By Mary Massingale Illinois Statehouse News

SPRINGFIELD – Medicaid reform took a “bold” step on Wednesday as the Illinois Senate approved a measure projected to save $800 million during the next five years.

House Bill 5420 calls for moving half of the state’s 2.8 million Medicaid participants into “coordinated” or managed care during the next four years – a far stretch from the 195,000 participants who now are assigned to a primary “medical home.”

“That is a very aggressive goal, it’s a bold goal, but we believe that by really looking at the holistic needs of our Medicaid clients we will, in fact, succeed in keeping them healthier,” said Julie Hamos, director of the Illinois Department of Healthcare and Family Services.

Lawmakers were assigned the task of tightening the $14 billion state-federal health care system in December and were still hashing out the details Wednesday morning.

“This is probably not a bill that any one of us on this committee would write. But that’s the nature of compromise,” said state Sen. Heather Steans, D-Chicago. “I think where we are and what we’re going to see, though, is something that really does put the state and our Medicaid system in a much better place down the line.”

All states are looking at Medicaid reforms in anticipation of the ramp-up of the federal health care law in 2014, when low-income single adults will be eligible to enroll. State Sen. Dale Righter, R-Mattoon, said the proposal will return the “struggling” program to a safety net for the poor, instead of a catch-all for the potentially ineligible.

“It’s struggling for the people who need it the worst,” he said. “We’re talking about the people who are on the lowest rungs of the economic ladder, the people for whom access is a truly critical issue. The people who aren’t mobile. People who can’t drive two hours and take a day off because it’s not a big deal to make sure that their child can get to a medical provider.”

However, the legislation makes an attempt to crack down on fraud by setting up administrative hearings that can collect and fine individuals who have been scamming the system, and even refer the cases to local prosecutors. But the Senate’s chief budget expert questioned how effective that would be.

“I can see how you recover from if they’re pharmacists or doctors that are scamming the system,” said state Sen. Donne Trotter, D-Chicago. “How do you recover from people like the guy that you said is getting payments out of his check and his brother’s check, assuming he doesn’t have any money? How do you recover that?”

The measure also tightens eligibility by requiring individuals to provide proof of Illinois residency and a month’s worth of income, and to periodically re-apply to the program.

It clamps down on the expanded All Kids program, the state’s health insurance for children of parents who earn too much to qualify for Medicaid. Parents pay health insurance premiums based on their income, which will be limited to 300 percent of the federal poverty level – or $66,150 for a family of four.

The current 3,000 participants whose parents earn more than 300 percent of FPL will be given a grace period of one year to find new insurance, although state Sen. Dave Koehler, D-Peoria, wondered if exemptions should be made for rural residents lacking close medical care.

“Will the emergency room again become the point of contact for the health care system?” Koehler asked. “Because that’s going backwards, if that happens.”

The legislation also creates a “global budget” for long-term care by allowing up to 4 percent of budget line items for nursing home care for the elderly, developmentally disabled and the mentally ill to go toward shifting those patients into community-based settings, at an annual savings of $100 million.

Changes to the prescription drug program include possible co-pays at federally accepted levels, 90-day prescriptions for medication for chronic conditions, and prior approval for some drugs. Interest on late payments to pharmacists will be cut in half.

Using future appropriations to pay current bills to providers of care will also be phased out during the next 10 years, in an attempt at fiscal responsibility.

The measure now heads to the House, where a vote is expected on Thursday.