Medicaid Budget Cut Will Lead to $85.5 Million in Lost Federal Funds

(Chicago) -- The state's proposed budget includes an 8.8 percent cut to Medicaid funding for Illinois nursing homes, totaling $171 million, along with a complete elimination of bedhold payments in Medicaid. If the proposed Medicaid cuts go through, the state will lose federal funds in the process. A $171 million cut will lead to $85.5 million in federal matching funds being lost. Illinois will end up losing 50 cents of federal funds for every dollar decreased for nursing home payments.

These proposed cuts come at a time when Illinois already lags behind the national standard for Medicaid funding for nursing homes. Currently, the average payment paid to Illinois nursing homes ranks 44^th in the nation. Average costs at Illinois nursing homes have increased 61 percent over the last nine years, while Medicaid rates paid to these facilities have increased by only 37 percent.

"If the proposed Medicaid cuts come to fruition, many Illinois nursing facilities will close their doors, and resident care will suffer at those facilities that are able to remain open," said Terrence Sullivan, executive director of the Illinois Council on Long Term Care. "Over the past two years, over 50 Illinois nursing facilities have declared bankruptcy due to inadequate Medicaid funding – the proposed $171 million cut to Medicaid will strike a fatal blow to many more Illinois nursing facilities that are currently struggling to cover their expenses."

As 79 percent of a nursing home’s budget goes to payroll, cuts in Medicaid reimbursement will make it virtually impossible for nursing facilities to attract and retain staff members in today’s competitive health care labor market. "The quality of care provided to our state’s nursing home residents is dependent on the caliber and number of staff members who care for them on a daily basis," Sullivan explains. "The proposed budget cuts will lead to thousands of Illinois nursing home employees losing their jobs as nursing facilities scramble to avoid bankruptcy."

According to the Illinois Council on Long Term Care, with a recession budget, one solution to avoiding these devastating cuts to Medicaid is to temporarily increase the provider license assessment. By raising money through a provider license assessment, all monies raised will be matched by the federal government. Increasing the provider license assessment will cost the state nothing and will also prevent the loss of needed Medicaid matching funds. Rather than lose federal funds, an increased license assessment brings more federal funds to Illinois to help solve the state’s budget problems.

"Increasing the provider license assessment is the most practical solution to maintaining the safety net of long term care for our state’s frail and elderly citizens," states Sullivan. "With two-thirds of our state’s nursing home population dependent on Medicaid -- more than 50,000 people -- it is crucial that the State of Illinois prevents the loss of federal monies and provides appropriate funding to meet these elderly residents’ health care needs."

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