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October 25, 2000

Governor Ryan Thanks Speaker Hastert for His Efforts on Behalf of Medicaid Beneficiaries Nationwide

SPRINGFIELD -- Governor George H. Ryan today expressed his appreciation to House Speaker J. Dennis Hastert for his efforts to prevent over $1 billion in funding cuts in Illinois for healthcare services to low-income families.

"I would like to personally commend Speaker Hastert for his leadership on this issue of state and national importance," Ryan said. "It was a tough battle, but the Speaker was able to craft a legislative compromise which will minimize disruptions in providing necessary health care services while ensuring the fiscal integrity of the Medicaid program."

A proposed rule issued by the U.S. Department of Health and Human Services (HHS) on October 10 would have slashed billions of dollars from the health care budgets of approximately 20 states, including Illinois, New York, and Pennsylvania, over the next five years. The rule would overturn a long-standing funding mechanism used by Illinois and these states to maximize their share of federal health care funds.

Over the last decade, HHS, through the Health Care Financing Administration, has granted approval 22 separate times for Illinois' use of a funding mechanism that allows the state to allocate state tax dollars for local health services in order to maximize the federal reimbursement. The result is a higher federal rate of return for Illinois.

Unlike a few other states, Illinois has always used the higher reimbursement to pay for other health care services, including children's immunizations, prescription drugs for persons with disabilities and seniors' visits to doctors and dentists. However, as more states began to use the funding mechanism, some for purposes other than health care, the Administration decided to close the alleged regulatory "loophole" allowing its use.

Although the proposed rule purportedly provided a longer transition period for states which have long-standing programs dependent on this funding mechanism, it was unclear whether states with both pending and approved plan amendments (including Illinois) would be eligible. The legislative compromise negotiated by Speaker Hastert ensures that states that have relied on the funding mechanism since October 1, 1992 or before will be given a longer and more gradual transition period under the final HHS rule, which must be issued by December 31, 2000.

The compromise language also would permit states to provide a higher level of payments for public hospitals, including Cook County Hospital, during the first two years of the transition period to mitigate the impact on these crucial safety-net providers.

"States which have relied on these funds to provide health care services to the poor for almost a decade need more time to develop alternate funding sources," Ryan said. "Thanks to Speaker Hastert, millions of Medicaid beneficiaries in these states will not face immediate disruptions and reductions in health care services."


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