SPRINGFIELD - If he could have been there, the clack and hum of machinery going full speed in the Illinois comptroller's mailroom would have been music to the ears of Roger Ball, who instead was busy distributing prescriptions to the customers of Weber's Drug Store in Hoopeston.
With the receipt of a $1.5 billion short-term loan Thursday morning, the state was finally able to start processing Medicaid reimbursement checks for services rendered as far back as November.
"Hallelujah," Ball said. "That's great!"
The state owes his small independent shop somewhere between $40,000 and $50,000, he said.
"I have had to go to the bank and borrow money to take care of cash flow," Ball said. "It's not been good at all."
The Champaign County Nursing Home is waiting for more than $700,000 in reimbursement checks, and the state owes Vermilion Manor Nursing Home more than $1 million. Hoopeston Community Memorial Hospital is owed 36 checks totaling nearly $430,000 and that does not count claims it has filed that are still being processed by the Department of Public Aid and have not yet been sent to the comptroller's office.
Statewide, Medicaid payments have been delayed three to seven months, leaving nursing homes, medical suppliers, hospitals and pharmacies borrowing to meet payroll; maxing out their lines of credit; and in some cases ending service to Medicaid patients or closing their doors entirely.
"My office is well aware of the unfair burden that this fiscal crisis has put on our pharmacies, nursing homes, hospitals and other medical service providers," said Comptroller Dan Hynes, who requested the short-term loan. "Today, and in the coming weeks, this money will alleviate some of the financial hardships that Medicaid providers throughout Illinois have had to shoulder over the past year."
It is only fair that the state borrow money rather than those businesses, since the state can get a much lower interest rate, he said. - Hynes said his employees will be working overtime and into the holiday weekend to write more than 200,000 overdue checks and get them in the mail as soon as possible.
Some nursing homes, pharmacies and hospitals could see their money as soon as Saturday morning, he said.
State Rep. Bill Black, R-Danville, who also backed the borrowing plan, said the checks will be a welcome sight in vendors' mailboxes.
"I personally know of businesses that have had to borrow money just to stay in business because the state hadn't paid them for services rendered," Black said. "It is not right to borrow money on the backs of small business and those who provide services to the sick and elderly by not paying our bills in a timely fashion."
Approximately half of the $1.5 billion loan would be used to pay overdue Medicaid bills, allowing Illinois to capture another $740 million in federal matching funds. Another $275 million would be used to make the final two aid payments for elementary and secondary public schools on time, and $475 million would be used to pay corporate and individual income tax refunds the state owes.
Under the terms of the failure in revenues provision of the Short-Term Borrowing Act, the loan must be repaid within 12 months, and Hynes said revenues from taxes due next spring will help cover that cost.
The state is still paying off another $1 billion it borrowed under a different provision of the Short-Term Borrowing Act last July to keep its cash flow going. That loan comes due June 30.
Ball said he is grateful the state borrowed money to pay its late bills, but said he is worried it will soon fall behind again.
"From past history, I expect this to happen again," he said. "It's a Band-Aid for right now, but I don't think it's going to be a cure."
Hynes admitted that even with this short-term loan there will still be some payment delays if the economy does not improve. "We have to be realistic about our revenues," he said.
Hynes said "rainy day" fund legislation now awaiting Gov. Rod Blagojevich's signature would require the state to set aside money in good years to help with cash flow in tight times like the ones Illinois now faces.
You can reach Kate Clements at (217) 782-2486 or via e-mail at firstname.lastname@example.org.