The practice allows the state to circumvent a federal regulation that requires it to pay costs in nursing homes where at least half the beds are filled with psychiatric patients. According to the state, the patient's problems included ovarian dysfunction, arthritis, and a cranial dermatosis condition, commonly known as dandruff. Robert Smith, a state Department of Public Aid administrator, denied that Illinois has improperly billed Medicaid or that nurses have embellished diagnoses. He said the method for counting mentally ill patients is an interpretation of federal standards. Medicaid is the federal-state program that helps pay health care costs for the elderly, disabled and poor families.
States determine which services are covered and are partially reimbursed by the federal government.
The Tribune said its computer analysis of state and federal records shows that the public aid agency has used the practice to win Medicaid funding to subsidize 25 nursing homes with a predominance of psychiatric patients. The newspaper said the practice diverts Medicaid funds earmarked for the poor and allows the state to continue to postpone action to create facilities specifically designed for the mentally ill.