By Mike Sheilds and Dave Ranney, November 23, 2009
TOPEKA — Gov. Mark Parkinson spelled out $258 million in fund transfers and budget cuts today, including an immediate 10 percent reduction in the rates paid the state’s Medicaid providers.
He acknowledged some doctors and other medical providers might stop seeing Medicaid patients as a result of the cuts, but implored against that.
"Medicaid cuts unfortunately will result in some physicians, some hospitals, some nursing homes making the decision that they won’t take care of those who are most needy in our society," Parkinson said in response to questions during an afternoon press conference. "There’s no way to sugar coat this. This will have very negative effects across the state."
Parkinson said Medicaid rates weren’t that good to begin with compared with those paid by Medicare and private insurance plans.
He said the public should understand that providers who agree to see Medicaid patients “are great people. We really appreciate them.
"My hope is that doctors will continue to treat people that are covered under Medicaid," he said. "My plea to them is that they continue to treat Medicaid recipients. Whether they do or not, only time will tell."
The rate reduction will save the state an estimated $22 million in the current fiscal year, which ends June 30, 2010.
The governor also indicated the cuts would likely carry over into the 2011 budget year, Budget officials said carrying the rate reduction through the next fiscal year would save the state another $88 million.
Officials at the Kansas Health Policy Authority, which administers the state’s Medicaid program, said they were still sorting out the full consequences of the governor’s allotment order.
"We’re assessing the full impact and trying to find the best way to proceed and make this as painless as possible," said agency spokesman Peter Hancock.
‘Camel’s back’
Reaction was swift from those who speak for those on the receiving end of the rate cuts.
"This is a devastating day for seniors and for the people who provide services for them," said Cindy Luxem, executive director of the Kansas Health Care Association, which represents many of the state’s for-profit nursing homes.
"We’ve been making a lot of forward progress in the last few years and now this — this is a big step backward," she said.
Earlier this year, lawmakers shelved a planned increase in Medicaid rates paid to nursing homes.
"From our perspective that amounted to a 5 percent cut," Luxem said. "What happened today is on top of that."
Some nursing homes, she said, will likely have to lay off workers and slow efforts to reform care. A few may be forced to close.
"There are a lot of facilities that are already on the brink of closing," Luxem said. "This just might be the straw that breaks the camel’s back."
Luxem said recent cost surveys showed that, on average, nursing homes lose $9 a day on each of their Medicaid patients.
‘Going to be bad’
The cuts also are expected to result in fewer people receiving in-homes services paid for by Medicaid, which could force some people to move to nursing homes.
"It’s going to be bad," predicted Shannon Jones, executive director of the Statewide Independent Living Coalition of Kansas.
"It’s going to mean that a percentage of people who are receiving services now are going to cut off from those services," Jones said. "When that happens, a lot of these folks will have no other choice but to move to a nursing home."
Jones predicted that a 10 percent cut in home and community based services would lead to 800 people with physical disabilities being dropped from the programs.
"People are saying this is big," she said, referring to the cut. "I’m saying, no, it’s bigger than big."
The cuts also are likely to add people to the state’s waiting lists for home and community based services.
Today, more than 1,500 adults with physical disabilities have been declared eligible for in-home services but are waiting to get them. More than 2,000 people with developmental disabilities are on a similar waiting list.
Aging services
Kansas Department on Aging Secretary Martin Kennedy said the agency would cut rates paid to providers rather than directly curtail access to services.
Whether providers continue to provide the services, he said, remains to be seen.
"This is a way to address Medicaid expenditures that can be done across the board," Kennedy said. "I don’t know that you could say it’s the most fair, but at least it’s uniform. It preserves the ability for people to get services at this point."
The department’s only other choice, he said, would be to cut "big chunks of services altogether," resulting in people losing services.
No agency spared
The governor’s allotment order fell on virtually all state agencies.
At Kansas Department of Health and Environment, general salary and operating expenses were reduced about $100,000. The infant and toddler program was reduced $183,573; the state laboratory, $100,000 and the Coordinated School Health program, $46,567.
At the health policy authority, in addition to the reduced Medicaid reimbursements, eligibility for the MediKan and General Assistance programs were cut to 12 months instead of 18 months, a savings of $570,000.
At the Kansas Department of Social and Rehabilitation Services, cuts of about $4 million were made in grants to community mental health centers and about $1.3 million was cut from supports for the developmentally disabled.
How the agency’s cuts would be fully implemented, were not yet clear, said agency spokesperson Michelle Ponce.
"We’ll be meeting with providers and with stakeholders first thing in the morning (Tuesday)," Ponce said. "I suspect it will be a few weeks before the impact is fully understood and the implementation strategy is fully developed."
She said SRS was not planning to layoff or furlough any employees, however.
"We’ve already undergone a statewide reorganization that we’re hoping will make it so we don’t have to go through that, but that’s not to say that at some time in the future it won’t be an option," Ponce said. "It’s not something we’re looking at now."
System collapse predicted
Mike Hammond, executive director at the Association of Community Mental Health Centers of Kansas, said the cuts in state grants combined with cuts in reimbursement rates would be more than the centers could handle.
"You have to understand this comes on top of the cuts in the grants that community mental health centers used to pay for services for the uninsured, people who can’t pay their bills but aren’t eligible for Medicaid," Hammond said. "When you put the two together, it’s too much. The system is going to collapse."
The biggest savings in the governor’s allotment order came from reductions in K-12 and higher education spending and highway maintenance funds. The $50 million shift in transportation spending would require legislative approval when lawmakers return to the Statehouse in January. The $36 million reduction in K-12 schools and $2 million from higher education would not. K-12 schools also were scheduled to receive a $155.8 million increase in state aid due to enrollment increases and property tax revenue. The governor eliminated the increase.
-Mike Shields and Dave Ranney are staff writers for KHI News Service, which specializes in coverage of health issues facing Kansans. They can be reached at 785-233-5443.