Gov. Linda Lingle has asked state lawmakers for an emergency $40 million to help make April payments to health insurers for Quest, the state's health plan for the poor.

The state had warned insurers that it may not be able to make payments for the last quarter of the fiscal year, which insurers feared could have interrupted or delayed payments to health care providers that care for the poor and disabled.

Lingle wants lawmakers to advance the $40 million, which would allow the state to use $80 million in federal Medicaid money to cover the April payments. The payments for May and June would still be delayed until the next fiscal year, in July, similar to last year, but insurers have said they can wait.

Lillian Koller, director of the state Department of Human Services, said the emergency money would solve an immediate cash-flow problem. But she added that the state cannot sustain its spending on Medicaid and needs to consider reducing the Quest benefits.

"It still postpones the real reckoning of having to right-size our Medicaid programs," she said.

The state makes about $100 million in Medicaid payments each month to five health insurance plans: Hawai'i Medical Service Association, Kaiser Permanente and AlohaCare for Quest; and Ohana Health Plan and EverCare for Quest Expanded Access, the plan for the aged, blind and disabled.

The Department of Human Services says it faces an $84 million general-fund shortfall — with an additional $258 million gap in federal Medicaid money — for the fiscal year that ends in June.

Quest and Quest Expanded Access, the state's version of Medicaid, cover about 245,000 people.

Lingle's request for emergency funding was applauded yesterday by insurance officials.

"We're pleased that the administration has finally realized the importance of paying Hawai'i's Quest health plans in a timely fashion, and we have support from the Legislature to consider and move this issue forward, and we're happy with that," said Jennifer Diesman, vice president of government relations for HMSA, the state's largest insurer.

HMSA had previously described the state's delayed payment strategy as "illusory" and warned that it could lead the insurer to delay payments to providers.

Erhardt Preitauer, president of Ohana Health Plan's Hawai'i region, said insurers had been urging the state to minimize the payment delays as much as possible.

"Ultimately, we just appreciate the administration's and the Legislature's focus on helping the most vulnerable population of Hawai'i," he said.

Some lawmakers have criticized Lingle for delaying payments in Quest and state income tax refunds from April to July, saying she is avoiding difficult decisions and placing a burden on the next governor. Lingle has countered that the alternative is deeper spending cuts to state programs.

State Sen. Suzanne Chun Oakland, D-13th (Kalihi, Nu'uanu), the chairwoman of the Senate Human Services Committee, has been pressuring the Lingle administration on Quest and believes the governor responded.

"I'm very happy that she finally wants to do it," she said.

State House Speaker Calvin Say, D-20th (St. Louis Heights, Pālolo Valley, Wilhelmina Rise), said Lingle should say how lawmakers should make up the $40 million they would be taking from next fiscal year's budget.

"How do I fill the $40 million hole?" he asked.