Skilled Nursing Providers Sue Illinois Over Medicaid Rates

A group of five nursing home providers sued the state of Illinois late last week in federal court, claiming that low Medicaid reimbursement rates in the Land of Lincoln could force them to shut down.

The companies specifically accuse Felicia F. Norwood, director of the Illinois Department of Healthcare and Family Services, of violating federal law by reducing Medicaid reimbursement rates outside of an open, public process — and harming their business in the process.

“As a direct result of the State’s reductions in Medicaid reimbursement rates and changes to its reimbursement methodologies, Plaintiffs are considering reducing its Medicaid participation,” the complaint, filed in U.S. District Court for the Northern District of Illinois, reads. “Such reductions will result in decreased access to care for Medicaid patients and fewer nursing care services and programs for Medicaid patients.”


Generations Health Care Network, Carlyle Healthcare Center, St. Vincent’s Home, Clinton Manor Living Center, and Extended Care Clinical joined together to file the lawsuit, with Norwood listed as the defendant.

The providers want the federal government to force Norwood and the state to develop new reimbursement rates through a public process.

Illinois has struggled to fund Medicaid amid consistent financial strain: Back in July, for instance, a federal judge ordered the state to pay $586 million per month in back Medicaid bills to help put a dent in its estimated $3 billion backlog.


State comptroller Susana Mendoza at the time said Illinois had more court-ordered and state-mandated payments than it could afford, and while lawmakers passed their first new budget in two years in July, providers that rely on Medicaid reimbursements are still feeling the pain.

In all, the state owes various vendors $9.1 billion, according to Reuters, which first reported the lawsuit. Some providers have been forced to wait up to nine months to receive Medicaid reimbursements, the news service reported.

“The State’s actions have effectively set reimbursements so low that the State will not be able to assure reimbursement rates consistently with efficiency, economy, and quality of care, and equal access to care and services in compliance with the Medicaid Act,” the providers argue in their complaint.

Written by Alex Spanko

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