Ill. Medicaid cuts fall short of projected savings

CHICAGO – Savings from cuts to the Illinois Medicaid program have fallen short by $464 million, about 30 percent of the expected $1.6 billion in projected savings that Gov. Pat Quinn pushed for last year.

In the first public report on how cuts to the health care safety-net program are being carried out, Illinois Department of Healthcare and Family Services Director Julie Hamos detailed the actual savings of cost-cutting measures so far. Hamos reported to the House Human Services Appropriation Committee on Thursday in Springfield.

Repairing a long-term deficit in the Medicaid program was a top legislative priority for Quinn. Last June, the Chicago Democrat signed a multilayered package of cuts and taxes, known as the SMART Act, including a cigarette-tax increase of $1 per pack.

Some cuts have gone as planned, such as dropping Medicaid coverage for thousands of working parents and eliminating coverage of dental care and visits to chiropractors for adults.

"We were able to achieve a billion dollars in health savings and that's never been done in Medicaid history," Hamos told The Associated Press in a telephone interview after giving the report.

But a projected savings of $350 million from making sure only people who are eligible receive Medicaid was too optimistic, Hamos said. An outside vendor started the work in January. Reston, Va.-based Maximus Inc. was hired to improve the system, eliminate a backlog and make recommendations to state caseworkers.

Hamos said that it takes time to implement a large effort to check the eligibility of 2.7 million Medicaid recipients. Her new estimate for savings from the eligibility crackdown is $150 million for this year.

"This company had to hire and train 500 people. They had to rent office space," Hamos said. "The company (Maximus) believes (this process) should take seven months. We made them do it in 90 days, and by Jan. 2, they were up and running."

State Rep. Patti Bellock, R-Hinsdale, said she's alarmed by the report because of the uncertainty over what actual savings will be achieved. But, she added, "there was so much done in such a short period of time. You know that everything isn't going to bring about the savings" that were projected.

Another obstacle to achieving all the projected cuts: The federal government denied permission to carry out some planned cuts that would have changed the way people are deemed to be eligible for nursing home care, preventing savings of several million dollars.

The Illinois Hospital Association won changes to rules that will mean $30 million in cost savings won't be achieved, Hamos said. The state had planned to stop paying for entire hospital stays when certain mistakes happen — such as a surgical sponge left inside a patient. But that plan "was basically gutted," Hamos said, after the hospital association made its case to the Joint Committee on Administrative Rules.

Danny Chun, of the Illinois Hospital Association, countered that the original draft rule violated federal regulations. The hospital group and Illinois officials have since negotiated a compromise that will mean a deduction of $900 on a hospital bill when there's a hospital-acquired infection or other mistake, Chun said.

The Medicaid cuts limit patients to four prescription drugs per month without prior approval. Rep. Greg Harris, a Chicago Democrat, said he'd like to see future reports on how that's going for people with severe mental illnesses. If most are gaining authorization for their drugs because they clearly need them, Harris said, it may be wiser to drop the red tape.

"Are we just creating bureaucracy?" he asked. "I think we need to be monitoring for unintended consequences that push the costs out someplace else."


AP Medical Writer Carla K. Johnson can be reached at

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