Kansas Hospitals Push Back on Medicaid Cuts, Tax Hike

Providers air frustrations at a plan by Gov. Sam Brownback to nearly double a tax on inpatient revenues to offset the funding gap created by the governor's 4% cut to the privatized KanCare Medicaid program.

For obvious reasons, healthcare provider associations and lobbyists are a diplomatic bunch. They loathe public confrontations with elected state officials who can raise and cut taxes, and who control funding for Medicaid, which is one of the biggest items in any state budget.

So, it was unusual to see the Kansas Hospital Association last week offer a strongly worded criticism of Gov. Sam Brownback's proposal to cut Medicaid spending by 4%, and cover the hole by what would have to be the nearly doubling of a 1.38% assessment tax on hospital inpatient revenues.

"The governor seems to be saying that in order to reverse the 4% rate cuts, he is going to increase a tax on the very entities those cuts are hurting," KHA President and CEO Tom Bell said in an op-ed column offered to newspapers across the state.

"The governor's hospital tax increase, just like his Medicaid cut announcement, shows a lack of understanding of the interdependence of Kansas hospitals specifically, and the Kansas healthcare system in general. All hospitals are challenged by the Medicaid cuts and all hospitals will be even more challenged by an increase in the hospital provider tax. And, consequently, every community, large and small, will feel its effects."

Bell told HealthLeaders Media he wrote the op-ed piece because he was frustrated by a problem with an obvious solution.

The way hospitals see it, the governor has resorted to a convoluted scheme that robs Peter to pay Peter while forfeiting about $1.2 billion of Affordable Care Act dollars that would have been available if he expanded KanCare, the privatized Medicaid program that he created.

"We feel have been great partners with the state in trying to make our KanCare program work," Bell says.

"We've been good partners through many times when there had been implementation issues, through times when we feel like policies have been instituted that would not make the program better. We've got to point out that this program can be made better by taking a hard look at it and looking at expansion at the same time."

Not a Done Deal

The ill effects of the governor's proposal would fall heaviest on rural Kansans. While critical access hospitals would be exempted from the direct 4% cut to KanCare, Bell says, they would not be exempted from the inpatient revenue tax hike. In addition, physicians and long-term care facilities serving those rural areas would see their KanCare reimbursements cut.

Brownback's proposal is not a done deal. The KanCare cuts require the approval of the Centers for Medicare & Medicaid Services. The tax hike on inpatient revenues has to be approved by the next Kansas Legislature, which may be less receptive to the governor's agenda after the November elections.

Already this month, firebrand conservative Republican supporters of Brownback's radical tax cutting philosophy were defeated in their party primary elections, which many observers saw as a referendum on Brownback, who is tanking in the polls.

"The legislature that is coming to Topeka in January will be much more interested in having this thoughtful discussion about KanCare expansion and trying to work out a program that not only supports vulnerable populations but is also is good for the Kansas economy," Bell says.

He believes the primary election was a sign that people are tired of politics taking precedence over sound policy.

"From a healthcare perspective, there has been a growing disconnect between the process hospital people go through every day at work and the political process, which is to lay blame and point fingers," he says.

"That is one of the reasons that our folks have become frustrated. They see a lack of movement toward trying to solve a problem and instead just blaming whomever."