The Illinois Health Facilities Authority is considering new ways to get needed cash to hospitals, nursing homes, and pharmacists that are owed more than $600 million in Medicaid reimbursements by the state.

Two plans, which are still in their formative stages, were proposed by public finance officials at Kemper Capital Markets and Lehman Brothers. The plans would leverage the money the state owes the Medicaid providers to raise cash for them.

The plan put forward by Lehman officials would involve a "unique" version of a commercial paper transaction, according to one public finance source. The Kemper officials' plan would have the authority issue tax-exempt notes.

Mary McInerney, the authority's executive director, said the total amount of debt the authority could sell under the two plans would range from $100 million to $600 million. She said the authority hoped to have final plans in place by July.

Ms. McInerney added that the note issue or commercial paper sale would probably be done through a negotiated sale.

State officials said neither plan would address the underlying problem of late Medicaid payments caused by the state's deteriorating financial position.

"It's an attempt by the Health Facilities Authority, with [the state's] encouragement, to provide creative assistance for cash-strapped providers," said Erhard Chorle, an executive assistant to Gov. Jim Edgar. "It is not an answer to the problem of delayed payments."

Richard Hamilton, vice president of finance at the Illinois Hospital Association, said the association was examining the authority's plans in their preliminary form.

"Clearly the problem of receivables is a huge one for us and the state is not willing to step up and face the obligation," Mr. Hamilton said.

The association is currently suing the Illinois Department of Public Aid in U.S. District Court over the state's Medicaid reimbursement system to hospitals.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.