Reforms Reported to Strengthen Medicaid Finances by $800 Million
Ensures Stronger Finances for Those in Need
Now Blocked by Federal Government

            CHICAGO – Following federal attempts to block parts of a bipartisan Illinois reform to strengthen the finances of Medicaid, U.S. Rep. Judy Biggert (R-Hinsdale),U.S. Sen. Mark Kirk (R-Ill.), and ten other members of the Illinois Congressional delegation sent a letter to CMS (Centers for Medicare and Medicaid Services) Administrator Donald Berwick objecting to the agency’s decision.  State Rep. Patti Bellock (R-Westmont) alerted federal lawmakers of CMS’s recent decision to disallow a provision of the bipartisan Illinois Medicaid reform law, which Bellock spearheaded to curb the fraudulent collection of health benefits intended for low-income families.

            Medicaid supports the health care of low-income Illinois citizens.  This program is under stress and would be strengthened if measures were taken to ensure funding for intended families by excluding fraud that grants taxpayer funding to people who are not low-income or were not from Illinois.

             To strengthen the troubled finances for Illinois Medicaid, the state legislature adopted bipartisan reforms in 2010 requiring beneficiaries of taxpayer support to show they had low incomes and were residents of the state.  Specifically, the federal government blocked reforms that required applicants provide one month of income documentation and ask applicants to show proof of residency. The reforms—designed to strengthen Medicaid’s finances by cutting fraud and decreasing costs—were planned to take effect on July 1.

           “The federal government should be working with us—not against us—to protect Illinois’ Medicaid system for those who need it most.  In these tough economic times, we should not allow any taxpayer-supported program to be abused.  Unfortunately, in this case, CMS concluded that the Administration’s health overhaul is standing in the way of reform here at home,” said Rep. Biggert, who is a co-sponsor of H.R. 1683, to preserve the flexibility of individual states to implement reforms like those passed in Illinois.

           “There are 2.5 million Illinois residents on Medicaid,” Senator Kirk said.  “I applaud Rep. Bellock’s championing of these common-sense income and residency verification reforms which would ensure more health care for legitimate low-income Illinois residents and save taxpayers up to $800 million.  Unfortunately, the federal government is insisting on eliminating these anti-fraud measures, weakening the financial future of Medicaid.”

           According to the Government Accountability Office, Medicaid represents the largest and fastest-growing part of the Illinois budget, which could force cuts to programs like education.  According to a National Governors Association Fiscal Survey of States, Medicaid mandates consume an average of 22 percent of state budgets nationwide.  In 2009, Medicaid comprised an estimated one-third of the state budget of Illinois.

            Between the 2009 economic stimulus package and the Administration’s health care reform, new Medicaid eligibility requirements were imposed on the states.  These are called “Maintenance of Effort” (MOE) restrictions, which lawmakers say will create new difficulties in managing unprecedented budget crises.  The Illinois Hospital Association reports that the State of Illinois accounts for 4.1 percent of America’s Medicaid services, but receives less than 3.3 percent of total federal Medicaid funding—a shortfall that costs Illinois taxpayers $1 billion per year.

            "Our Medicaid reforms would save Illinois taxpayers $800 million and were years in the making," said State Representative Patti Bellock.  "To have them blocked is a huge disappointment.  I appreciate the willingness of Rep. Biggert, Senator Kirk, and the rest of the Illinois delegation to push back in Washington and help get Illinois the flexibility it needs to combat fraud and preserve Medicaid funds for the Illinois families who need it.  With our state budget facing its biggest crisis in decades, and numerous services facing cuts, this is no time for the federal government to stand in the way of commonsense reforms."

           The Illinois measure was an attempt to meet these new and pressing fiscal challenges. The bill—H.B. 5420—received overwhelming bipartisan support, passing the Senate by a vote of 58-0-1.  The House Concurred in the reforms by a vote of 111-4-2 and the provisions were signed into law as P.A. 96-1501. 

            CMS's decision resulted from its interpretation of a provision in the Administration's health care overhaul that prohibits states from implementing new income and residency verification procedures.  Kirk, Biggert, and other Illinois lawmakers asked the agency to reexamine its decision, and allow Illinois to move forward with reforms that would combat Medicaid fraud, which is draining state resources sorely needed for other services.

           In January, several governors sent a letter to the president and congressional leadership asking for flexibility and to be absolved of MOE requirements. The governors’ letter asked for relief from these new federal mandates and for the liberty to better manage their respective Medicaid programs. 

          “The situation in Illinois is proof positive that states need the latitude to strengthen Medicaid on their own – ensuring their truly needy residents receive care while saving taxpayers money,” Senator Kirk said.

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The full text of the letter and a list of co-signers follows:

July 18, 2011 

Donald Berwick, M.D.
Administrator
Centers for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244

Dr. Berwick,

It has come to our attention that your agency, the Centers for Medicare and Medicaid Services (CMS), has issued a determination that would void Illinois reforms designed to strengthen the integrity of its Medicaid program.  We strongly urge you to reexamine this decision, and allow Illinois to move forward with commonsense reforms that would protect eligible Medicaid beneficiaries and taxpayers alike.

In a letter to the Illinois Department of Healthcare and Family Services, CMS advised that recently-approved Illinois reforms violate federal Maintenance of Effort (MOE) requirements established under the Administration’s Affordable Care Act (ACA), which prohibit the implementation of any Medicaid eligibility standards more restrictive than those in effect on March 23, 2010.  While we share your commitment to ensuring access to care among our state’s most vulnerable residents, it is clear that this decision would have the opposite effect by reversing reforms intended to preserve and protect our Medicaid system for those who need it most.

As you know, states across the nation are struggling to fund critical programs.  Illinois, which is experiencing a record budget shortfall, has enacted reforms that would save an estimated $800 million over five years.  Rather than substantially tightening eligibility requirements as prohibited by the ACA, the changes proposed under Illinois law would simply require Medicaid beneficiaries to verify income with a full month’s paystub and demonstrate state residency with a utility or other bill. 

 As you are aware, Congress has been working to reverse multiple unintended consequences resulting from the rushed and controversial passage of the Administration’s ACA.  The specific provision cited by CMS in its decision to disallow Illinois reform efforts is among those that Congress is now working to clarify under legislation such as H.R. 1683, the State Flexibility Act.  In the meantime, we urge you to reevaluate your decision, which contradicts the opinion of legal experts consulted by Illinois State lawmakers and would needlessly prevent the implementation of anti-fraud reforms passed with overwhelming bipartisan support to address shortfalls identified by the Illinois Auditor General.

Given Medicaid’s historic partnership with state governments, and long-standing policy of allowing states to manage their respective enrollment systems, we once again respectfully urge you to reconsider your decision to deny our state the flexibility it needs to strengthen Medicaid and safeguard limited funds for eligible Illinois residents.

We appreciate your consideration of this request.  Please do not hesitate to contact our offices with any additional questions.

Sincerely,

U.S. Senator Mark Kirk and U.S. Representatives Judy Biggert,  Peter Roskam, Joe Walsh, Robert Dold, Adam Kinzinger, Randy Hultgren, Timothy Johnson, Donald Manzullo, Bobby Schilling, Aaron Schock, and John Shimkus