Measure reversing cut to Medicaid providers gets OK from House panel

Legislation to reverse a cut to Medicaid providers made by Gov. Sam Brownback last year advanced in the House budget committee on Tuesday.

The measure, passed by the House Appropriations Committee on a voice vote, would reverse a 4 percent cut to reimbursement rates for medical providers who serve Medicaid patients. It instead would increase fees on managed care organizations in KanCare. It now goes to the full House.

KanCare, the state’s privatized Medicaid program, began in 2013. Medicaid is a federal program administered by the states that provides insurance for low-income and disabled individuals.

Lawmakers described reversing the cut as necessary because of the financial strain faced by providers. But several said raising fees on managed care organizations to aid providers amounts to the best of bad options.

“We’re at a point where this is becoming an access-to-care issue,” Rep. Susan Concannon, R-Beloit, said. “We’re talking about companies. What about people, who when these providers no longer will accept Medicaid ... have no place to go for care?”

The bill would increase the fee charged to managed care organizations from 3.31 percent of premium revenue to 5.77 percent. Currently, the fee – known as the MCO privilege fee – is set to drop to 2 percent in 2018.

Brownback’s reduction of the Medicaid provider reimbursement rate last year saved the state about $38 million annually. Kansas receives $1.28 for every $1 it spends on Medicaid, and the cuts caused a loss of more than $70 million in federal funding. Reversing the cut would allow the state to again receive more federal funds.

In August, Brownback said he looked “forward to working with the Legislature to restore the 4 percent cut in reimbursement rates and will call on them to pass an increase in the provider tax.” The Eagle is seeking comment from the governor’s office on whether Brownback would support an increase to the MCO privilege fee.

In total, the proposed fee increase would raise state general fund spending by $1.5 million next year and reduce general fund spending by $115 million in fiscal year 2019, according to a fiscal analysis by state budget director Shawn Sullivan.

Although the fee primarily affects managed care organizations, some non-MCO insurers also offer plans that fall under the fee.

Several insurance companies oppose fee increases. Aetna, Blue Cross and Blue Shield of Kansas and other insurers argued during a hearing on a similar bill in the Senate that a retroactive provision in the legislation would make it impossible for the companies to recoup their losses this year.

“I think we can all agree the 4 percent needs to go back and that triggers the federal money. I just have an issue with the people we’re taxing to pay for this,” Rep. Sean Tarwater, R-Stilwell, said.

Tarwater said the state made a promise to insurance companies and policy owners that the privilege fee was going to decrease to 2 percent in 2018. The bill goes back on that promise, he said, in essence telling companies “never mind.”

Rep. Kathy Wolfe Moore, the ranking Democrat on the Appropriations Committee, acknowledged the bill probably isn’t the best solution for insurance companies. She said she didn’t see any other options.

“This isn’t the end of the difficult decisions that are between good and awful,” Wolfe Moore said.

This story was originally published March 14, 2017 at 5:02 PM with the headline "Measure reversing cut to Medicaid providers gets OK from House panel."