Passavant to receive $4 million less in fed funds in 1st year under IL’s new Medicaid Assessment Program

By Blake Schnitker on March 16 at 1:28pm

A bipartisan deal to modernize Illinois’ $3.5 billion Medicaid Hospital Assessment Program was signed earlier this week, and a local hospital could start feeling the effects of those changes in the near future.

Illinois Governor Bruce Rauner’s penned his signature on the new Medicaid Assessment program, which would changes how the state both taxes and pays hospitals for Medicaid patients based on the number of people they treat.

With these changes set to take place, Passavant Hospital President and CEO Harry Schmidt is discussing how he they’re likely to effect the local hospital. To get a better sense of what all of this means, Schmidt explains exactly what the Medicaid Assessment Program is and how it works.

“First of, the Medicaid Hospital Assessment Program is essentially a matching program from the federal government. So from the historical perspective, the hospitals in Illinois pay a self-imposed tax, those dollars are aggregated and then matched from the federal government, and then the match is redistributed within the state. This program has been going on for a period of time and it also includes Affordable Care Act access payments, which began in 2014,” Schmidt explains.

As for the changes to the program and how they’re likely to impact the hospital, Schmidt says Passavant will unfortunately experience decreased funds coming in from Medicaid Assessment payments.

“The new program is going to be a little bit more closely tied to the current volumes that the various hospitals are seeing. So, unfortunately, Passavant is going to see about a $4.4 million reduction in our hospital assessment payments that we receive on an annual basis. So there’s going to be an impact to us here in the first year specifically, and that’s going to start July 1st,” says Schmidt.

While the local hospital will initially take financial hit during the first year of the new program, Schmidt says that as the program gets into future years, Passavant will receive reimbursements thanks in large part to their Behavioral Health Inpatient Unit established two years ago.

“Essentially, when the trailing data starts to pick up, we’re going to get healthier in years two, three, all the way through year six of this program. The next benchmark that they’re using is 2015 data for the services provided. One of the extra programs that you’ll get funding for is Behavioral Health Services. Well, at Passavant, we started a Behavioral Health Inpatient Unit in 2016, so in this first year of the program, we’re not going to get any credit or receive reimbursement for those services. However next year, we will get reimbursement for the Behavioral Health Services that we were providing,” Schmidt explains.

Before these changes can become official they must be okay’d by federal Medicaid managers, a process that could take several months. The state’s old payment schedule expires June 30th.