CHICAGO -- Illinois' chronic tardiness in paying its Medicaid bills has led one state bonding authority to sell tax-exempt commercial paper to help speed money to nursing homes.

At least $43 million of six-month commercial paper, backed by pooled state Medicaid receivables held by nursing homes, is scheduled to be sold as early as today by the Illinois Development Finance Authority, which last year marketed a similar commercial paper issue for pharmacies.

Another yet-to-be determined amount of commercial paper is scheduled for sale next week to complete the program, according to Philip Howe, the authority's acting executive director. The authority has approval to issue up to $150 million of the short-term paper, he said. While the authority has received applications from nursing homes covering about $140 million of Medicaid receivables owed by the state, only thoSe receivables that are free of liens will be included in the debt program.

The commercial paper program allows the authority to purchase Medicaid receivables held by the nursing homes for Services provided in February, March, and April, according to officials working on the program. In return for selling the receivables at a discount to the authority, the nursing homes will get their money 90 days faster than if they waited for the state to work its way through a backlog of Medicaid bills.

Unlike the $10 million of commercial paper sold by the authority last year for pharmacies, the deal for nursing homes will not involve both adjudicated and appropriated Medicaid receivables, according to Smart Fuchs, a vice president and co-manager at Goldman, Sachs & Co., sole manager for the issue.

The nursing home program will involve only adjudicated receivables -- bills that have gone through the state's billing process and have been certified as payable. However, payment has not been appropriated as Illinois ran out of Medicaid appropriations in its fiscal 1994 budget earlier this year.

Fuchs said state appropriations for the nursing homes bills will be contained in Illinois' yet-to-be approved budget for fiscal 1995. Once appropriated, the money would be paid by the state to the authority to retire the commercial paper. While the fiscal year began a week ago, Gov. Jim Edgar and legislative leaders have yet to reach an agreement over the budget. A major sticking point in the negotiations has been finding money to pay overdue Medicaid bills.

If no budget is forthcoming and the state fails to pay off the receivables by the end of December, the program would draw on letters of credit securing the deal from Canadian Imperial Bank of Commerce and the Industrial Bank of Japan. Each bank will be responsible for securing a specific series of commercial paper.

Executives at the banks said they feel comfortable that a budget will be passed and the receivables will be paid.

"We believe there is going to be a budget pretty soon based on past history in Illinois," said Timothy L. Bailer, a vice president in public finance at Canadian Imperial Bank of Commerce U.S.A. "We did a lot of due diligence and are very comfortable [the commercial paper] will be paid out of the '95 budget."

An additional credit enhancement is provided by a $2.4 million debt service reserve from the authority.

The Illinois department of public aid also has an agreement with the authority to pledge $1.4 million to the debt service reserve fund if the state does not pay off the receivables by sometime in September, according to Fuchs.

Ratings for the issue are pending from Fitch Investors Service and Moody's Investors Service.

Mike Belletire, Edgar's deputy chief of staff, said the governor's office was approached by long-term care providers looking for some monetary relief from the state's elongated payment cycle. He said that without the commercial paper program, some of the providers could wait until the end of September to be paid all or some of the money the state owes them.

Some nursing homes can't wait that long, according to William Kempiners, executive. director of the Illinois Health Care Association, which represents nursing homes. He said that some facilities have reached "the end of the line of credit" with their lenders, while trying to make payrolls, purchase supplies, ,and pay vendors.

The program marks the second time in Illinois that nursing homes have been given a way to accelerate payment of their state receivables through the issuance of commercial paper.

In 1991, the Illinois Health Facilities Authority inaugurated the first commercial paper program to use Medicaid receivables in a pooled approach that did not rely for security on the creditworthiness of individual participants, but on the state's pledge to pay its bills and other credit enhancements. At the time, about $50 million of commercial paper was issued by the authority for hospitals and nursing homes, but the program was discontinued last year due to insufficient demand by participants, according to Mary Mcinerney, the authority's executive director.

That program was followed last year by one devised by the Development Finance Authority involving state Medicaid receivables held by pharmacies. One of the main differences between the programs was that the finance authority's program was tax-exempt, while the one run by the health facilities authority was taxable, even though both programs involved some for-profit providers.

The fact that the development finance authority's program for pharmacies is still in operation and is tax-exempt, which offers the possibility of lower interest rates on the paper, were reasons cited by state officials for choosing that authority for the new commercial paper program.

"Speed was the prime consideration," said Howe of the finance authority. "The thought was the pharmacy program was up and running and could be modified quicker, cheaper, and easier."

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