Brownback budget cuts include $56M from KanCare

Providers say reductions in reimbursement rates break promise Brownback made when seeking support for Medicaid privatization

By Megan Hart, May 18, 2016

Editor’s note: This story was updated at 10:50 a.m. May 19.

Governor Brownback is pictured explaining his latest budget cuts to KanCare to the press.

Gov. Sam Brownback announced more than $97 million
in budget cuts Wednesday, including $56 million from the
state’s privatized Medicaid program known as KanCare.
(Photo by KHI News Service)

Gov. Sam Brownback slashed more than $56 million from the Kansas Medicaid program as part of larger budget cuts announced Wednesday, prompting concerns that health care providers will drop out of the program or limit services to Medicaid patients. 

About $38.2 million of the $56.4 million in budget cuts comes from reducing reimbursements by 4 percent for providers who treat patients covered by KanCare, the state’s privatized Medicaid program launched in 2013. The remaining $18.2 million comes from cuts in other areas of the Medicaid program. 

The cuts come after the Kansas Legislature adjourned earlier this month, leaving more than $80 million in cuts up to Brownback in order to balance the budget 

Providers offering home and community-based services to Kansans with disabilities are exempt from the rate reductions, as are the 95 Kansas hospitals that qualify as critical access facilities or are in counties defined as rural, densely settled rural and frontier. However, all 127 of the state’s community hospitals will be subject to a $3.5 million cut in a program intended to increase provider participation in KanCare.

Cindy Samuelson, a spokesperson for the Kansas Hospital Association, said the cuts break a promise Brownback made to health care providers when he sought their support for privatizing Medicaid.

“When Governor Brownback began the KanCare program, he emphasized that his Medicaid reform program would allow the state to avoid Medicaid rate cuts,” Samuelson said. “The governor’s proposal to now cut Medicaid rates is a broken promise.”

In addition, Samuelson said, the rate reductions will add to the financial pressures hospitals are under due to reductions in Medicare reimbursement rates and the loss over the last several years of nearly $1.2 billion in federal funds because of Brownback’s rejection of Medicaid expansion

Dennis Cooley, a Topeka pediatrician, said while a 4 percent reduction may not sound like much, it can be significant for primary care doctors who typically have slim profit margins because of the amount they invest in staff and technology. They already receive less to care for Medicaid patients than they do for Medicare patients, and about half as much as they would for patients with commercial insurance, he said.

“From a financial standpoint, you’re losing money, so you just can’t see Medicaid patients,” he said.

The cuts are particularly concerning for pediatricians, Cooley said, because about one-third of Kansas children are covered by Medicaid. In the past, his practice and others have had to limit their Medicaid patients so they could balance them financially with patients with private insurance, he said.

If a significant number of providers stop accepting new Medicaid patients or drop out of the program, it would further limit access to care among low-income Kansans, Cooley said. Not every public health department can provide primary care services, he said, and parents who can’t find a doctor for their child may only seek care if the health issue is serious enough to merit an emergency room visit.

“It’s the kids I’m dealing with that are going to suffer,” he said, adding that “it’s short-sighted” to cut Medicaid reimbursements.

A Kansas provider earns only 78 percent as much, on average, for a patient insured by Medicaid as one insured by Medicare. The ratio is even less for obstetric providers, who earn about 72 cents for every $1 they would be reimbursed for treating a Medicare patient.

As of 2014, Kansas reimbursement rates for most Medicaid services were near the middle compared to other states, tying for 24th overall. Its reimbursements for obstetrics were on the low end, however, tying for 35th. 

Rachelle Colombo, director of government affairs for the Kansas Medical Society, said providers are still evaluating the effect that the Medicaid reimbursement cuts will have on their practices. But she said some may decide not to serve Medicaid patients if the reduction is too steep.

“It’s certainly not going to promote more provider participation,” she said.

Other budget reductions to health programs include:

Some of the remaining reductions to Medicaid come from policy changes. For example, KDADS expects to save $1.3 million by limiting the range of household duties a support worker can perform if a person recieving in-home resides with a non-disabled person, said Angela de Rocha, a KDADS spokeswoman.

KDADS estimates it can save an additional $1.3 million by paying providers only for days they work rather than paying them daily rate to be on call, de Rocha said.

— KHI News Service reporter Jim McLean contributed to this story

Download the Gov. Sam Brownback’s FY 2017 Reductions to KDADS and KDHE

The nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.

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