Gov. Sam Brownback’s administration may reduce reimbursement rates for medical providers who serve Medicaid patients in an effort to balance the state’s budget, lawmakers close to the issue say.
Critics of the idea say it could reduce patient access to care because some physicians may stop serving Medicaid patients.
But Sen. Jim Denning, R-Overland Park, says it’s the state’s only option as it seeks to fix a budget deficit.
“That’s the only pot of money left,” he said.
Brownback has until Thursday to sign or veto a budget bill lawmakers passed earlier this month. It requires the governor to make additional budget cuts to balance.
“Unless the revenues increase more than what is projected, the governor’s going to have to go into Medicaid about $40 (million) or $50 million to make the numbers work,” said Denning, who is vice chairman of the Senate budget committee.
The budget bill shields K-12 education – which accounts for more than half the budget – from cuts. That leaves KanCare, the state’s $3 billion privatized Medicaid program that provides health coverage for low-income Kansans, as the only place to find the millions needed to fill the budget hole, Denning said. He noted that efforts to roll back a tax exemption for business owners failed to gain traction this session.
State budget director Shawn Sullivan presented possible options to close the budget gap in April, including a 5 percent cut to the Kansas Department of Health and Environment’s health services
Rep. Jerry Henry of Atchison, the ranking Democrat on the House budget committee, said Sullivan framed that $35 million cut as a cut to reimbursement rates for medical providers serving Medicaid patients.
“It was a provider cut,” Henry said Tuesday. “And that could be to hospitals, that could be any type of provider, dentists, doctors. … How they framed it to me is the services would still continue, it’s just the provider would receive less.”
Henry said the portion of Medicaid used to serve developmentally disabled Kansans won’t be affected because that is administered by the Kansas Department for Aging and Disability Services.
Final decisions later
The governor’s office would not say Tuesday whether it planned to cut Medicaid reimbursements.
“Our office is reviewing the budget and will announce final decisions later this week,” said Eileen Hawley, Brownback’s spokeswoman.
However, Rachelle Colombo, director of government affairs for the Kansas Medical Society, said the governor’s office informed her organization last week about a possible reduction to Medicaid provider reimbursement rates.
“The administration has reached out to KMS and let us know there will be a cut to provider reimbursement coming. They have not told us how much or when it would be effective or announced. But they’ve told us they plan to cut provider reimbursement for Medicaid,” she said.
“It’s our understanding that the specifics are still being worked out,” Colombo said.
Paid less for services
Denning said the state would reduce the monthly per-member payment to the private insurance companies that administer the KanCare program and adjust the Medicaid fee schedule downward, which would allow the insurance companies to pay doctors and hospitals less for their services.
“And the providers, it’s my understanding they have contracts that pay based on the Medicaid fee schedule, so once the Medicaid fee schedule gets changed to a lower amount, then they’ll get paid less,” he said.
Denning added that he wouldn’t be surprised if the insurance companies “took a little bit of the pain as well.”
He said the changes might need approval from the federal Centers for Medicare and Medicaid Services, depending on how significantly the state reduces rates.
The state would also stand to lose federal money, said Sheldon Weisgrau, director of the Health Reform Resource Project in Topeka, because the federal government provides $1.28 in match funds for every $1 the state spends on Medicaid.
“If the state spends less, they will get less from the federal government,” he said.
Some providers may cut back
Another concern is that some doctors will be less willing to work with Medicaid patients if they receive lower payment rates, Henry said.
“Some providers will probably just quit taking Medicaid, period, or you’ll have some that will really start cutting back, so while they may say there’s money there for services, you’re going to have some Medicaid recipients that won’t be able to find a provider,” he said.
Colombo said a provider cut has the potential to affect access to care and result in overall higher costs.
“We’re disappointed by this news. It really flies in the face of the problems KanCare was designed to solve. … One of the administration’s key principles for KanCare was that they would improve outcomes and lower costs without cutting provider rates,” she said. “We feel this is a reversal of that principle and the wrong approach to achieving their goals.”