Opinion ID: 6497990
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiﬀ Saint Anthony Hospital

Text: Saint Anthony is a so‐called “safety‐net hospital” on the southwest side of Chicago. It provides health care regardless of patients’ financial means. See 305 ILCS 5/5‐5e.1. Most Saint Anthony patients are on Medicaid. As the Illinois Medicaid system has shifted from fee for service to managed care, the hospital has become ever more dependent on timely pay‐ ments from MCOs. In recent years, according to Saint An‐ thony, those payments have repeatedly arrived late, if they arrived at all. As of February 2020, payments of at least $20 6 No. 21‐2325 million were past due. The impact of late payments can be dramatic. In 2015, Saint Anthony had more than $20 million in cash on hand, which was enough to fund 72 days of opera‐ tion. As the State increased its reliance on managed care, Saint Anthony saw its cash reserves dwindle. By 2019, Saint An‐ thony had less than $500,000 cash on hand, enough to cover just two days of operation. Saint Anthony’s net revenue per patient also dropped more than 20%. The MCO payments that eventually arrive are often for less than is owed. Making matters even worse from Saint An‐ thony’s perspective, the payment forms it receives from the MCOs lack the details needed to determine just what is being paid and what is not. The delays and lack of clarity benefit the MCOs: since the State pays the MCOs flat fees per patient and permits them to keep the funds they do not pay out to pro‐ viders, MCOs have a powerful profit incentive to delay and underpay hospitals like Saint Anthony. Saint Anthony may not be alone in its experience. Mer‐ cyhealth is a regional health‐care system and the largest Med‐ icaid provider in Illinois outside of Cook County. Illustrating the potential gravity of the MCO payment problems, in April 2020, Mercyhealth announced it would stop accepting Medi‐ caid patients covered by four of the seven MCOs in Illinois. Decl. of Kim Scaccia ¶ 6, Dkt. 50‐1, Ex. 12. That was a drastic step showing the potential threat to the viability of the man‐ aged‐care model for Medicaid. Mercyhealth said it took this step because those MCOs were delaying and underpaying it to the point that it was losing $30 million per year on Medi‐ caid patients. See also David Jackson & Kira Leadholm, Insur‐ ance Firms Reap Billions in Profits While Doctors Get Stiﬀed for Serving the Poor, Better Government Ass’n (Nov. 8, 2021, No. 21‐2325 7 12:00 PM), https://www.bettergov.org/ news/ insurance‐ firms‐reap‐billions‐in‐profits‐while‐doctors‐get‐stiﬀed‐for‐ serving‐the‐poor/.1 Faced with this dire financial situation, Saint Anthony had two paths to seek legal relief from what it sees as systemic defects in the Illinois Medicaid program. One path would be to sue MCOs individually for violating Saint Anthony’s con‐ tractual right to timely payment. Arbitration provisions in those contracts would likely require arbitration for each indi‐ vidual claim in dispute, which could easily involve many thousands of individual claims each year. This suit represents the second path, seeking a court order to require Illinois to enforce the MCOs’ contractual obligations to make timely and transparent payments.