Kansas Providers Bristle, Brace for Medicaid Cuts

Hospital and physician associations warn that the governor's Medicaid privatization scheme has failed to deliver and threatens the program's existence.

Kansas Gov. Sam Brownback's $56 million cut to the privatized KanCare Medicaid program is facing blowback from healthcare providers.
In a media release detailing the cuts, Brownback said KanCare's 4% reductions to providers, which take effect on July 1, would exempt home- and community-based services and almost 100 hospitals defined as rural, densely settled rural, frontier and critical access hospitals.

After identifying KanCare as one of "the three main drivers of budget growth," Brownback said "we are working to slow the growth of government spending and our projected FY 2017 expenditures are less than FY 2015 actuals. Kansans cannot afford the explosive growth of state government spending that occurred in the past."

In a sharply worded open letter last week, however, Kansas Hospital Association President and CEO Tom Bell threw the baloney flag and accused the governor of attempting to obfuscate the scope of the cuts, which were part of more than $80 million in reductions to the overall state budget.

"There has been a flurry of inaccurate or incomplete information, and we need to set the record straight. Despite comments to the contrary, there simply is no 'rural' exemption from the proposed cuts," Bell said.

"Every part of the state will feel the effect of the cuts through reductions in payments to physicians, nursing facilities, home health agencies, hospitals or other caregivers."

More than 30 of the state's 107 rural hospitals are in danger of closing, and Bell said the ongoing effect of the KanCare cuts has become "obvious."

"Almost every comment made about this new proposed policy warns that KanCare reimbursement cuts will seriously jeopardize access to care," he said. "We've now seen concrete examples of hospitals in different parts of the state struggling under the current system, and these cuts will only exacerbate those struggles for all providers."

Kansas remains one of 19 holdout states that reject Medicaid expansion and the money that comes with it under the Affordable Care Act. As a result, Kansas has lost an estimated $1.2 billion in federal matching funds.

Brownback privatized KanCare in 2013 with assurances that the leaner and more efficient program would improve access to care.

So far, those promises have not materialized. Providers and patient advocates hate it, and commercial payers aren't happy with it either. The Witchita Eagle reported last week that KanCare's health plans, Sunflower, UnitedHealthcare and Amerigroup, reported losing $52 million in Kansas in 2014.

Bell accused the governor of reneging on promises made to providers.

"When KanCare was announced, the Administration repeatedly stated that the program would improve access to healthcare and allow the state to avoid cutting provider rates," Bell said.

"And encouraged by these promises, healthcare providers have been good partners regarding KanCare. This despite the fact that the program pays them less than the cost of providing care; despite the growing financial pressure facing those providers; and despite increasing evidence that KanCare isn't working as promised."

The Kansas Medical Society has also weighed in on the cuts, warning that physicians are already providing KanCare services for about half the payment of commercial plans, and that further reductions "are likely to adversely impact access to care, and will inevitably result in higher overall costs to the program."

"If the cuts cause physicians to drop out of the program, or place strict limits on the number of Medicaid patients they are able to see in their offices, more care will be delivered in hospital emergency departments, which are considerably more expensive settings than a physician clinic," KMS said in a statement.

KMS said that the cuts would exacerbate the very problems that the privatization was supposed to resolve: "They represent a reversal of one of the administration's key principles upon which KanCare was founded a few years ago: improved patient care outcomes and lower costs, all to be achieved without cutting provider payments."

Bell said the KanCare cuts are "simply bad public policy" that do not account for the ripple effect that the funding loss will have in communities across the state.

"In Kansas, the healthcare sector is the fourth-largest employer statewide and generates approximately $1.5 billion in state and local tax revenue annually," he said. "The Kansas Industry and Occupational Outlook created by the Kansas Department of Labor puts healthcare among the top 10 job creators, showing more job growth than any other industry in the state with over 33,000 new jobs added over the next decade."

Brownback was elected in 2010 with nearly 70% of the vote on a promise to slash income and business taxes. (He was reelected in 2014 with 49% of the vote.)

Taking a page from the trickle-down economics playbook, Brownback said the lower taxes would spur investment and job growth. So far, that investment and job growth has not kept pace with the cuts, which has led even one-time supporters to concede that Brownback's "real, live experiment" is a failure.

For obvious reasons, state healthcare provider professional associations tend to be very cautious when wording displeasure with elected officials. Perhaps the KHA and KMS are feeling a bit more emboldened because of growing public discontent at the direction of state government.

At least one poll shows that Brownback's 26% approval rating makes him the least-popular governor in the nation.

Or, perhaps the KHA and KMS are just tired of seeing their provider members and the poor and vulnerable patients they serve used as guinea pigs for a radical experiment that isn't working.