June 28, 2006

Barry S. Maram - Director
Illinois Department of Healthcare and Family Services
201 S. Grand Avenue East
Springfield, IL 62763-0002

Dear Director Maram:

Thank you fro your letter dated May 25, 2006. The ISMS Board of Trustees met last Saturday and discussed this correspondence, as well as the state's AllKids Medicaid expansion initiative. The society remains very concerned that continued underfunding of Medicaid in all its various components will result in greater and greater access to care barriers for our state's neediest patients.

I will first address the chronic Medicaid funding shortfall. While your letter highlighted a number of initiatives aimed at correcting the severe underfunding in Illinois' Medicaid program, ISMS remains extremely concerned that physicians are continuing to experience long payment delays. To many in the medical community, it appears that the state's Medicaid budget is being balanced on the backs of physicians caring for Medicaid patients.

For example, the supplemental appropriation of $80 million, while desperately needed for this year's budget, was simply transferred for next year's budget. It reduces this year's payment cycle in return for lengthening the payment cycle next year. As the saying goes, this merely "robs Peter to pay Paul."

In your letter you cite the distribution of $500 million and up to $900 million to "providers" by the end of the fiscal year, but it is still extremely unclear how much of this, if any, is targeted to reducing the physician payment cycle. It is our understanding that these funds do not expand appropriations for physicians. Therefore, just how will these funds result in shortening the physician payment cycle? While we understand that other providers are also experiencing delays, our initial letter to the Governor was clearly focused on the physician payment cycle. Yet, the numbers cited in your letter seem to address other providers rather than the insufficient physician appropriations.

We at ISMS would appreciate more specific detail on the current payment cycle for physicians (as opposed to other categories of Medicaid providers) and how it changed after the $80 million appropriation. In particular, we would like to know the mean and median physician payment cycle for expedited and non-expedited physician payments both before and after the additional appropriation was implemented. We continue to hear reports daily from physicians who are waiting in excess of three to four months for payment of Medicaid claims.

Now, allow me to turn my attention to AllKids. ISMS supports and commends the overall goal of the AllKids program, but we remain very concerned about the implementation of a major, costly Medicaid restructuring and expansion initiative at a time when the state appears to lack sufficient resources to reimburse its front line medical providers. The cost savings you cite in your letter are only projected, and have not yet been achieved. Yet, your letters state that AllKids is "fully funded by the savings we have been able to achieve [emphasis added] through the implementation of Disease Management and Primary Care Case Management." We are not aware of any savings that have already occurred. In theory, these savings may be realized at some time in the future, but to imply that these savings have already been realized is misleading at best. If you have specific data on savings and how they are to be (or already have been) achieved, I would be interested in reviewing the data.

A strong, ongoing concern voiced about AllKids by the ISMS Board is that without significant change in the current reimbursement rates and payment cycle for all Medicaid physicians, doctors will indeed be placed in the position of continuing to de facto subsidize the AllKids program. Even with the recent court-mandated increases to the preventive medicine codes that took effect this year - which doubled the prior Medicaid rate -- these 12 payment rates are still only 88% of Medicare. In fact, some physicians have probably not yet even received these enhanced rates due to the long payment cycle.

Other physician services and procedures do not fare as well: overall Medicaid payments are just 63% of Medicare rates. This puts Illinois near the bottom of state-by-state rankings in terms of Medicaid fee-for-service payments. In fact, according to a study of 2003 data by the Kaiser Family Foundation, Illinois ranks 42nd among the states in terms of Medicaid fee for service rates as a percentage of Medicare.

Low pay, extremely slow pay, and unproven case management and disease management programs are not the solution to expand access to care. Just as the impending Medicare cuts may have negative effects on access to care for the elderly, so will the continued underfunding of the Medicaid program negatively affect access to care for the most needy. As I said in my letter to the Governor last month, providing fair and timely reimbursement for services to patients covered by state programs is essential to ensuring access to primary and specialty medical care.

While I appreciated your response, I am very disappointed by the lack of specifics for implementation and funding of the AllKids/Medicaid program. We at ISMS would very much like to be boosters for AllKids, but we cannot justify this stance to our members when the overwhelming feedback we hear from them is that they are not being paid for months on end, and then, when the check finally arrives, it is well below their actual cost of providing care. As we embark over this summer on a series of member educational pieces regarding AllKids, we hope you and your DHFS colleagues will be able to provide us with real answers to these very real concerns so that, together, we can accurately report to Illinois physicians that AllKids will be more than just a continuation of Illinois’ existing Medicaid program.

I look forward to hearing your response.

Sincerely,

William E. Kobler, M.D.
Chair, Board of Trustees

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Twenty North Michigan Avenue, Suite 700 Chicago, Illinois 60602 Telephone: 312-782-1654 Toll Free: 800-782-ISMS Fax: 312-782-2028