Kansas health care providers will urge federal officials to reject Gov. Sam Brownback’s proposed Medicaid cuts and may challenge them in court.
The recently announced cuts would reduce state expenditures for KanCare, the state’s privatized Medicaid program, by $56.3 million and trigger a loss of approximately $72.3 million in federal funds. Combined, the managed care organizations that administer the $3 billion KanCare program and the health care and service providers they have contracts with would be forced to absorb more than $128 million in cuts.
Of particular concern to providers is the proposed 4 percent reduction in reimbursement rates, which would amount to about $87 million of the $128 million total.
“In addition to being bad policy, the administration’s proposal to cut provider reimbursement would be inconsistent with state and federal law,” Tom Bell, chief executive of the Kansas Hospital Association, said in a recent letter to Brownback. “It would also be inconsistent with and not permitted by provider contracts in place with all Kansas hospitals. As such, we will challenge these proposed cuts in any appropriate way.”
Reductions of the magnitude being proposed will make it harder for the approximately 425,000 low-income children and families, elderly adults and people with disabilities covered by KanCare to access services, Bell said in an interview.
“The effect of these cuts will be to make providers less likely to participate (in KanCare) and ultimately make it even more difficult for vulnerable people to get the health care they need,” he said. “And why in the world would we want to do that?”
State officials must obtain approval from the federal Centers for Medicare and Medicaid Services to fully implement the cuts. But Brownback administration officials have said the reductions will take effect July 1 regardless of whether CMS has approved them.
“From our perspective, that’s fairly presumptuous,” Bell said. “I think the assumption on the part of the state is that CMS will just rubber stamp this. But our hope is that because so many people are concerned about the effect on access that CMS will take a very serious look at this. This is not your typical state plan amendment.”
Michael Randol, director of the Division of Health Care Finance in the Kansas Department of Health and Environment, said regardless of when CMS approves the cuts they will be retroactive to July 1. If there is significant lag time between the effective date of the cuts and when CMS approves them, it could increase their impact by requiring providers to absorb a year’s worth of reductions in a matter of months.
Randol said he believes the state can legally impose the cuts pending CMS approval.
“I am confident in what we’re doing,” he said.
Julie Brookhart, a CMS spokesperson, said states can implement Medicaid changes while the agency is reviewing them.
“For a July 1, 2016, effective date, the state Medicaid agency would need to submit a state plan amendment by September 30, 2016, as the amendments can be retroactive,” Brookhart said in an email.
Still, those attempting to stop the cuts see timing as a potentially critical issue. Hospital association lawyers are assessing the chances of obtaining a court order to delay the cuts.
“We’re absolutely taking a look at that,” Bell said.
The extent to which the planned reductions in provider reimbursements affect KanCare patients’ access to care will be among the issues that CMS considers. Federal law requires that reimbursement rates be “sufficient to enlist enough providers” to ensure that Medicaid recipients get roughly the same level of services as the general population, Brookhart said.
In defending the cuts, Randol pointed to the 10 percent reduction in Medicaid reimbursement rates ordered in 2010 by former Democratic Gov. Mark Parkinson during the Great Recession. He said Brownback administration officials reviewed those cuts when crafting their plan.
“We tried to maintain some semblance of consistency,” he said.
The current situation doesn’t compare to 2010, said Kyle Kessler, executive director of the Association of Community Mental Health Centers of Kansas
“The cuts under Parkinson were the result of a recession and were temporary,” Kessler said. “That’s not what this is.”
The Brownback Medicaid cuts are the latest in a series of actions taken by the governor and lawmakers to cover chronic budget shortfalls that many believe have been caused by Brownback’s tax policies, specifically the income tax cuts and exemptions he pushed through the Legislature in 2012.
Because the budget problems appear likely to continue, Kessler said providers are concerned the proposed cuts may be permanent.
“Without a plan for restoration, the assumption has to be that they’re indefinite,” Kessler said.
Kansas hospital administrators share that concern.
“I’m very concerned about that,” said Randy Peterson, chief executive of Stormont Vail Health in Topeka. “It’s hard to accept that this could go indefinitely.”
Bell, the chief executive of the state hospital association, questions whether it's necessary for the state to make the cuts now. With a projected ending balance of $87.1 million in fiscal year 2017, Bell said the state could forgo the KanCare cuts and still finish the year with approximately $30 million in the treasury.
The Brownback news release announcing the budget reductions said they were being made to “continue to slow the growth of government” and signaled the possibility of additional cuts to Medicaid and higher education if the Kansas Supreme Court orders the state to increase funding for public schools.