Senate Week in Review: May 21-25

Springfield, Ill. – After months of negotiations, the General Assembly advanced the first pieces of a massive Medicaid reform package, according to State Sen. Sue Rezin (R-Morris).

Also during the week, Senate Democrats pushed through a budget package on May 23, though it’s widely assumed that the plan will stall in the House of Representatives.

On May 24, Senate Republican lawmakers threw their support behind Senate Bill 2840, which through targeted reforms and reductions of services and programs, is expected to reduce Medicaid liabilities by an estimated $1.6 billion in Fiscal Year 2013. The bill advances $1.36 billion in benefit cuts and $240 million in provider rate reductions.

The legislation reflects numerous reforms that Senate GOP lawmakers have sought for many years, including many of the changes strongly advocated for in their 2011 Reality Check fiscal reform plan. Reforms target eligibility verification, utilization controls, optional services, and rate adjustments, among other changes.

Senate Bill 2840 targets eligibility verification as a way to produce significant cost savings, including turning over the verification of continued eligibility (redetermination) to a private entity, which is expected to save the state $350 million. Additionally, the Department of Healthcare and Family Services (DHFS) will be required to file timely reports with the Auditor General, providing specifics on efforts that have been taken to implement the reforms.

As part of the legislation, DHFS will enhance eligibility verification procedures and tighten asset testing for seniors applying for nursing homes. The bill also requires data sharing between the state’s employment security agency and DHFS to help verify income eligibility.

The measure will save $50 million by reducing eligibility for Family Care to 133 percent of the federal poverty level, which is more in line with other states, and will terminate the Illinois Cares Rx prescription drug assistance program. Instead, low-income seniors utilizing Illinois Cares Rx can access federal assistance as has been done in many other states.

Many optional services not required under federal law will be reformed to more closely mirror the policies of Medicare and private insurance policies. Under the plan, adult chiropractic services would be eliminated, while adult dental and podiatry services would be significantly scaled back.

Additionally, enrollees would be limited to one pair of eyeglasses every two years; this is common practice in the private insurance industry. Currently, eyeglasses are unlimited under the Medicaid program. Similarly, adult speech, hearing and language therapy, occupation therapy, and physical therapy services would all be limited to a maximum of 20 services per year, reflecting private insurance practices.

Other efforts to reduce costs include limiting the amount of pharmaceutical drugs dispensed to a seven-day supply for those in a long-term care setting; currently, they typically receive a 30-day supply which goes to waste when a resident changes medications, is hospitalized, leaves the facility or passes away. Additionally, adult’s and children’s prescriptions are also limited, and will be confined to four per month unless a special exception is identified.

DHFS will also be required to implement co-pays in all areas of the Medicaid program, the maximum co-pay being $3.60 for brand-name drugs. The co-pay for generic drugs will be $2.  These changes are expected to free up $44 million within the program.

However, Republicans largely voted against one component of the package – House Bill 5007 – that would allow for a Medicaid expansion in Cook County. The legislation allows the County to expedite by 18 months the influx of new Medicaid enrollees in Cook County expected under the federal Affordable Care Act. This legislation expands eligibility for Medicaid benefits to up to 250,000 childless adults within the county.

Though proponents insist that there will be no cost to the state, many Senate Republican lawmakers noted that the measure is in direct conflict with the bipartisan Medicaid reforms passed by lawmakers in 2011, including P.A. 96-1501, which prohibited any expansion or creation of Medicaid programs for two years.

Opponents also expressed skepticism that a Medicaid expansion of this magnitude could be implemented at no cost to state taxpayers. The legislation does include language that would eliminate the new program and immediately remove anyone signed up for the program if the relevant sections of the federal Affordable Care Act are either declared unconstitutional or repealed.

The Medicaid reform proposals are a key component of the budget process; however, a budget proposal rushed through by Senate Democrats May 23 will not likely be taken up by House lawmakers. Senate Republicans voted against the measure, noting that the proposal spends more than any other budget plan currently under consideration, including the Governor’s FY13 budget proposal.

The Senate Democrat budget package identifies Fiscal Year 2013 General Revenue Fund (GRF) spending totaling $33.3 billion. Though Senate Republicans noted the proposal relies on reducing Medicaid program liability by $1.6 billion, they pointed out that it is $1.1 billion short of the needed $2.7 billion reduction.

Senate Democrat lawmakers anticipate filling that hole with a tax on cigarettes – a revenue increase that would precipitate an increased appropriation that drives the budget total to $34.467 billion. This is approximately $1.5 billion more than the assumed House budget spending level, and the assumed revenues would total $35.7 billion – $2 billion more than the revenue resolution agreed to by all four caucuses in early 2012.

Republicans drew attention to millions of dollars in questionable spending initiatives advanced by the proposal, including funds for the lackluster Grow Your Own Teacher program. Buried within the budget plan approved by Senate Democrats May 23 was a $1.5 million earmark for the little-known program that is supposed to recruit and train parents and community leaders to become teachers.

However, the program has already received more than $19 million in its first six years and has only produced 29 teachers – that’s an average of $662,000 per teacher.

In fact, only 54 individuals have ever graduated from the program, which works out to $356,000 per graduate. Although students who fail to graduate or who do not take teaching jobs are supposed to repay their educational costs, most are “counseled out” of the program, which does not require a repayment.

Digging deeper into the statistics – a total of 615 students has started the program since its beginning in Fiscal Year 2006. That works out to a dismal graduation rate of 8.7 percent.

Republicans also spoke out against the $400 million in fund sweeps in the Senate Democrat plan, and noted that it closes major facilities in Republican districts while protecting state facilities in areas represented by Democrats, such as Tamms prison and Joliet Youth Center.

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