residents.  $3,300.0 savings
  • Moratorium on admissions to Intermediate Care Nursing Facilities: Illinois is the defendant in multiple lawsuits regarding its unique reliance on ICF's to house individuals who have a mental illness diagnosis or a developmental disability. This reduction would impact 14,900 admissions a year. $114,100.0 savings 
  • Reduction of the nursing facility capital rate: This cut will lower the return on investment percentage for the capital rate portion of the nursing facility rate$71,125.5 savings
  • Eliminate paid "bed holds" for adult age 21 and over in SNFs and SLFs. The Governor sees no justification for this expense and additionally, some research indicates that payment for bed-hold increases re-hospitalization of SNF residents (here). $8,305.0 savings
  • Delink SLF rate increases from new nursing home provider tax funded nursing home rate increases. Currently, SLF providers receive 60% of the local average SNF rate of reimbursement (here). This proposed reduction would delink SLF rates from SNF rates and avoid an automatic rate increase to SLFs from the recent assessment-funded nursing rate adjustment to SNFs. $28,800.0 savings

These proposed cuts will most likely trigger a vociferous response from the various constituent groups who will oppose any rate reductions or elimination of services. Truthfully, many programs are simply growing at unsustainable rates (e.g. the number of CCP clients increased 55% from 2004 to 2009). Interestingly, Illinois legislators may find refuge in offending all parties equally, or they may (hopefully) consider outcome measures and program efficacy when considering reductions/eliminations of services. Ultimately, we may find that some constituent groups are better positioned then others to protect their interests. What do you think?

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    Bruce

    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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