CHICAGO — A West Side hospital hit hard by coronavirus is suing the state for millions in unpaid Medicaid reimbursements as the medical center struggles with a surge of patients.
Saint Anthony Hospital in North Lawndale is a safety-net hospital that treats patients, many of whom are vulnerable to coronavirus because of underlying conditions, regardless of their ability to pay. But the hospital’s response to the pandemic has been impeded by financial difficulties stemming from a mismanaged Medicaid system, said Chief Quality Officer Dr. Eden Takhsh.
The private managed care organizations contracted to handle the state’s Medicaid services pay out only a small fraction of what commercial insurers or Medicare would pay. But in many cases, safety-net hospitals don’t get reimbursed for treating Medicaid patients at all, Takhsh said.
“Managed care organizations have been dysfunctional in a way that there are tremendous delays and denials of payments over the last few years,” Takhsh said.
Hospital CEO Guy Medaglia said Saint Anthony had been working with the Illinois Department of Healthcare and Family Services to get the money owed to them, but the hospital filed a federal lawsuit against to recuperate up to $42 million after negotiations hit a dead end. Saint Anthony “needs emergency reimbursement to help keep the doors open,” he said.
Takhsh said outstanding payments have impacted the hospital’s ability to purchase medical equipment and competitively compensate staff because their patients rarely have commercial insurance that would cushion the Medicaid losses. About 70 percent of patients at the hospital are insured through Medicaid, compared to an average of only 19 percent statewide for safety-net hospitals. Only 4 percent of Saint Anthony patients have private insurance.
“The COVID-19 pandemic makes our situation more urgent because the community we serve is a hotspot within a hotspot. That has put even greater demands on the hospital,” Medaglia said.
Illinois Healthcare and Family Services spokesman John Hoffman confirmed they’ve been working with the hospital for several weeks to address the hospital’s claim it has not received all payments it is due.
“To date, the hospital has not yet provided to the State any information demonstrating that it is due any payment. It is unfortunate that the hospital has chosen the path of litigation instead of continuing to discuss its concerns with us,” Hoffman said in a statement.
Medaglia said the broken managed care organizations system for handling Medicaid reimbursements is a holdover from former Gov. Bruce Rauner, but hopes the Gov. JB Pritzker’s administration will fix the problem.
The lawsuit claims the state violated federal law by failing to enforce over $40 million in payments managed care organizations contracted by the Department of Healthcare and Family owe to Saint Anthony. If successful, the lawsuit could push the state to reform its Medicaid reimbursement system by cracking down on laws that require managed care organizations to pay providers in a timely manner.
The claim says managed care organizations have gotten away with systematically delaying and denying payments unless there is sufficient outcry to compel the state to enforce payment laws. The hospital is also asking the court to order managed care organizations to provide transparency in its payment process so safety-net hospitals can ensure they are paid appropriately.
“Saint Anthony Hospital had no choice other than to sue the state in federal court to protect the vulnerable, largely Hispanic and African American patients for whom we provide essential care to on the West and Southwest Sides of Chicago,” Medaglia said. “We continue to hope for an amicable resolution.”
Pascal Sabino is a Report for America corps member covering Austin, North Lawndale and Garfield Park for Block Club Chicago.
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