Kentucky Hospital Association calls ‘code blue’ over $7B in cuts

In what it termed a “code blue,” the Kentucky Hospital Association (KYHA) released a report warning that health reforms implemented under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) will significantly contribute to $7 billion in federal cuts to Kentucky hospitals by the year 2024. The report acknowledged that the uninsured rate in Kentucky dropped by 50 percent as a result of the ACA, but maintained that Kentucky hospitals will lose more in revenue than they gain through the expansion of the covered population, amounting to a net loss of $1 billion by 2020.

According to the report, the ACA reduced the number of uninsured Kentucky residents by 50 percent, with over 400,000 individuals gaining health insurance, including through Kynect, the state’s health insurance marketplace. Kentucky was the only southeastern state in the United States to expand its Medicaid under the ACA. However, the KYHA warns that the expansion comes at a cost to Kentucky hospitals that will face $7 billion in federal cuts which will cause layoffs and reductions in available services, especially to those in rural areas.

Kentucky Hospital Association President Mike Rust has been reported as stating that while the expanded coverage of the uninsured has provided additional money to hospitals, there is a significant downside to the changes in the health care system and that the report, “provides the real picture” of the challenges faced by Kentucky hospitals.

The report blames the expected federal cuts to Medicare and Medicaid payments, with many of the newly insured in Kentucky qualifying for the expanded Medicaid services. The report also cited Medicare payments that are lower than cost of inflation, readmission penalties, hospital acquired condition penalties, cuts to disproportionate share hospital (DSH) payments, and problems with Medicare Managed Care Organizations (MCOs), such as slow, reduced, or denied payments. Additionally, it noted that hospitals are facing reductions in funding unrelated to the ACA, including across-the-board federal cuts.

As a result, Kentucky hospitals have resorted to reducing staff, benefits and wages, and programs and services, according to a survey conducted by KYHA. The survey stated that over three quarters of hospitals reducing programs and services were located in rural areas.

Kentucky Governor Steve Beshear, however, defended the state’s Medicaid expansion. According to the governor’s website, the Medicaid expansion will have a $15.6 billion impact on the state’s economy in the coming years and will create 17,000 new jobs.

It was reported that the governor issued a statement defending the changes to the Kentucky health care system and stated, “We are very aware of the challenges that medical providers face in Kentucky.” He added, “Rather than trying to turn back the clock and return to old business practices, we are working directly with providers to help them develop new strategies for better, more efficient, quality health care delivery.”