Hospital leaders propose Medicaid expansion to Legislature

State hospital leaders will make another push to expand Medicaid in Kansas when the Legislature reconvenes next week.

The effort is being pitched as “KanCare 2.0,” a reboot of the state’s privatized Medicaid program.

States can use federal funding to expand Medicaid and cover people who don’t currently qualify. Kansas is among the states that have not done that.

“We’ve had two legislative sessions where we have not taken advantage of that opportunity. During that time we’ve identified a group of people, about 150,000 or so, that would be able to take advantage of expansion if we chose to,” said Tom Bell, president and CEO of the Kansas Hospital Association.

KanCare serves 346,411 poor and disabled people, according to the most recent quarterly report from the state.

The biggest hurdle in passing Medicaid expansion is the perception among politicians that it is an extension of the Affordable Care Act, often referred to as Obamacare.

The biggest advantage health care leaders may have in getting a hearing is Senate Majority Leader Susan Wagle, who said she is open to the discussion.

“She’s been a great champion of health care in general and that has allowed her to understand that this is an issue we ought to really be looking at,” Bell said.

Wagle told The Eagle in December that her experiences with health care, particularly the survival of her son who had leukemia and her own battle with non-Hodgkin’s lymphoma, have given her a “soft spot for health care.”

“I think I uniquely understand how difficult health care is and that we should find a way, in order to make sure that our Kansas hospitals are just as quality facilities as other states, we should do a Kansas plan that brings in federal dollars because our hospitals are losing right now. … I haven’t pushed that on my Senate, but when people ask me, we need to keep our health care facilities as strong as other states and money needs to flow.”

The hospital association says the state is missing out on roughly $300 million in federal dollars from expansion, which would be funded at 100 percent in 2016 and phased down to 90 percent in 2020. The group contends that increased state revenues and health savings would make up for any money spent by the state for expansion.

Discussion “would allow Kansas to develop its own plan, a plan that makes sense for our state, one that we could take to Washington and say ‘This works for Kansas,’” Bell said.

The proposal is a combination of ideas from other Republican-led states, including Utah, Pennsylvania and Arkansas, Bell said.

It includes:

▪ Premium assistance for people with employer sponsored insurance

▪ High deductible health plan model with a health savings account

▪ Financial contributions by enrollees who are above the federal poverty level

▪ Incentives for healthy behaviors, like prenatal care, blood sugar and cholesterol monitoring

▪ Incentives for job search, training and working toward a GED

▪ A provision that would allow the state to opt out of the program if federal fund matching drops below 90 percent

Federal funding cuts

As part of the Affordable Care Act, hospitals saw reductions in reimbursements for Medicare, the federal program that covers most people over 65. The cuts were meant to help offset the costs of expanded Medicaid, which covers the poor and disabled, since the law originally intended for all states to expand Medicaid to cover more people.

But in 2012, the Supreme Court ruled that Medicaid expansion was optional. States like Kansas that didn’t expand Medicaid have a “Medicaid doughnut hole” where some people make too much to qualify for Medicaid but not enough to afford insurance, health care officials say.

The federal government passed a rule that those in the “hole” won’t have to pay penalties if they don’t purchase health insurance under the individual mandate. But that will still leave a portion of the population uninsured.

In the meantime, many of those people are often given the most expensive health care – in the emergency room.

Medicaid expansion would not completely make up for the Medicare reimbursement duductions, but it would help hospitals, Bell said.

Over the course of 10 years, there will be about $1.3 billion worth of reductions in the Medicare program in Kansas, largely focused on bigger hospitals, he said.

Jeff Korsmo, president and CEO of Via Christi Health, says the system will absorb about $25 million a year in reimbursement cuts.

“If KanCare were expanded along the lines of what we’ve recommended, it would restore about $14 million (to Via Christi),” he said.

That $14 million could translate into roughly 280 more jobs at Via Christi, Korsmo said.

Steve Edgar, CEO of Galichia Heart Hospital, which is associated with Wesley Medical Center, said they have an estimated $12 million in cuts between both campuses.

The restoration of funds through Medicaid expansion would be about $10 million, Edgar said.

Bell said the KHA board will meet next week to approve the wording of the proposed legislation.

KanCare

The three managed-care companies that provide health care services to those in KanCare – Amerigroup, United Health Care and Sunflower, a subsidiary of Centene – all saw net losses during the first year of the program, according to a report by the Kansas Department of Health and Environment.

The losses have some concerned about the viability of the program and whether the companies will continue to work in Kansas.

All three companies have a history of leaving Medicaid programs in other states amid financial and contractual problems.

Hospital officials said previous issues with lagging reimbursements from the companies are getting better, but aren’t perfect.

This story was originally published January 9, 2015 at 7:09 PM with the headline "Hospital leaders propose Medicaid expansion to Legislature."