Kansas Governor Proposes Restoring Medicaid Cuts, Increasing Hospital Tax
August 26, 2016 06:41 AM
Kansas Governor Sam Brownback (R) said on August 17 he would be willing to restore four percent cuts to KanCare reimbursement rates if the state legislature increases the provider tax, a fee to hospitals. KanCare is the state’s privatized Medicaid program.
“I look forward to working with the legislature to restore the four percent cut in reimbursement rates and will call on them to pass an increase in the provider tax,” the governor said in a statement. The announcement came a day after the state canceled public meetings to discuss the KanCare cuts.
The federal government provides $1.28 to Kansas for every dollar the state spends on Medicaid so the provider rate cuts led to a loss of over $70 million in federal aid. Some of that federal aid would be restored by restoring the rate cuts.
Kansas is one of 19 states that reject expanded eligibility for Medicaid, a decision that has cost Kansas more than $1.3 billion, according to the Kaiser Family Foundation.
Under pressure to balance the state’s budget, Governor Brownback announced the payment cut to some KanCare providers in May, with the cuts taking effect in July. The $56.3 million in Medicaid reductions was part of almost $100 million in spending cuts Brownback ordered to eliminate a projected deficit in the fiscal year 2017 budget.
“The Governor’s announcement of cuts to the KanCare program amounts to a broken promise
to the people and the health care providers of Kansas,” the Kansas Hospital Association said in a statement. “The Governor’s announcement will undoubtedly make some providers question whether they can continue to participate under such circumstances. Ultimately, and most importantly, that will threaten access to care in Kansas.”
This is the third time Brownback has attempted to negotiate provider tax increases to address budget shortfalls, but both previous attempts met fierce resistance from hospitals, who said they could only agree to the tax increase if the money was used to fund Medicaid expansion, something the governor refuses to do.
A 2014 study commissioned by the Kansas Hospital Association found expanding KanCare would generate $2.2 billion in additional federal money, more than Kansas would need to cover the state’s share of the expansion cost for five years.
Many healthcare professionals in Kansas have called for Medicaid expansion as a way to improve access to care and also ease the state’s budget shortfalls that have led to sharp spending cuts. There is also concern that Brownback’s plan would place an additional tax burden on the very caregivers he says he wants to help.
Primary elections in early August resulted in moderate Republican candidates ousting more than a dozen of Brownback’s close allies in the state legislature, leaving advocates of Medicaid expansion hopeful they can move a plan through the legislature and to Brownback’s desk.
Dan Hawkins, the Republican who chairs the House Health and Human Services Committee says rolling back the provider cuts will be his “first job” when the state legislature returns from recess. While Hawkins does not support KanCare expansion, he is willing to repeal some of Brownback’s tax cuts to small business owners or raise taxes on the three private companies awarded state contracts to manage the KancCare program. Brownback has voiced his strong opposition to rolling back any of his tax cuts.
In his statement last week Governor Brownback pointed out the financial vulnerability of some rural health care providers.
“Our rural hospitals face many challenges, caused primarily by declining Medicare reimbursement rates. Initiatives like our Rural Health Working Group are looking at the broader issues facing rural health care and identifying solutions that will be presented in early 2017,” the statement said.