Organizations that provide long-term care for the elderly in Illinois operate in a kind of business limbo, unsure of when they'll receive from the state the Medicaid reimbursements they rely on to keep their doors open.
ROCKFORD — Organizations that provide long-term care for the elderly in Illinois operate in a kind of business limbo, unsure of when they'll receive from the state the Medicaid reimbursements they rely on to keep their doors open.
Right now, the payment backlog is about six months, forcing organizations to find creative ways to manage without half of the annual revenue that finances care for two-thirds of patients in nursing homes and about 60 percent of those in assisted living centers.
Illinois deliberately delays paying its bills in an effort to manage its broken finances. The practice shifts the burden onto all sorts of state contractors, including long-term care facilities, which must borrow money and, in some cases, let open jobs remain vacant as they wait on the state.
Small organizations, with just one or two facilities, are particularly hard hit because they lack the budget flexibility to absorb the delays, said Wayne Smallwood, who spent 33 years with the Department of Health Care and Family Services before he retired to lobby on behalf of supportive living organizations as executive director of the Affordable Assisted Living Coalition.
Medicaid-dependent agencies typically turn to their banks for a line of credit when the state doesn't pay its bills on time, Smallwood said. Some have been pushed to the limits of their borrowing power.
"Many of those are depleted, so they go right down to the wire on making payroll in some cases," Smallwood said.
Although small facilities are most in jeopardy, late payments cause headaches for larger organizations, too, said Jerry Finis, CEO of Pathway Senior Living, which has assisted living locations across Illinois.
"It's just unpredictable and relatively sporadic, so it's hard to plan around it," Finis said. "It's hard to go to your banks and say you need a line of credit that might cover me for 60, 90 or 120 days. Then the question is what happens if it goes 180 days, which is always the dilemma."
Illinois Comptroller Judy Baar Topinka said in her most recent quarterly report that there's no end in sight to payment delays. The report said that the backlog of unpaid bills had grown by more than $2 billion in the past year.
"This thing could get even uglier next year," Smallwood said. "When is the straw that breaks the camel's back going to be placed on our backs?"
The impact of delayed reimbursement by the state produces a trickle-down effect, as care facilities negotiate delayed payments to their utility providers and other vendors.
"Facilities have to go out and negotiate a longer payment cycle so they can continue to feed their residents," said Pat Comstock, executive director of Health Care Council of Illinois.
Some nursing facilities may be forced to decide whether to continue to accept Medicaid patients at all, Comstock said.
Comstock said the late payments, coupled with the 2.7 percent Medicaid rate cuts for the state's current fiscal year and laws that mandate increased staffing levels "create a very stressful situation that, before long, is going to result in facilities going out of business."
The state has an expedited payment program for organizations that can't push their borrowing power any further. The comptroller's office has "bent over backwards" to help such agencies, Smallwood said. The state also pays 1 percent interest penalty for late payments. Smallwood said 2010 interest penalties were paid just before Christmas in 2012.
"People are breathing a sigh right now, just because you have a little money to work with," Smallwood said. "We're also wondering when that next payment's going to come and how are we going to make this thing go in the first quarter of the new calendar year."