By Ronnie Ellis
CNHI News Service
At a time when the state is scrambling for revenue and wrestling with Medicaid costs and managed care, it might have to repay $60 million in federally disallowed supplemental payments to primary care centers.
State Medicaid Commissioner Lawrence Kissner earlier this month sent a letter to the primary care centers informing them the federal Center for Medicare and Medicaid Services (CMS) would not approve such payments if the center isn’t certified by the federal government. The letter said payments to non-certified centers will cease as of Feb. 1.
CNHI News obtained a copy of another document, titled “draft for internal discussions only,” which was circulated among legislative leaders outlining the change by CMS and raising the possibility the money might have to be repaid.
The document and spokespersons for the Cabinet for Health and Family Services and the Budget Director’s Office indicated Kentucky had not yet been asked to repay the money — and may not be.
A Center for Medicare and Medicaid Services spokesman in Washington would not say if the state would ultimately be asked to repay the $60 million.
Alper Ozinal told CNHI News that CMS “has been working with the state to identify any overpayments.” But Ozinal would not say if, or when, CMS might ask for repayment.
But the possibility Kentucky might have to come up with the money is causing state officials to try to find out.
The chairman of the House Budget Committee, Rick Rand, D-Bedford, said if the federal government should ask for the money back, “that would be a pretty good hole in the budget and be a major issue for us.”
Rand hopes the cabinet can negotiate with CMS to avoid repayment or if it can’t do that negotiate a partial repayment.
For several years Kentucky has paid supplemental Medicaid payments to primary care centers serving rural and other medically under-served regions. Over the years, some of those centers began operating in areas that aren’t under-served, but the practice was apparently approved under the state Medicaid plan.
But with the implementation of managed care under which the state pays managed care organizations a contracted amount to pay for Medicaid services, the federal government said it would no longer allow those payments unless the primary care centers were certified by CMS as either Federally Qualified Health Centers (FQHC) or Rural Health Centers (RHC).
Of the approximately 273 primary care centers in Kentucky, only 118 meet the certification requirement of CMS. Payments to the other 155 over the past 12 months come to about $60 million.
Jill Midkiff, spokeswoman for the cabinet, said so far there’s been no indication CMS will ask Kentucky to re-pay the $60 million.
“It’s not unusual when there is a change like this for the federal government to seek repayment,” Midkiff said. “But they have not indicated we will have to repay it.”
State budget officials are monitoring the situation.
“We’ve been in close contact with Health and Family Services and the Department of Medicaid,” said Kevin Cardwell, deputy budget director. “It is possible the feds could ask for repayment of those funds or a portion of them.”
But Cardwell said that’s not certain and even if the money had to be repaid, it wouldn’t likely affect the current budget. It would more likely be accounted for in the 2014-15 biennial budget.
Senate Budget Chairman Bob Leeper, I-Paducah, said Senate Republicans are looking into the matter.
“We are aware of the problem,” Leeper said. “We’re trying to find out if we’ll be asked to repay the money.”
Lourdes Baez-Schrader, spokeswoman for Senate President Robert Stivers, said Senate leadership has been briefed on “preliminary details” of the overpayments and has assigned Senate staff to look into it. (House Speaker Greg Stumbo, D-Prestonsburg, was traveling out of state and could not be reached for comment.)
The payments were used to supplement Medicaid price reductions so that underserved regions could attract primary care physicians.
The 118 CMS certified centers will continue to receive the supplemental payments but the other 155 will be hit hard, according to Joseph Smith, executive director of the Kentucky Primary Care Association.
Smith said some which serve rural, medically underserved areas are seeking certification as RHCs. The process takes from three to four months before CMS decides if they meet the requirements.
But the others, those serving other areas and largely owned by physicians, would have to qualify under the FQHC certification that applies to non-profit centers with sliding scale fees and a community based board.
“That would be a tough hurdle for those centers,” Smith said. “These centers have historically received these payments and now suddenly they aren’t and that is what their business plans are based on.”
He said all the affected centers have indicated they will have to cut back on services and some have said they may cease operations.
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at email@example.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.