Rauner's Budget is Bad Medicine for State's Health Services

The following post originally appeared on Crain's Chicago Business.

The much-anticipated “turnaround budget” from Illinois Gov. Bruce Rauner feels more like a “look back,” parading out failed ideas from past years. Rauner says this budget "preserves services to the state's most vulnerable residents”—but a quick review suggests this is far from true. Instead, we see a budget that:

• Further decimates a fragile community mental health system
• Reduces access to lifesaving drugs for people living with HIV and prevention services for those at risk of HIV
• De-funds critical substance-abuse treatments
• Drastically reduces cost-effective breast and cervical cancer screening services
• Makes it harder, and in some cases impossible, for people with disabilities and seniors to get support to live at home
• Reduces funding for evidence-based tobacco prevention and cessation services
• Eliminates Medicaid benefits for preventive health services, including adult dental care
• Eliminates health insurance for workers with disabilities, coverage unavailable in the private marketplace
• Slashes funding for hospitals serving Medicaid populations
• Eliminates funding for care coordination, originally designed to contain costs
• Secures Illinois' position near the bottom of states for per-enrollee Medicaid funding

It's ironic the governor calls these cuts “tough medicine,” when the proposed budget would deny any medicine and critical health care services to so many. We've been down this road before, and here's what we learned:

• Cuts of $113 million to mental health and addiction treatment services in fiscal years 2009-11 increased state costs by more than $18 million due to increased emergency room visits, hospitalizations and nursing home placements.
• Elimination of Medicaid coverage for adult dental services in 2012 caused spikes in emergency department visits for dental problems. In-patient ER treatment for dental problems averaged $6,498, nearly 10 times the cost of preventive care delivered in a dentist's office.
• Disinvesting in HIV prevention will lead to new infections, for which the Centers for Disease Control estimates lifetime treatment costs of $379,668 per case.
• For every dollar Illinois spends on providing tobacco cessation treatments, it has on average saved $1.29. Cutting funding for smoking cessation services will increase costs by up to $32.3 million annually in health care expenditures and workplace productivity losses.

As proposed, the Rauner budget is not only bad for our health, but it's bad for businesses, too, likely resulting in decreased productivity, loss of jobs and economic activity, and greater health care costs for employers. Some examples:

• The proposed child care “intake freeze” and increase in parent co-pays will lead to increased absenteeism as employees will take time off to care for children. Such absenteeism already is costing American businesses nearly $3 billion annually.
• Planned cuts to Illinois hospitals are expected to result not only in the loss of more than 12,500 jobs but $1.7 billion in economic activity.
• Cuts in funding for health care services, such as cancer screening, most certainly will increase the health care costs of Illinois businesses. One study of major employers found that patients with cancer cost five times as much to insure as patients without cancer ($16,000 versus $3,000 annually).

We urge the governor to listen to the critics of this budget and learn from Illinois' past experiences. We stand prepared to support him on this learning curve.

Barbara A. Otto
CEO
Health & Disability Advocates

Safety Net Hospitals Spared, But Not Much Else in Medicaid Bills

Although Medicaid is a state & federal program, the City of Chicago got involved in the raging debate in Springfield. On Tuesday, May 22, 2012, Alderman George Cardenas (12th Ward) called a meeting of the Chicago City Council Committee on Health and Environmental Protection to discuss the way Governor Quinn’s proposed Medicaid cuts would affect medical care providers, specifically Safety Net Hospitals. Those hospitals have a client base that is primarily those without insurance, or those insured via Medicaid, which puts the hospitals in a position to be disproportionately affected by any Medicaid cuts.

Hospital CEOs, including those representing St. Anthony's, Mercy Hospital and Norwegian American Hospital and others, and community leaders including Metropolitan Chicago Healthcare Council, Health & Disability Advocates, Catalyst Schools, Lawndale Christian Development Center and the National Latino Education Institute, testified in front of the committee. Each person spoke about the impact of the cuts to their constituencies. The cuts would not only mean a loss of accessible healthcare in Chicago communities but also a steep decline in jobs, as many of the hospitals fuel the economic engine in the communities they serve.

Turns out some of the voices were heard: SB 2840, the final Medicaid budget bill (Named the "Save Medicaid Access and Resources Together (SMART) Act"), softens the original blow—sparing safety net hospitals from proposed provider reimbursement cuts, and lowering cuts overall from $240 million a year instead of $675 million. Passed by both houses on May 24, 2012, it will go to the Governor's desk for signature and will most likely be signed.

Unfortunately, many other health care programs for low income people and those with disabilities in Illinois were not spared in the bill. A full list can be found here, but the cuts include:

• Elimination of Illinois Cares Rx
• Family Care Eligibility reduction to 133% FPL (from 185%-400% FPL)
• Elimination of General Assistance Medical
• Adult Dental Eliminated (except in emergencies)
• 4 Prescription per month limit

These cuts will be devastating to many vulnerable populations and advocates are gearing up for the anxious phone calls from clients and providers.

The one silver lining in yesterday's legislative action is that the Cook County 1115 waiver (HB 5007) passed both houses which will allow Cook County Health and Hospital System to expand access to care for about 250,000 low income adults (below 138% FPL) in the area. Under the Affordable Care Act, their health insurance will be covered by the federal government so this will save the State $36 million per year. Of course, this is dependent on the Supreme Court upholding the ACA. Assuming it does, this early expansion of Medicaid is a huge kickstart toward ACA implementation in Illinois.

One baby step forward, two giant steps back:

So, while we mourn the Medicaid losses in SB 2840, we need to celebrate the gains in HB 5007. Nevertheless, it's important to keep talking about the life-threatening and costly implications of the stunning loss of access to affordable, quality health care that will be triggered by the signing of this "SMART" law. We also need to share clear information about the potential benefits of implementation of the Affordable Care Act, even though the ACA will not completely undo the economic cost and harm set forth in yesterday's decision.

Stephani Becker
Health & Disability Advocates, project director of Illinois Health Matters

Medicaid plan would shake up the way hospitals are paid

A draft copy of Medicaid reform legislation closely resembles a proposal that Gov. Pat Quinn made last month. However, it appears that it would reform the way some medical providers are paid and potentially avoid immediate cuts to their rates.

The plan would transition hospitals to a payment plan known as an All Patient Refined Diagnosis Related Groups (APR-DRG) system, according to a draft version of the amendment obtained by Illinois Issues. The legislation covers more than 400 pages.

Quinn’s office did not respond to questions about the draft amendment.

APR-DRGs were created by 3M Health Information Systems for the Center for Medicaid and Medicare Services. “The design and development of the [Diagnosis Related Groups (DRGs)] began in the late '60s at Yale University,” said an overview of DRGs from 3M. “The initial motivation for developing the DRGs was to create an effective framework for monitoring the quality of care and the utilization of services in a hospital setting. The first large-scale application of the DRGs was in the late '70s in the state of New Jersey. The New Jersey State Department of Health used DRGs as the basis of a prospective payment system in which hospitals were reimbursed a fixed DRG specific amount for each patient treated.” The system takes into consideration the complexity of the health issues facing patients that hospitals are treating.

Starting in October 2012,The Department of Health and Family Services would determine the reimbursement rates for inpatient services at hospitals under the APR-DRG payment plan, but Hospitals would still get paid current rates. DHFS would work with the Illinois Hospital Association and a "hospital technical advisory group" on a path to transitioning to the APR-DRG rates by the end of Fiscal Year 2014.

Danny Chun, vice president of corporate communications and marketing for the Illinois Hospital Association, would not comment on specifics of the amendment but said rate cuts to medical providers should be a “last resort.” “There are other options and alternatives that we have been talking to everybody about over the past weeks and months that we think can generate substantial savings and revenues,” Chun said.

Quinn’s original plan would have cut provider reimbursement rates by $675 million. Quinn also proposed a $1-a-pack cigarette tax increase to protect the program and providers from deeper cuts. Such a tax increase would likely be moved in separate legislation.

The draft amendment calls for savings in areas that Quinn outlined in his original proposal. Under the plan:

• The Department of Healthcare and Family Services would no longer be required to provide adult dental care or eyeglasses. This does not mean that it would necessarily eliminate eyeglasses. It could also offer to scale back the program by offering replacements less often.

• Illinois Cares RX, a program that provides prescription drug health to seniors, would be eliminated.

• All patients would be limited to four prescriptions a month. Three of them could be brand name drugs. Patients would pay a $2 copay for generic drugs. They currently have no copay for generics.

• Coverage for group therapy in nursing homes, adult chiropractic care and in patient detox programs would be eliminated.

• Repairs to or replacement of medical equipment, such as wheelchairs and prosthetic devices, would require prior approval from DHFS. The proposal also contains provisions targeting fraud and calls for the state to contract with a vendor to help DHFS verify the eligibility of Medicaid patients.

Sen. Dale Righter, a member of a legislative working group charged with finding Medicaid savings, said he had not seen the amendment. He said he expects Quinn to file his plan by the end of the week. Righter said the rates paid to Medicaid providers have been a pivotal part of negotiations. “I know there is still a lot of talk going on about [provider reimbursements], and I think we’re going to learn a lot more in the next couple of days,” he said.

That's not to say, however, that provider rate cuts would not be a part of the final legislation. Another possibility being considered would spare so-called safety net hospitals — which take a high rate of Medicaid patients and are often in underserved communities — from rate cuts while other hospitals would have to bite the bullet on reductions. Those close to negotiations say the overall plan is still a work in progress and that Quinn’s final proposal would likely see changes from the amendment that is currently circulating.

Righter, a Republican from Mattoon, said it is unlikely that the working group will present competing legislation. “I don’t think it will shake out that way. There will be competing ideas out there, but I don’t think you’re going to see a governor’s bill and a working group’s bill, I don’t think it will break out like that.” 

By Jamey Dunn and Ashley Griffin
Illinois Issues Blog - The official blog of Illinois Issues magazine, published by the Center for State Policy and Leadership at the University of Illinois Springfield

(Originally posted here on 5/16/12)

5 Ways Health Care Reform Will Benefit Illinois Small Businesses

Illinois has strong, vibrant neighborhoods and small businesses play a vital part in those communities. However, while small businesses are working to meet their bottom line, it can be challenging for them to afford to provide health insurance for their employees. According to the Small Business Majority, an average of 86% of small businesses owners who don't offer health coverage to their employees say they can't afford to provide it. The Affordable Care Act (ACA) has put into place reforms – some right now and some rolling out later – that will make it easier for the owners of small businesses to buy affordable insurance. Below we list five ways that health care reform will benefit Illinois small businesses and their employees.


At Ruby's Restaurant, Health Care May Be On The Table - Images by Jay Dunn

1. RIGHT NOW: Since March 2010, tax credits are being offered to small businesses owners with 25 or fewer full time equivalent employees in order to help them offset the costs of providing health insurance. Until 2014, small businesses who pay for at least half of their employees’ health care premiums will receive a tax credit to offset 35% of those premium costs. Starting in 2014, the tax credit will increase: for those small businesses who buy insurance through the insurance exchange (see #5 below), the tax credit increases to 50%. September 15th is an important deadline for filing so check out the tax credit calculator here to see if you are eligible.

2. RIGHT NOW: Small businesses often struggle with unpredictable and often steep health insurance premium increases from year to year. One of the priorities of the Affordable Care Act is to implement consumer protections so that insurance companies are more transparent and accountable with things like premium increases. As of September 1, 2011, health insurers seeking to increase their premium rates by 10 percent or more must submit their request to state or federal reviewers to determine whether they are reasonable or not. This rate review program will bring more predictability to health insurance costs and in many cases will lower costs for small business owners.

3. RIGHT NOW: Many small business owners cannot purchase affordable insurance, because they have a pre-existing condition. A pre-existing condition is a physical or mental health condition, disability or illness that you have before you enrolled in a health plan. If you or your employees are uninsured and have a pre-existing condition, you may be eligible for the Illinois Pre Existing Condition Insurance Plan, which is an insurance plan that was established by the Affordable Care Act. Questions? Call the Toll Free Number: (877) 210-9167, or email your question directly to IPXPInquiry@healthalliance.org.

4. LATER: Under the Affordable Care Act, denying health coverage or excluding benefits due to a pre-existing condition will no longer be allowed. As a result, if you have a pre-existing condition that has prevented you from buying affordable insurance for yourself and your employees, on January 1, 2014, it will not make you uninsurable any longer. This change is already in place for children under age 19.

5. LATER: The new health reform law establishes a competitive healthcare marketplace, commonly known as an “insurance exchange” run by each state or the Federal government. Slated to be up and running by the beginning of 2014 in Illinois, the Exchange will make purchasing insurance easier for individuals and small businesses by giving them the power to compare health care plans in one digital hub. The Exchange will also ensure that quality health insurance options are available – and that subsidies are also available to those who need them. These online marketplaces will create competition among insurance companies that will help to drive down the costs of insurance. More information about Illinois’ progress toward establishing an Exchange, can be found here.

If you have questions about the new health care law and how it affects you or your small business, submit your questions here and we will write you back.

An employee and customer at Ruby’s. The owners of the restaurant currently can’t afford to pay for health insurance for their employees, but that could change with the Affordable Care Act reforms