If Gov. Rod Blagojevich’s administration wasn’t motivated to get its arms around the state’s chronic Medicaid payment backlog before, the pressure is really on now.

A new report from Illinois Auditor General William Holland paints a very unflattering picture of the Department of Healthcare and Family Services, the agency that administers the joint federal/state insurance program for low-income residents.

Some of what auditors reported was already painfully evident. For instance, Illinois carries an average $1.5 billion in unpaid medical claims from one fiscal year to the next, thanks to a provision in its own finance law that allows this practice. As such, lawmakers and the governor are able to claim each year that they’ve passed a “balanced” budget, as they are constitutionally required to do, when really these billion-buck obligations are floating around.

But Illinois’ problems go deeper than this.

One, the audit found DHFS with “no written policies, procedures, or guidelines that document how decisions are made that determine which providers are paid and when the payments are made.” That’s troublesome. Any taxpayer-funded agency must be able to justify who it pays, when and why. It’s called accountability.

Two, the audit faults DHFS’ communication with Medicaid providers. It has a “cumbersome” process providers must follow when they get fed up waiting for their checks and start demanding interest. In fact, Holland says submitted claims have “accrued a potential liability” of $81 million in interest due to payment delays over the past eight years.

It’s beyond irresponsible for this governor to keep pushing for more expansions of state health care when Illinois can’t meet its current obligations. As for lawmakers, any serious discussion about the state’s financial health must include the billion-plus structural deficit.

Fortunately, the audit is full service: It contains more than a dozen recommendations to help DHFS get its house in order. We hope that some of these recommendations are implemented.