Overview of Medicaid Cuts in Illinois 2012

Overview of Medicaid Cuts in Illinois 2012
By Tom Wilson, Access Living Health Policy Organizer

Illinois made a shameful historic legislative action this year by making the largest cuts ever in its Medicaid Program. These cuts hurt people with disabilities. In the previous year Illinois spent over 6 Billion dollars on Medicaid. This year they cut 1.6 Billion dollars from the Medicaid budget. This was a cut of 23%.

Medicaid was serving 2.7 million people in Illinois before the cut. The cuts were implemented in the midst of a prolonged economic crisis and because of unemployment and poverty the roles had been increasing as people applied for Medicaid. Medicaid had been used as a safety net in previous downturns and as a counter cyclical economic tool to increase public spending when private spending was in decline. The current cuts are also ironic because while we are cutting spending, eligibility and covered services in Medicaid; the Affordable Care Act calls for a major Medicaid expansion.

Politically we should note that the only significant opposition to the cuts came from the African American legislators, with all of them voting against the cuts.

The state through Senate Bill 2840 has targeted deep Medicaid cuts by using several mechanisms. I will highlight significant cuts but will not record all the 61 areas that were cut.

1.Changing eligibility standards for various parts of Medicaid.
Examples of this include:

a.The Family Care for Adults lowered eligibility standards from 133% of the poverty level where it had been up to 400%. This saves 50 million dollars and affects 26,400 consumers.
b.Terminating the Illinois Rx Drug program cuts off 180,000 people. This is a common complaint we hear from many of our Access Living consumers who are worried about the impact. This will save the state 72 million dollars.
c.Eligibility verification is another state effort. The state will be comparing data bases to see when people have returned to work or no longer qualify. They expect to save 350 million dollars on this. Many observers consider this number to be fantasy.

2. Some Medicaid Optional Services are being eliminated and some are being controlled by setting utilization limits. The state could not drop mandatory services so it took the budget axe to the optional services. Another irony is that optional services often exist because they are cheaper than mandatory services or because they help prevent costly hospitalizations. Some examples of cuts to optional services include:

a.Adult dental (except emergency extractions)
b.Adult chiropractic
c.Adult podiatry (people with diabetes are exempted)
d.Group psychotherapy in nursing homes
e.Pediatric palliative care

These examples total 55 million dollars. Limits were placed on speech, hearing and language therapy, occupational therapy and physical therapy. These cuts saved 3.5 million dollars.

Other optional services that were limited to consumers were: eye glasses replacement and requiring prior approval for purchase and repair of durable medical equipment. For people with disabilities, cuts in physical therapy and greater difficulty getting wheelchairs repaired are serious concerns related to retaining mobility and health.

3.Significant utilization controls are being used to cut the Medicaid budget. These include:

a.No adult Detox services in hospitals
b.They will only pay for vaginal delivery rates for c–sections unless they are proven to be medically necessary
c.They will not pay full rates if hospitals do not meet performance based standards in the prevention of hospital readmissions
d.limits to bariatric surgery
e.limiting coronary bypass grafts
f.They are changing the eligibility standard for qualifying for nursing homes and supportive living arrangements. This means raising the Determination of Need (DON) score necessary to get services from 29 to 37. Because eligibility to home care is linked to eligibility for institutional care, it raises the standard for getting home services. The law also mandates a review of the DON tool and there are plans to possibly eliminate it if the federal officials will approve it.

These cuts ignore potential savings that disability advocates have demanded for many years by making home care the defacto option for long term care services rather than institutions. They also do not address the issues that disability and senior advocates have raised:

1) It should be easier to get home care services and it should require a much higher level of need to go to a nursing home.

2) There has been a great deal of fraud in DON evaluations for entry into nursing homes and once you get in it is hard to get out. Three: When we move people out of nursing homes it is not possible to give them home care on discharge because they do not score the required 29, soon to be 37, on the DON. This may be because they improved in the nursing home or because they never had the requisite 29 score. After a lengthy stay in the nursing home people have been made more dependent and may need some services to successfully reintegrate into the community.

Another area of concern is the setting of a four medication limit for Medicaid spending with prior authorization required to increase this total. This is expected to save the state 180 million dollars and will impact more than 300,000 people who currently have more than 4 prescriptions.

My concerns of the prior authorizations are:

1. Who is going to be doing the authorizations and what competency do they have?

2. Doctors are paid so little by Medicaid that they often don't want these patients. Will they take the time and energy to do the paperwork required to request the prior approval?

3. The state is under staffed now and they don't have enough resources to do all that they need to do now. How will they do this work?

4.While medication review would improve some peoples care, it is budget concerns that are driving these decisions and they are not being made with all the medical input or necessarily based on best practices. Other adjustments include cost sharing with an extremely poor population. The 3.65 dollars per doctor visit copay is a significant barrier to getting timely care. This will save the state 44 million dollars.

5.Rate Adjustments are another way spending is being cut.

a.Academic hospitals will lose 13 million dollars.
b.Cutting HMO wrap around services saves the state 13 million dollars.
c.Cuts in the Medically Fragile/Technology Dependent Medicaid waiver will save 15 million dollars.
d.Eliminating Nursing Home bed holds saves 8 million dollars.
e.By delinking Supportive Living Facility rates from the new nursing home rates due to the tax increase on nursing homes the state saves 20 million dollars
f.Drug discounts previously received by providers through 340B will be passed on to the state. This saves 15 million.

Another area of projected savings is from moving people into managed care programs. These savings are projected to be 16 million dollars. Many previously name brand drugs are entering generic status. This will save the state 77 million dollars.
Tom Wilson
Community Organizer - Health Care