Illinois not complying with orders to fund Medicaid: US judge

A U.S. District Court judge on Wednesday said Illinois has failed to comply with federal consent decrees by minimally funding Medicaid during the state's budget impasse.

Judge Joan Lefkow ordered renewed negotiations between Illinois and health care advocates for the poor to reach a goal of "substantial compliance" with the decrees.

Lawyers representing Medicaid recipients had asked the judge to give precedence to payments to managed care organizations participating in the state and federal health care program for the poor and disabled over other priorities the state was fully funding such as debt service on bonds and pensions.

Lefkow said Illinois Comptroller Susana Mendoza, who pays the state's bills, has not offered a "lawful basis" for not fully paying the Medicaid providers, who are owed about $2 billion.

"Although the court means no disrespect to the comptroller, who faces an unenviable situation, it finds that minimally funding the obligations of the decrees while fully funding other obligations fails to comply not only with the consent decrees, but also with this court’s previous orders," the judge's latest order stated.

Illinois is limping toward the June 30 end of a second-straight fiscal year without a complete spending plan due to a political stalemate between its Republican governor and Democrats who control the legislature.

Lawmakers ended their spring session last week without a fiscal 2018 budget deal, triggering downgrades that pushed Illinois' credit ratings from S&P and Moody's Investors Service to a step above junk.

As a result of the stalemate, Illinois' backlog of unpaid bills reached $14.9 billion this week. The state's Medicaid program covers about 3 million residents.

(Reporting by Karen Pierog; Editing by Chris Reese and Lisa Shumaker)