Kansas Medicaid cuts will cost Lawrence Memorial Hospital nearly $750,000 in next fiscal year

Lawrence Memorial Hospital

Medicaid cuts that Gov. Sam Brownback ordered in May to balance the state’s budget will cost Lawrence Memorial Hospital approximately $500,000 to $800,000 in the next fiscal year.

Joe Pedley, LMH chief financial officer, told the hospital’s board of directors Wednesday about the effects of both across-the-board Medicaid cuts and cuts to provider reimbursement rates.

A 4 percent overall cut to the Kansas Department of Health and Environment and Kansas Department for Aging and Disability Services — which is mostly coming from Medicaid — would lead to an estimated $462,000 in lost revenue for LMH, Pedley said. And an approximately 4 percent cut to reimbursement rates would cost LMH another estimated $272,000. The decrease would start with Kansas’ new fiscal year, beginning July 1.

Kansas must get approval on the Medicaid reductions from the federal Center for Medicare and Medicaid Services.

Some providers are part of an effort, led by the Kansas Hospital Association, to fight the cuts, said Andy Ramirez, an attorney with Lathrop and Gage representing LMH.

“Providers enter into a contract with the state, and the state with the federal government. There is a significant legal issue as to whether the state can unilaterally change those contracts,” Ramirez told the board of directors. “Just be aware. I think Kansas hospitals affected by this are paying close attention because it’s going to impact their bottom line.”

Besides the reductions, Kansas is two payments behind to LMH for treating those without health insurance. Providers pay a fee to the state and get a lump sum in return for uncompensated care, Pedley explained. LMH and other providers are being asked to continue to pay the fee, though they aren’t receiving the payments in return, he said.

“They’re still insisting we pay in our provider fee, and for some hospitals that is a true hardship,” Pedley said.