CHICAGO, June 19 (Reuters) - Talks over boosting Illinois' lagging payments to Medicaid providers amid the state's budget impasse will continue past a Tuesday deadline initially set by a federal judge, an attorney said on Monday.
Earlier this month, U.S. District Court Judge Joan Lefkow directed both sides to file motions on Tuesday if they failed to reach a negotiated solution that would put Illinois in substantial compliance with federal consent decrees on Medicaid, the healthcare program for the poor and disabled.
"We're still talking to the state," said Tom Yates, executive director of Legal Council for Health Justice, who is representing the state's 3 million Medicaid recipients.
Yates added while he could not divulge details of the talks, no motion will be filed on Tuesday on behalf the recipients, some of whom could lose their access to medical services because Illinois owes Medicaid providers $2 billion.
Eileen Boyce, a spokeswoman for the Illinois Attorney General's office, confirmed that talks were ongoing and said the office did not plan to file a motion on behalf of the state on Tuesday.
Lefkow's June 7 order found Illinois' minimal payments to managed care organizations that in turn pay doctors and others did not comply with the consent decrees, which resulted from two cases filed against the state in 1992. In the wake of the order, Illinois general obligation bond prices plummeted and yields soared in U.S. municipal market trading, although the bonds subsequently clawed back some losses.
An impasse between Illinois' Republican governor and Democrats who control the legislature has left the nation's fifth-largest state without a complete budget for an unprecedented two-straight fiscal years.
As a result, the state has amassed an unpaid bill pile topping $15 billion, while payments mandated by state law for expenses such as debt service on bonds and pensions were made in full.
The next court status hearing for the Medicaid cases is scheduled for June 28, just days before the July 1 start of Illinois' new fiscal year.
Governor Bruce Rauner has ordered lawmakers into a special session beginning on Wednesday to pass a fiscal 2018 budget.
Entering a third-straight fiscal year without a spending plan could sink Illinois' credit ratings to "junk," a first for any U.S. state, leaving some investors unable to buy the state's debt and others to demand even fatter yields. (Reporting by Karen Pierog; Editing by Matthew Lewis)