Legislators hear testimony on cost of Medicaid expansion, discuss changes to State Health Plan

At Wednesday’s Medicaid Oversight Committee, legislators heard testimony from Cabinet for Health and Family Services Secretary Audrey Haynes on the status of Medicaid and the implementation of Medicaid expansion in Kentucky.

Touting the success of Medicaid expansion and Kynect in Kentucky, Secretary Haynes stated that Kentucky is now the second lowest in the nation when looking in terms of number of citizens going from being uninsured to insured, only behind Arkansas. She also stated the Beshear administration expects a $30.1 billion boom to the economy and creation of 40,000 jobs in the state through 2021 because of the expansion. Patients covered under Kentucky’s Medicaid expansion is approximately 8.5% of Kentucky’s total population.

When asked about the cost to Kentucky for the expansion, Secretary Haynes explained that beginning in 2017 the state will have to start paying a portion of expansion, eventually ending in 10 percent of the total cost by 2021. She stated that in 2017 the projected costs of the expansion to the state budget would be $74.4 million and increase to $173 million in 2018. Many legislators, including Sen. Ralph Alvarado—a doctor from Winchester, questioned how the state would pay for this cost with an already strapped budget, and by 2021, Kentucky would financially be unable to pay for their 10% portion. Haynes stated that she believed with the financial boost to the economy through jobs, the costs will be offset.

Sen. Alvarado questioned the cabinet about concerns that many providers are still not receiving sufficient or prompt reimbursement through Medicaid managed care. He cited the Kentucky Hospital Association’s report Code Blue, which showed the struggle of many rural hospitals because of implementation of the ACA and Medicaid managed care. In response, Sec. Haynes referenced a report from CHFS which showed that over 90% of Medicaid claims are being paid in a timely manner.  Sen. Alvardado replied that this statistic does not match what he is hearing from his constituents and medical providers.

The Interim Joint Committee on Health and Welfare also met on Wednesday where Cabinet officials offered testimony on the revised State Health Plan, which includes several changes to Certificate of Need (CON). CHFS has been working with stakeholders on modernizing the CON process and the new plan has seven core principles which were identified: support the evolution of care delivery, incentivize development of full continuum of care, incentivize quality, improve access to care, improve value of care, improved technology, and look at services for which formal CON review may no longer be necessary.

Secretary Haynes told the committee that health care in Kentucky looks much different than it did years ago and it was time to modernize the CON procedures to accommodate the new environment to increase flexibility for providers, including rural hospitals and incorporate quality measures.

The revisions to the State Health Plan are open to comments through the end of June and a final plan is expected to be released in August or September of this year.