The Cabinet for Health and Family Services has long enjoyed a strong working relationship with Kentucky's rural hospitals. As both a regulator and funding source, the cabinet's focus is on cost-effective, high-quality services that lead to improved health outcomes for all Kentuckians, while ensuring the health and safety of the public.
This relationship offers the cabinet a unique perspective on the financial challenges faced by some rural hospitals, the changing health care environment in which they operate and how these changes affect their financial health.
Recently, the state auditor released a report on the financial strength of Kentucky's rural hospitals. While the Auditor's Special Report is limited to 2011-13, the most recent financial numbers from calendar year 2014 are very favorable for health-care providers, including rural hospitals.
Since Jan. 1, 2014, more than 500,000 Kentuckians have gained health-care coverage via kynect through either Medicaid expansion or the commercial insurance market.
Thanks to Gov. Steve Beshear's bold leadership, these decisions have benefited the health of half a million Kentuckians, including nearly 30,000 people in Fayette County who now have access to health care. This huge increase in the number of individuals with health insurance also has broad and significant economic implications for your community and your hospitals.
For example, during 2014, $1.2 billion was added to the bottom line of Kentucky's economy, $177.2 million of which went directly into Fayette County.
Since 2011, Fayette County hospitals have been paid more than $1.1 billion by the Medicaid program. Of that, more than $384 million came in 2014 alone, thanks to the expansion of Medicaid to individuals whose income falls below 138 percent of the federal poverty level.
But the path toward improving Kentucky's collective health goes back to 2011, when Kentucky's Medicaid program transitioned from a fee-for-service to a managed care model, one of the last states in the nation to do so.
As a result, health-care preventive services are up by 36.7 percent; breast cancer screening improved by 20.6 percent; cervical cancer screening increased 3 percent; and colorectal cancer screening grew by 16.1 percent.
Managed care has been a critical first step toward improved health for all Kentuckians.
From July 2011 to June 2013, the cabinet saved Kentucky taxpayers $1.3 billion in state and federal funds as a result of managed care.
The cabinet is currently soliciting new proposals from Medicaid managed care companies, providing an opportunity to strengthen penalties for non-compliance with contract requirements, revisit processes and efficiencies for providers, improve communications between the companies and the providers, and divert non-emergency visits from hospital emergency rooms.
The cabinet agrees with the auditor's call for rural hospitals to modernize their business models in response to the changing health-care landscape. One of the major challenges rural hospitals face relates to inpatient hospital stays, where Kentucky hospitals have much room for improvement.
Recently, Medicare implemented a Hospital Readmissions Reduction Program to help avoid unnecessary inpatient hospital stays. Congress imposed penalties for high rates of readmission within 30 days post-discharge, requiring hospitals to place a greater focus on their patients after they leave the hospital.
While Kentucky hospitals comprise approximately two percent of all U.S. hospitals, nine of the 39 U.S. hospitals, or 23 percent, assessed the maximum penalty are located in Kentucky. Our hospitals must evolve their practices to avoid these unnecessary readmissions, and the cabinet stands ready to assist in that effort.
In recognition of changing trends in health-care delivery, the cabinet also pursued and won a $2 million national grant in December to help Kentucky's health-care community design payment and service delivery models that will improve health-care quality and lower costs.
Kentucky has engaged a broad group of stakeholders in designing this plan, including health-care providers and systems, long-term service and support providers, commercial payers, state hospital and medical associations, and consumer-advocacy organizations.
This work is ongoing and we are pleased to have strong representation at the work sessions from hospitals across the state.
In Kentucky, we are fortunate that most of our citizens now have access to health care. Our shared goal now must be to translate that increased access into quality health outcomes and improved health status. I know this is a goal that all providers, including our rural hospitals, share.