With passage of Medicaid omnibus bill, Illinois secures funding for reforms to healthcare access, behavioral health, and more


Boram Kim


The Illinois Legislature passed House Bill 1298, the state’s omnibus Medicaid legislation, during the 2023 legislative session, securing notable funding for Medicaid programs along with other targeted healthcare reforms that address areas such as access and children’s mental health.


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The legislation outlines overall state spending provisions for the Medicaid program, including reimbursement rates for community-based substance use disorder treatment and intervention services. 

Lawmakers approved $317 million for Medicaid rate increases and more than $700 million to account for the phasing-out of enhanced federal matching funds associated with the unwinding of continuous Medicaid enrollment

Rep. Dagmara Avelar (D – Bolingbrook), chair of the House Medicaid and Managed Care Subcommittee, told State of Reform the rate increases will go to support reimbursement for community health workers, behavioral health professionals, orthodontists, and other providers of typically non-traditional Medicaid services.

“In talking to a lot of stakeholders in the state of Illinois—physicians, direct service providers, etcetera—we’ve been able to find some of those key things to bring forward to our legislature to be able to pass a Medicaid omnibus, which in the state of Illinois has the biggest chunk of our [general revenue fund] money allotted to it,” Avelar said. “So we wanted to make sure that we’re good stewards of it, where we’re not just focusing on the quantity but then also the quality of healthcare.”

Avelar said one of the biggest challenges to the state’s efforts in value-based healthcare was access—having enough providers who accept Medicaid and serve in rural areas. 

The Illinois State Medical Society (ISMS) praised state leadership on the progress made in healthcare this session.

“ISMS applauds the General Assembly for preserving Governor Pritzker’s Medicaid budget proposal that included a reimbursement increase for physicians,” said Rodney S. Alford, M.D., ISMS president. “Of the $250 million in overall Medicaid rate increases, through ISMS advocacy, $25 million will be designated specifically for physician rate increases to begin on Jan. 1st, 2024, which is half of the upcoming fiscal year. The full-year rate would total $50 million. This is important for patients and physicians.”

The Illinois Association of Medicaid Health Plans (IAMHP) told State of Reform that by increasing provider rates for behavioral services, federally qualified health centers, and critical access hospitals, the state’s focus on improving health outcomes for its members and communities at large remains. 

“We are pleased with the passing of SB 1298, the Medicaid Omnibus legislation, and how it prioritizes health equity and access to services that are critical to the well-being of our Medicaid members,” said Samantha Olds Frey, CEO of IAMHP.

“Medicaid Omnibus legislation highlights important reforms and initiatives that remain a top priority to IAMHP and our member Medicaid Managed Care Organizations, as well as to the state of Illinois. By increasing provider rates for behavioral health services, FQHCs, critical access hospitals providing OBGYN care, and more, we are not only continuing to set an important precedent of how the state values our safety net program, but we ensure that our focus remains on improving health outcomes for Medicaid members, and thus our communities at large.”

IAMHP partnered with the state to add protections for the quality withhold program that incentivizes improving health outcomes while preserving resources within Illinois Medicaid. Frey said the association was encouraged by its collaboration with state leaders on policies that strengthen the Medicaid program.


Healthcare access and affordability

Sen. Laura Fine’s (D – Glenview) HB 2296 will authorize the Illinois Department of Insurance (DOI) to approve, modify, or deny premium rates in the individual and small group markets. DOI will also require health plans to provide cost transparency for any proposed rate changes. 

“[HB 2296] would allow the DOI to tell an insurer that their policy rate is too high and they have to reconfigure the rate,” Fine told State of Reform toward the end of the session.

“There are a lot of consumer protections. Part of that legislation contains a section all on transparency and that section would explain, ‘Where are these healthcare costs coming from? Is it [that] your pharmaceuticals have gone up? Hospitalization? What is it that are the drivers of your healthcare costs?’ And that’s something that’s kind of mysterious to all of us. We know prices are going up. Why are our policies going up? And so this would answer that question.”

Illinois became the 19th state to create a state-based health insurance exchange this year with the passage of HB 579, which sponsors say will expand healthcare access by identifying uninsured communities and helping them enroll in an appropriate plan.

DOI will create an advisory committee that will work with stakeholders on implementing the Illinois Health Benefits Exchange, which advocates are hoping will be operational as a state-based platform by plan year 2026. 

In an interview with State of Reform, Sen. Dave Syverson (R – Cherry Valley), minority spokesperson on the Senate Health and Human Services Committee, said the state-based exchange was a politically motivated measure that made no sense. 

“The problem is one: that [the state-based exchange] competes with the [marketplace] exchanges, which means it’s going to make the ACA premiums potentially more expensive because companies are going to have less people in it,” Syverson argued. “It’s going to create a problem.

Second, the more people you put on a Medicaid plan means doctors and hospitals are getting reimbursed at a low rate, which drives more hospitals into bankruptcy or drives up the cost of private insurance because they have the cost shifted. This is really poorly thought out. I don’t know if it’ll ever get off the ground. But clearly, there is not a need for it because we already have an income-based healthcare plan in place. It’s more to do with next year’s presidential election than it is to do with really addressing a healthcare issue.”

HB 3030 will amend the state’s arbitration process for insurance claim disputes by allowing out-of-network physicians and medical groups to file batch claims against insurers. 

Alford said the legislation will vastly improve the existing arbitration process, which is cost-prohibitive and administratively burdensome. He also confirmed that ISMS will have a presence on the advisory committee that will inform the development of the state-based marketplace exchange. 


Behavioral health

The state’s ambitious Children’s Behavioral Health Transformative Initiative (CBHTI) will evaluate and redesign the delivery of behavioral health services for children and adolescents. 

With $22.8 million in funding approved, state agencies will be able to move forward with system improvements to behavioral health access by building out residential transition and placement, acute crisis care, and intensive in-home and community-based services. 

“We heard from families, we heard what their [children’s mental health] struggles are,” Fine said. “Now that we’re going to see [CBHTI] enacted, we’re going to see what works, what doesn’t work, and what needs to be tweaked. But what’s so exciting for me is [that] the state of Illinois is really paying attention.

We’re hearing from people, we’re hearing what needs to be done—those personal stories that really tell you, ‘Is the state on track?’ … I am really proud to be from a state that’s focusing on this issue, that’s really going to help everybody—because everybody’s impacted by this one way or another.”

Fine helped pass the Interagency Children’s Health Services and Healing-Centered Illinois Acts. The former will create services for youth with complex behavioral health needs, and the latter will work to implement trauma-informed, healing-centered policies, practices, and programs for children and youth moving forward. 


Social determinants of health

The Illinois State Board of Education will receive $18.8 billion ($10 billion general) toward programs to support schools, faculty, and student learning, including $250 million for the first year of Pritzker’s early childhood initiative Smart Start Illinois

Under the initiative, SBE will provide grants to promote preschool capacity, support preschool construction and renovation, and increase salaries for childcare workers throughout the state with the larger aim of providing pre-K education to all children in the state. 

The $350 million Home Illinois initiative will fight homelessness through prevention, affordable housing, outreach, and other programs. SB 2241 allocates an additional $144.5 million to DHS for grants to family and community services that support the homeless, including nearly $20 million in low-income housing assistance. 

Meanwhile, a measure to expand the state’s undocumented immigrant health program to all adults failed as the political division over the issue of immigrant coverage and its fiscal impact led to an extended session. The session adjourned on May 29th three days after its scheduled end date due to disagreements over the $50.6 billion state budget

Syverson was critical of the undocumented health program even before the Department of Healthcare and Family Services revised its estimated costs for immigrant coverage from $220 million to $1.1 billion. 

“It’s a better program than anyone else in Illinois has,” Syverson said. “The undocumented plan is better than what we give our own low-income people because our regular Medicaid recipients in Illinois are in managed care. The undocumented [beneficiaries] are in fee-for-service so they’re in the Cadillac health plan that covers everything and you don’t have to have your care managed.”

Syverson said the program will be costly and strain health system resources, driving up premiums and reducing access and quality for everyone. 

Avelar, formerly an undocumented immigrant herself, said that healthcare is a human right, not a privilege, and praised the state’s support for the vulnerable. Avelar said state leadership will be looking at ways to maximize federal matches to the program and that the cost savings will be measured over time. 

“When you have people getting a lot of their healthcare on a preventative basis, we can save a lot of money in emergency room costs,” Avelar said. “We believe that that investment we’re [making] right now, it’s going to pay off at the end of the day.”