Illinois nursing homes sue state over low Medicaid rates

A handful of Illinois-based nursing homes sued the state's Department of Healthcare and Family Services on Friday, saying low Medicaid rates are jeopardizing their ability to provide adequate quality of care.

In a lawsuit filed in the U.S. District Court for the Northern District of Illinois, five groups that jointly operate more than 100 skilled nursing facilities across the state said Illinois' reimbursement rates and methodologies violated certain requirements under the Medicaid Act.

The Illinois Department of Healthcare and Family Services and the governor's office did not immediately return requests for comment.

Nursing homes across the country are struggling to pay landlords, employees and providers due to low Medicaid and Medicare reimbursement rates and depressed occupancy levels, but the problem is especially acute in Illinois, where reimbursements are not only low, but also arrive with months of delays.

An impasse between Illinois' Republican governor and Democrats who control the legislature left the state without a complete budget for an unprecedented two fiscal years. Lawmakers enacted a fiscal 2018 budget in July, but the state still has a $9.1 billion backlog of unpaid bills to vendors and service providers.

CC Care, a Chicago-based skilled nursing home operator, filed for Chapter 11 bankruptcy in October, saying in court papers that slow, erratic and low Medicaid payments were having a "disastrous effect" on all nursing homes in the state.

Some nursing facilities have waited up to nine months to receive their Medicaid payments, which they rely on to cover everything from salaries, rent and food to laundry and medical equipment and services, restructuring experts have told Reuters.

The lawsuit against the Illinois Department of Healthcare and Family Services was filed by Generations Health Care Network, Carlyle Healthcare Center, St. Vincent's Home, Clinton Manor Living Center and Extended Care Clinical.

As a result of the state's reductions in Medicaid reimbursement rates, the five operators said they have substantially limited, or are considering limiting, their participation in the Medicaid program. This will "severely curtail" Medicaid patients' access to nursing care services, they said.

(Reporting by Tracy Rucinski; Editing by Lisa Shumaker)