SPRINGFIELD, Ill. (AP) — Illinois Gov. Bruce Rauner signed a Medicaid funding plan Monday that aims to ensure hospitals in impoverished communities are adequately funded, although two South Side Chicago facilities say they will not be able to afford to stay open under the measure.

The legislation changes the state’s $3.5 billion hospital assessment program to comply with federal mandates that more patients be covered by cost-cutting managed care organizations. It also adds oversight, tracking managed-care organizations following opposition complaints that such organizations often hurt hospital cash flow by denying claims or delaying payments.

Rauner called the measure a “major step forward.”

“We in Illinois have been allocating Medicaid dollars based on a process that was set up back in 2005,” the Republican governor said during a bill signing event in Chicago. “It’s long overdue to come up with a new way to reimburse health care delivery.”

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The new formula relies on updated patient data and gives additional funding to hospitals whose patients overwhelmingly rely on Medicaid coverage, according to Chicago Democratic Rep. Greg Harris, who sponsored the legislation in the House. He adds that the hospital assessment program is a creative solution to fill Medicaid funding gaps, bringing billions in federal matching funds to the state via a tax on hospitals.

Roseland Community Hospital and South Shore Hospital, both located in low-income neighborhoods on Chicago’s South Side, have already said they will close from lack of funding under the new plan. The hospitals employ 950 people and their CEOs say closure would be an economic blow to their communities.

Tim Caveny, CEO of Roseland, said his hospital needs an investment from the state “to survive.” His hospital faces a $6.5 million cut under the updated formula.

Harris said that he and other legislative leaders in Springfield will work with the hospitals to find funding solutions.

The state is now racing against the clock to ensure funding before the current assessment program expires June 30. The plan still needs approval from the federal government, a process that typically takes months. Director of the Department of Healthcare and Family Services Felicia Norwood said the formula could be sent to Washington as early as next week.


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Rauner signs new Medicaid funding plan for hospitals