Judge: Illinois Must Make Medicaid Payments Faster

A federal judge on Wednesday agreed that Medicaid service-providers must be paid faster despite the ongoing budget impasse. 

But Judge Joan Lefkow declined to say how the state should go about making those payments, instead urging attorneys for Medicaid patients to continue negotiations with state comptroller Susana Mendoza. 

Lefkow acknowledged in her three-page ruling that Mendoza is in an “unenviable” position of having to decide which government services get funded first while there’s no state budget and Illinois’ backlog of unpaid bills continues to grow.

Lawyers for the state, who represent Mendoza, had argued that faster Medicaid payments would come at the cost of funding other key services, such as education or state worker pensions.

“Although the court means no disrespect to the Comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders,” Lefkow wrote.

Lefkow added that the state “failed so far to demonstrate a lawful basis” to disregard her earlier order that Medicaid reimbursements continue, with or without a budget. The judge said the patients’ request to speed up Medicaid payments is “reasonable,” and gave both sides until June 20 to find a way to make payments faster. 

Medicaid, the joint state-federal health care program for poor people, is the single most expensive government service Illinois provides. Money for schools, pensions or debt service will all be in jeopardy in favor of Medicaid, according to the comptroller’s office.

“The lack of a budget for the last two years has created a situation in which we now have more court-ordered and state-mandated payments than we have revenues to cover them,” Mendoza said in a statement after Lefkow’s ruling.

Last month, Chicago public radio station WBEZ first reported that the health care providers were threatening to stop seeing low-income Medicaid patients because they can’t afford to wait up to six months to be reimbursed by the state for the coverage they provide. Their lawyers argued to Lefkow that payments from the state are so behind that Illinois is now in violation of her earlier order that the payments continue, even while Democratic lawmakers and Republican Gov. Bruce Rauner remain in a stalemate over passing a budget.

Even though there’s been no state budget, several court orders and state statutes have dictated that many key government services continue to be paid for. Those mandates mean the state has been spending billions of dollars it doesn’t have. That’s caused the current backlog of bills to balloon to $14.9 billion, according to the comptroller’s office.

Attorneys for the state had asked Lefkow to make her ruling effective on July 1, the beginning of Illinois’ fiscal year and the deadline for Rauner and lawmakers to pass a state budget. They said the delay could avoid an immediate credit downgrade to the state’s bond ratings. 

But they also included a political appeal to Lefkow, saying such a ruling would “also would send a message to the Illinois General Assembly and Governor that they have until June 30 to resolve the State’s budget impasse and avoid the consequences of the Court,” Assistant Attorney General Brent Stratton wrote on behalf of the state.

If there continues to be no budget, officials in the comptroller’s office warned Lefkow that the office will have to find money from somewhere else in order to comply with her ruling that Medicaid must be prioritized.

“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.”

State lawmakers are set to hold budget hearings in Chicago on Thursday, but there’s still nothing to suggest a deal to end the impasse is imminent.

Court orders have kept much of the 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.