FRANKFORT, Ky. (Jan. 19, 2021) – On Tuesday, Gov. Andy Beshear announced Kentucky hospitals will receive an additional $800 million to $1 billion annually to help advance the quality of care of Medicaid members and provide a stable base for hospitals that will extend beyond the financial challenges of the COVID-19 pandemic.
The Governor said the Kentucky Cabinet for Health and Family Services (CHFS) received approval Jan. 14 from the U.S. Centers for Medicare and Medicaid Services (CMS) on a new directed payment initiative that increases inpatient Medicaid payments for Kentucky hospitals. Pending Kentucky General Assembly legislative approval and federal approval of details plans, payments could begin in March.
With over one-third of Kentucky’s population enrolled in Medicaid, the Governor said the payments are critical to building a better Kentucky by assuring equal access to quality care in the commonwealth.
“Health care is a basic human right, and our people deserve the highest-quality care possible,” said Gov. Beshear. “Our hospitals and medical professionals are the pillars holding up our communities during this unprecedented time. Our hospitals need additional support to ensure they can continue to meet the needs of Kentuckians and our health care heroes and sheroes deserve our sincere thanks for standing strong on the frontlines helping to save lives.”
In order to receive these funds, hospitals will have to abide by higher quality standards that will be developed in collaboration with CHFS and the Kentucky Hospital Association (KHA).
KHA President and CEO Nancy Galvagni said: “KHA is delighted by the news that CMS has approved this new directed payment plan. It will mean the difference between keeping the lights on rather than locking the doors for a number of our hospitals. We appreciate our partnership with Gov. Beshear’s administration and are eager to work with our partners in the General Assembly to enact the necessary legislation to ensure that Kentuckians have access to quality health care.”
CHFS Secretary Eric Friedlander explained that hospitals would cover the increased cost of the program and said House Bill 183 has been filed, which, contingent upon this approval, would provide the flexibility for further protecting smaller, rural hospitals.
If HB 183 passed, the Department for Medicaid Services (DMS), an agency of the cabinet, also could access an additional $50 million to $80 million in funding to support the Kentucky Medicaid program.
Directed payments were established by the federal government to allow states with Medicaid managed care programs to increase payments for eligible classes of providers to advance Medicaid program goals of improving quality and access to health care services. “This approval signals support of payment reforms designed to increase access to care and promote quality services for Medicaid members,” said DMS Commissioner Lisa Lee.
Funding is subject to continued federal approval and acknowledgement of this program in the state budget.
Over 1.6 million Kentuckians currently are enrolled in Medicaid.
There are 112 hospitals in Kentucky, excluding university-affiliated and state mental hospitals.