A federal judge Wednesday ordered Comptroller Susana Mendoza to make a “substantial” dent in a $2 billion backlog of bills owed to Medicaid providers in order to keep doctors and hospitals from cutting off care for the low-income families that rely on the program.
The ruling came in response to complaints from patients who said the state was falling behind on the payments as it tries to manage its cash flow in the midst of a nearly two-year budget impasse in Springfield. Mendoza’s office conceded in a filing with the court that the comptroller had prioritized payments for other expenses like state employee salaries, pension contributions and debt service — which are written into state law or required by state courts — over the Medicaid bills.
U.S. District Judge Joan Lefkow said in her ruling that “although the court means no disrespect to the comptroller, who faces an unenviable situation,” putting state-mandated payments ahead of the Medicaid bills was a violation of federal consent decrees and court orders designed to ensure that poor people in Illinois have access to care.
Lefkow ordered the lawyers for the state and those representing Medicaid recipients to get together and “negotiate with the goal of achieving substantial compliance with the consent decrees.” The judge gave them until June 20 to reach a deal. She noted that the patients are not seeking immediate payment of the pile of unpaid bills, just payments that would be “sufficient to sustain the services to members of the classes.”
“This is a reasonable position,” the judge said.
Whatever the two sides decide is likely to force Mendoza to cut back on payments for other expenses, which could put her crosswise with state law and state courts and further delay other state payments at a time when Illinois is already sitting on $14.9 billion in unpaid bills.
In an affidavit filed with the court before the ruling, Assistant Comptroller Kevin Schoeben said that 90 percent of the money that comes into the state’s main checking account is being spent on a “core priority category” that includes paying down state debt and making pension contributions, in addition to spending on elementary and high schools, paying state employee salaries and sending money to local governments. Debt payments, pension contributions and distributions to local governments are required under state law. A state court order requires state employee salaries to be paid in full and on time. Spending on elementary and high schools was approved by lawmakers and Gov. Bruce Rauner last year, but even those payments are behind by more than $1 billion.
The comptroller’s office tries to spread the remaining 10 percent around. Mendoza said in a statement that her office would continue working with the lawyers who represent the Medicaid patients.
“The lack of a budget for the last two years has created a situation in which we now have more court-ordered and state-mandated payments than we have revenues to cover them,” Mendoza said. “The real solution to this crisis is a comprehensive budget plan passed by the General Assembly and signed by the governor. Now.”
The ruling came as ratings agencies have been warning that the state’s debt could be officially demoted to junk status if the budget impasse isn’t solved by July 1, the start of the new financial year.
Also on Wednesday, the Commission on Government Forecasting and Accountability projected that the state’s pile of unpaid bills could reach a record $23 billion if the two-year stalemate between Rauner and Democrats who control the General Assembly is allowed to continue for a third year.