Lake Cumberland Regional Hospital (LCRH) stands to receive just over $11 million as part of a larger settlement Kentucky has reached in regard to a 13-year-old dispute over Medicaid reimbursement rates.
Kentucky and the federal government will pay $383 million to settle with 54 rural hospitals that said they were underpaid by Medicaid, Gov. Andy Beshear announced Wednesday with Senate Majority Leader Mitch McConnell. The state's portion will be $93.9 million and the federal government, which provides the majority of Kentucky's Medicaid money, will pay about $289 million.
The previous administration had budgeted an estimated $425 million in state funding to settle the case. The governor said the settlement saved the state more than $300 million and provides long-awaited funds immediately back to rural hospitals.
Beshear said Senate Majority Leader Mitch McConnell helped work out a resolution with the federal Centers for Medicare and Medicaid Services. Medicaid is a joint federal-state health insurance program for the poor and disabled.
"The funding is much-needed relief to our rural hospitals and health care workers that have been on the frontlines helping to fight the global pandemic," Gov. Beshear said. "The hard work from our office along with support from Majority Leader McConnell and federal partners has resulted in millions of dollars in savings to the state and immediate payment to our rural hospitals. We expect to be issuing checks as early as next week."
The dispute began in 2007 when a group of rural hospitals filed a protest over a change in reimbursement that stayed in effect for several years. A lawsuit followed in 2013. The hospitals claimed the rate-setting methodology used by Kentucky Medicaid was invalid, and the Franklin Circuit Court and the Kentucky Court of Appeals agreed. The case is pending before the Kentucky Supreme Court.
Earlier this year Gov. Beshear asked CMS to exercise its authority to dedicate federal Medicaid funds owed to rural hospitals. Following a request from the Beshear administration, Sen. McConnell's office contacted senior officials at CMS and at the U.S. Department of Health and Human Services reiterating the importance of a quick and positive decision for Kentucky's rural hospitals.
On April 3, Gov. Beshear and Senate Majority Leader McConnell announced the Centers for Medicare and Medicaid Services (CMS) approved Kentucky's request to recover Medicaid federal match rates and provide federal funds for a payment.
"In the midst of the coronavirus crisis, I'm proud to work with the Trump Administration and Gov. Beshear to deliver urgently needed resources for more than 50 of Kentucky's rural hospitals," McConnell said. "As the only congressional leader not from New York or California, I'm constantly working to direct national attention and federal resources to rural America, and especially Kentucky. The medical professionals at our rural hospitals have shown their courage and dedication every day throughout this pandemic, and it's my privilege to thank and support them."
LCRH is expected to receive $11,070,140. When contacted, hospital officials referred the Commonwealth Journal to the Kentucky Hospital Association.
Ginger Dreyer, KHA Director of Communications, said the organization wasn't party to the litigation but was pleased for all involved.
"This settlement is important because with 30% of Kentucky hospital patients generally being covered by Medicaid, which has historically paid hospitals about 25% less than the actual cost to treat these patients," Dreyer stated, "government underpayment and cuts damage the ability of hospitals to cover expenses and weaken the long-term sustainability of Kentucky hospitals.
"The settlement coming at this time will also help Kentucky's hospitals as they deal with additional losses from battling COVID-19."