Illinois Governor Restores One-Fifth of Planned $110 Million Cut to Safety Net Hospitals

Illinois Gov. George Ryan (R) said on Jan. 8 that he will restore between $20 million and $25 million of a roughly $110 million proposed cut in Medicaid payments to the state's "safety net" hospitals, the Chicago Tribune reports. However, aides to the governor said that he intends to compensate for the restoration of funds to these hospitals -- which either serve large numbers of Medicaid beneficiaries or are the sole health care provider in rural communities -- by decreasing Medicaid reimbursement rates to physicians and other private providers. Ryan announced the fiscal year 2002 cuts in November as part of his plan to reduce the state's $500 million budget deficit (Parsons/Japsen, Chicago Tribune 1/9). The restoration means that the state's 116 safety net hospitals will face a less severe budget reduction than under the original plan, which called for a more than 5% drop in Medicaid funds for the facilities. "We realized these hospitals serve a vital need to these communities and that is why we've worked hard to restore these funds," Ryan said in a release (Wills, Associated Press, 1/9). Part of the restoration will come from retaining a program that makes "special payments" to rural hospitals. Ryan also announced that 39 of the state's inner-city hospitals will see between 55% and 66% of their cuts restored.

Reaction
The governor's original plan drew sharp criticism from the Illinois Hospital Association, which said that the funding decrease would lead to a reduction of services at some hospitals and force others to close altogether (Chicago Tribune, 1/9). Calling Ryan's decision a "small step in the right direction," Bettina French, a spokesperson for the Illinois Hospital Association, said, "It still leaves a huge hole for many hospitals" (Associated Press, 1/9). But Julie Pesch, director of public affairs for Children's Memorial Hospital, where 50% of annual inpatients are children covered by Medicaid, said, "We are grateful for any relief in Medicaid reimbursements." State officials said the hospital would have lost $5.5 million under the governor's original plan but will now lose about half that amount (Chicago Tribune, 1/9). However, in order to cover the restored hospital funds, Ryan budget director Stephen Schnorf announced that Medicaid reimbursements to physicians and dentists would be cut an additional 3% on top of the 2% reduction proposed as part of Ryan's original plan in November. The Illinois Legislature's spring session began on Jan. 9; lawmakers and Ryan still need to reach agreement on changes to the cuts he proposed in November (Associated Press, 1/9).