a

January 30, 2018

A.J. Wilhelmi
President & CEO
Illinois Health and Hospital Association

Illinois House Appropriations-Human Services Committee

Redesign of the Illinois Hospital Assessment Program

Room 114, Capitol Building

Springfield, IL

FOR FURTHER INFORMATION

CONTACT:
David Gross
217-541-1161
dgross@team-iha.org
 Testimony of A. J. Wilhelmi
President & CEO
Illinois Health and Hospital Association

Illinois House Appropriations-Human Services Committee

Subject Matter Hearing: Redesign of the Illinois Hospital Assessment Program

Room 114 Capitol Building

Springfield, IL

Tuesday, January 30, 2018

Good morning, Chairperson Harris, Vice Chairperson Gabel, Minority Spokesperson Bellock and
members of the House Appropriations-Human Services Committee.

I am A.J. Wilhelmi, President and CEO of the Illinois Health and Hospital Association (IHA). I am
joined by John Bomher, Senior Vice President, Government Relations and Policy, IHA, who will
be available to respond to any technical questions following my brief remarks.

On behalf of the over 200 hospital and 50 health system members of IHA, I want to thank you
for the opportunity to talk to you about the urgent need to reauthorize the Hospital
Assessment Program, a program that brings the state $3.5 billion in Medicaid funding –
including more than $800 million in ACA Access Payments. This program represents a vital
source of funding support for patients, the state’s healthcare delivery system and your
community hospitals and health systems.

Ultimately and most importantly, this issue is about ensuring that individuals in our state –
especially the most vulnerable – have access to quality health care services that will
improve their health – and the health of communities throughout Illinois. Achieving this goal
depends on people having meaningful and affordable health coverage. In Illinois, more than
three million Illinoisans are covered by Medicaid, including one out of every two children, as
well as families, seniors and the disabled in every county of our state.

We recognize that redesigning the Assessment Program is a very complex and challenging
undertaking that will result in substantial changes to the current program. It’s important to
note that the federal government is requiring Illinois to redesign and update our assessment
program because current payments are based on data that is more than 10 years old and
because our assessment program uses 100% fixed, static supplemental payments. The
rationale is to more appropriately allocate scarce Medicaid resources and to have more of the
funding pay for actual Medicaid services provided – in other words, to have the money “follow
the patient.”

The State needs to put forward a redesigned assessment program that aligns with the
prerequisites and parameters of the federal government, in order to preserve $1.4 Billion in
1
federal matching funds and more than $800 million in ACA Access Payments, which expire June
30. Therefore, IHA and the hospital community urge the General Assembly to approve
legislation to continue the Assessment Program, so that the State can proceed as quickly as
possible to work with our federal partners from the Centers for Medicare and Medicaid
Services to obtain final federal approval of the program.

Over the past several months, as IHA has worked closely with the Legislative Medicaid Work
Group and the Department of Healthcare and Family Services (HFS) on the assessment
redesign, IHA has been guided by one of the bedrock principles of our Board of Trustees – to
preserve access to quality healthcare for Medicaid beneficiaries and all Illinoisans – especially
vulnerable populations and communities served by Safety Net and Critical Access Hospitals. We
continue to work with all key stakeholders, including the Work Group and HFS, to address
funding issues for Safety Net and Critical Access Hospitals.

As we have noted before, Illinois receives LESS federal funding per Medicaid beneficiary than
any other state in the U.S. – which reinforces the critical need for the State to continue the
Hospital Assessment Program. [See map/chart - based on data from Centers for Medicare and
Medicaid Services and Kaiser Family Foundation.]

Illinois hospitals and health systems have stepped up to help the State through the Hospital
Assessment Program – by contributing billions of dollars over the years, to leverage billions of
additional federal dollars for Illinois’ Medicaid program. The Hospital Assessment Program is
the direct result of a strong partnership between the hospital community, HFS, the General
Assembly and the Administration.

Reauthorizing the program will:

 Preserve access to quality healthcare for Medicaid beneficiaries and all Illinoisans;
 Help maximize federal Medicaid funding for Illinois;
 Reform and modernize the state’s Medicaid payment system; and
 Support hospitals as major job creators and economic engines for their local
communities and the state.

Currently, 83 percent of Illinois Medicaid payments to hospitals are from NON-state sources –
including the Hospital Assessment Program and federal matching funds from hospital spending.
Only 17 percent of Medicaid hospital spending comes from State General Revenue Funds.

There is no state cost to this assessment program. It is fully funded by Illinois hospitals and the
federal government.

IHA has been working with its diverse members – and listening to all voices within the hospital
community – as well as HFS, the Legislative Work Group and other stakeholders, to reach
consensus on legislation for a redesigned Hospital Assessment Program for consideration by the
General Assembly.

The redesigned assessment program:

2
  Preserves access to care for vulnerable communities by providing stable funding for
safety net and critical access hospitals;
 Updates the data on which the formula is based. The current program is based on
healthcare data from as far back as 2005. The proposed formula is based on the most
recent healthcare data available, namely FY15;
 Prioritizes payments for Medicaid-dependent and high-Medicaid hospitals;
 Acknowledges the demand and critical need for behavioral health services by enhancing
funding streams for these services;
 Recognizes the shift to outpatient services in the healthcare delivery system and designs
payments that take that shift into account;
 More closely aligns payment with current utilization by allowing some of the assessment
funding to follow the patient. This plan puts 18% of all payments into “live rates” with
the opportunity to double the amount allocated to live rates in two years;
 Acknowledges that the healthcare landscape is dynamic and changing and includes a
pool of funding designed to help struggling hospitals transform their operations over
time so they are able to continue to meet the healthcare needs in their communities;
 Funds costs for graduate medical education programs that provide Illinois communities
with high quality physicians and other healthcare workers; and
 Maximizes federal funding for healthcare services.

I want to personally commend Chairperson Harris, Vice Chairperson Gabel, Minority

Spokesperson Bellock and the other members of the Legislative Work Group as well as Director
Norwood and her HFS team for their diligence and engagement with IHA and the hospital
community in working to redesign and modernize the assessment program. Our collective
efforts are vital in making sure that our state’s most vulnerable populations as well as all
Illinoisans are able to receive the quality healthcare they need when they need it.

We believe that the resulting model to be considered by this committee and the General
Assembly represents true reform – while providing stability for our hospitals serving vulnerable
communities. We ask that the General Assembly approve legislation for the redesigned
Hospital Assessment Program within the coming days. This will allow time for the State to
obtain federal approval by the Centers for Medicare & Medicaid Services and implement the
new assessment program by July 1, 2018.

Thank you for your consideration. John Bomher and I would be pleased to address any
questions you may have.

3
Illinois is Getting Shortchanged
Federal Contribution Per Medicaid Beneficiary 2015

ff IL receives LESS Federal

Funds per Medicaid
Beneficiary than ANY
other state in the U.S.
$4,496
38% ff IL has one of the lowest
more Medicaid matching rates
than IL in the country
$5,015
54%
$4,746 more
46% than IL
more
than IL $4,687
44%
$3,252 $4,461
$5,050 more
Ranked #50— 55% than IL
the lowest 37% more
state more than IL
$6,448 than IL
98%
more $6,399
than IL
96%
more
than IL

U.S. Rank (higher is better)

— — — #29 WISCONSIN* —
— #2 MISSOURI* — #17 OHIO — —
— #3 KENTUCKY — #18 MICHIGAN — #31 INDIANA —
— — — —
— — — #33 TEXAS ($4,437)* —
— — #21 NEW YORK ($4,904) — —
— — — #35 CALIFORNIA ($4,397) —
— — #23 IOWA — —
— — — —
— — — —
— — #26 PENNSYLVANIA — — #48 FLORIDA ($3,629)*
— — NATIONAL AVERAGE $4,578 — —
— — — — #50 ILLINOIS

Illinois needs to maximize Federal funding support

for its Medicaid program through a redesigned and
modernized Hospital Assessment Program

* No Medicaid expansion funds included

 State Ranking: Federal Spending Per Beneficiary
2015 Federal Primary Federal Medical Federal Funds as a %
ACA Expansion Medicaid Spend Assistance Percentages of Illinois Fed Funds
State State Per Beneficiary Rank (FFY 2017) Per
Illinois Y $ 3,251.86 50 51.30% 100.0%
Colorado Y $ 3,363.75 49 50.02% 103.4%
Florida N $ 3,629.49 48 61.10% 111.6%
Georgia N $ 3,680.21 47 67.89% 113.2%
Hawaii Y $ 3,796.56 46 54.93% 116.8%
Tennessee N $ 3,803.05 45 64.96% 116.9%
South Dakota N $ 3,856.96 44 54.94% 118.6%
Washington Y $ 3,873.91 43 50.00% 119.1%
Nevada Y $ 3,939.48 42 64.67% 121.1%
Oklahoma N $ 4,055.53 41 59.94% 124.7%
Alabama N $ 4,147.73 40 70.16% 127.5%
Montana Y $ 4,189.85 39 65.56% 128.8%
Kansas N $ 4,244.61 38 56.21% 130.5%
Nebraska N $ 4,255.17 37 51.85% 130.9%
Virginia N $ 4,295.58 36 50.00% 132.1%
California Y $ 4,396.53 35 50.00% 135.2%
Idaho N $ 4,413.15 34 71.51% 135.7%
Texas N $ 4,436.64 33 56.18% 136.4%
North Carolina N $ 4,459.29 32 66.88% 137.1%
Indiana Y $ 4,461.26 31 66.74% 137.2%
Wyoming N $ 4,482.02 30 50.00% 137.8%
Wisconsin N $ 4,495.57 29 58.51% 138.2%
South Carolina N $ 4,510.45 28 71.30% 138.7%
Delaware Y $ 4,618.74 27 54.20% 142.0%
Pennsylvania Y $ 4,687.24 26 51.78% 144.1%
Louisiana Y $ 4,689.48 25 62.28% 144.2%
Arizona Y $ 4,705.51 24 69.24% 144.7%
Iowa Y $ 4,746.25 23 56.74% 146.0%
Maryland Y $ 4,890.34 22 50.00% 150.4%
New York Y $ 4,904.45 21 50.00% 150.8%
New Jersey Y $ 5,004.75 20 50.00% 153.9%
Utah N $ 5,008.49 19 69.90% 154.0%
Michigan Y $ 5,015.01 18 65.15% 154.2%
Ohio Y $ 5,049.59 17 62.32% 155.3%
West Virginia Y $ 5,146.55 16 71.80% 158.3%
Massachusetts Y $ 5,150.37 15 50.00% 158.4%
Vermont Y $ 5,160.80 14 54.46% 158.7%
Arkansas Y $ 5,163.67 13 69.69% 158.8%
New Mexico Y $ 5,292.69 12 71.13% 162.8%
New Hampshire Y $ 5,320.46 11 50.00% 163.6%
Mississippi N $ 5,480.40 10 74.63% 168.5%
Rhode Island Y $ 5,482.98 9 51.02% 168.6%
Maine N $ 5,749.82 8 64.38% 176.8%
Minnesota Y $ 5,966.36 7 50.00% 183.5%
Oregon Y $ 6,007.04 6 64.47% 184.7%
Alaska Y $ 6,055.60 5 50.00% 186.2%
Connecticut Y $ 6,123.35 4 50.00% 188.3%
Kentucky Y $ 6,399.41 3 70.46% 196.8%
Missouri N $ 6,447.81 2 63.21% 198.3%
North Dakota Y $ 7,506.64 1 50.00% 230.8%
Color Legend
MidWestern States
5 Largest Medicaid States Inlcuding Illinois

Total Medicaid Funds Received by state - Source = CMS 64 :

https://www.medicaid.gov/medicaid/financing-and-reimbursement/state-expenditure-reporting/expenditure-reports/index.html

Source of Expansion States:

http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/?currentTimeframe=0

Enrolment Reports- Average Monthly Enrollment FFY 2015 (Kaiser FF - Time Frame Dec 2015)
http://kff.org/health-reform/state-indicator/total-monthly-medicaid-and-chip-enrollment/?currentTimeframe=11