State Medicaid cut estimated to cost Lawrence hospital $850K annually

Gov. Mark Parkinson’s recent decision to cut Medicaid provider rates by 10 percent was brought up during Lawrence Memorial Hospital’s Board of Trustees meeting on Wednesday, Dec. 16.

Simon Scholtz, chief financial officer, expects the cuts to cost the hospital at least $850,000 annually, based on 2008 claims.

Scholtz went over a couple of letters provided by the Kansas Hospital Association that highlighted the association’s concerns. Among them:

• Increases in the number of patients treated without any or insufficient insurance have led to alarming increases in bad debt expenses and charity care expenses. Payment cuts in the Medicaid program will only exacerbate the situation.

In its 2010 budget, LMH is committing nearly $9 million in projected write-offs for patients who apply for and meet requirements for financial assistance. This is an increase of 12 percent over 2009.

• The state’s hospitals must continue to provide services to everyone who shows up at the door regardless of their ability to pay. This will be difficult, if not impossible, when asked to absorb a decrease in reimbursement of nearly $52 million next year.

• The Kansas Medicaid program has not provided a rate increase to hospitals or physicians for more than 10 years. To the extent possible, hospitals must shift these costs and losses to everyone else that gets care, resulting in higher costs, higher insurance premiums and higher local taxes.

• To compound matters, the significance of the state Medicaid cuts is magnified because of the federal matching funds involved. As a a result, when you save the state $3 through these cuts, you are actually cutting provider reimbursements by $10.

The Kansas Health Association described the decision as “bad health policy.”