CHICAGO -- Federal regulators have put a crimp into Illinois' plans to begin moving 1.1 million Medicaid recipients into a managed- care program that was at the core of Gov. Jim Edgar's fiscal 1995 budget.

The federal Health Care Financing Administration this week raised several issues that it said must be addressed before final approval could be given to Illinois' program.

Dean Schott, a spokesman for the Illinois Department of Public Aid, said yesterday that the delay in federal approval of the state's proposed MediPlan Plus program means that the state will not meet its April 1 target date to begin placing the Medicaid recipients into the program. That in turn means the state will not realize a $43 million savings that had been projected from the move, he said.

However, the elimination of the savings will not affect the state's budget for fiscal 1995, which ends June 30, Schott said. Edgar had promoted the managed-care program as the cornerstone of the $33 billion all-funds budget he proposed last year. The program was meant to curb spiraling Medicaid costs that were eating increasingly larger shares of the state budget.

Schott said the lost savings would be felt in the fiscal 1996 budget, but that the Edgar Administration is still projecting the program will ultimately save the state $2 billion over five years.

"The savings is not lost but delayed," he said.

One of the main issues cited by the federal financing administration was its problem with the Department of Public Aid's April 1 target date for placing Medicaid recipients into the proposed MediPlan Plus program.

A letter from the administration said the state's schedule does not provide adequate time "for establishing a network that ensures access and continuity of care or to allow for sufficient education of recipients."

Schott said the department is reworking its timetable.

The administration's letter also raised concerns about Illinois' plan for putting new Medicaid recipients into the program, developing an enrollment process that would encourage a large percentage of recipients to choose their own plans, ensuring proper monitoring of services to avoid duplication and to identify absences of care, as well as other matters.

Schott said the state will be discussing the issues with administration officials and that final approval of the program is expected early next year.

Meanwhile, another element of Edgar's budget has yet to be realized -- the refinancing of up to $750 million of outstanding general obligation bonds. The budget passed by the Illinois General Assembly last July allowed for the refinancing in order to realize approximately $25 million in savings that could be used to pay off the state's backlog of Medicaid bills.

Mike Colsch, the state's deputy budget director, said yesterday that rising interest rates have whittled potential savings down to a much lower amount.

"We're continuing to monitor opportunities to do the refiancing," Colsch said. "But it doesn't look good because of higher interest rates."

He said the state could make up for the lost revenue from other savings realized during the year or from higher than expected revenue growth.

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