With Illinois facing a growing pile of bills from Medicaid providers that is adding to its fiscal woes, the state’s finance authority board on Tuesday gave preliminary approval to a program to speed up payments.

Under the program, the state will assign Medicaid claims from hospitals, doctors, pharmacies, nursing homes and others to the Illinois Finance Authority, which in turn will assign the claims to a state-qualified group of investors.

The program is similar to one the state launched last year that allowed vendors to voluntarily assign their non-Medicaid claims to qualified investors such as banks in exchange for the rights to the state’s payments for the bills and any so-called “prompt payment” penalties due the vendors.

Chris Meister, the authority’s executive director, said the IFA’s statute allows it to get involved with Medicaid receivables.

“What is envisioned is a program that expedites payments to vendors for services they have provided to the state of Illinois,” he said, adding that the program will be taken up by the board again at a later date for final approval after the state irons out various details.

As of March 31, Illinois’ bill backlog stood at $4.51 billion, with some claims dating back to mid-October, according to the state comptroller’s office.

Meister said while he hopes the General Assembly will comprehensively address the late vendor payment issue, the IFA will have its program ready if it is not resolved.

Democratic Governor Pat Quinn had hoped to sell $8.75 billion of bonds to pay bills after state lawmakers in January passed a big, temporary increase in the personal and corporate income tax rates. However, the bond authorization, which needs Republican votes to pass, stalled in the Democrat-controlled General Assembly.

In March, Quinn floated the idea of an approximately $2 billion short-term borrowing just to pay Medicaid bills.

Without the borrowings, the state would have to use a large chunk of fiscal 2012 revenue to pay for expenses incurred in the current fiscal year, leaving the state’s nagging structural budget deficit largely in place.

That deficit, along with a huge unfunded pension liability, the state’s inability to pay bills owed to vendors and public entities on time, its cascading bond ratings, and its propensity to borrow its way out of financial problems have made Illinois a top concern in the $2.9 trillion U.S. municipal bond market.

The Illinois Finance Authority also gave final approval to the sale of up to $182.5 million of tax-exempt revenue bonds for the University of Chicago Medical Center. The variable and fixed-rate bonds to be priced through Bank of America Merrill Lynch will finance a hospital expansion and improvements.