07/19/2011 05:14 pm ET Updated Sep 18, 2011

Illinois Medicaid Reforms Halted By Federal Government

A law enacting major reforms to the state of Illinois's Medicaid program hit a stumbling block on Monday, as the federal government announced that two of those reforms cannot be implemented.

The law, which passed this winter and was signed by Governor Pat Quinn on January 25, contained a number of alterations to the way the state provides health care to its least fortunate. Among them, the All Kids program was pared back, more clients will be moved to managed care and increased checks were to be implemented to fight fraud.

It was these last provisions that forced the federal government to intercede.

The law required that Medicaid recipients present identification proving that they live in Illinois, and a paycheck to prove that their income is low enough to qualify. Those requirements, the Centers for Medicare and Medicaid Services said, are in violation of federal rules.

According to those rules, states aren't allowed to change the criteria for qualifying for Medicaid, Illinois Statehouse News reports.

Lawmakers from around the state were quick to express their frustration with the ruling.

Republican U.S. Senator Mark Kirk held a press conference Monday to decry the decision, and he and several Illinois congressmen drafted a letter to CMMS asking that it reconsider.

"This program is under stress," Kirk and the others wrote, according to FOX, "and would be strengthened if measures were taken to ensure funding for intended families by excluding fraud that grants taxpayer funding to people who are not low-income or were not from Illinois."

State Representative Patti Bellock, a Republican who helped craft the reform package, didn't mince words when describing how overloaded she believed the state's Medicaid rolls are.

"Fifty percent of all births in Illinois (are) on Medicaid," Bellock said, according to ISN. "One out of every three children in Illinois is on Medicaid, and one out of every five Illinoisans is on Medicaid."

Medicaid makes up nearly one-third of Illinois's total spending, and given the state's massive budget shortfall, lawmakers had hoped that cuts to the program could help save money. While many of the reforms will continue to be rolled out in the coming years, these two don't look like they'll make it past the drawing board.

In a statement, CMMS suggested that the state "use available electronic data and verification sources" to confirm that applicants are in fact Illinoisans.

"We are committed to giving Illinois and all states the ability to maintain the integrity of their Medicaid programs, while ensuring that beneficiaries continue to receive access to the care they need to live healthier lives," the statement read.