FRANKFORT — Gov. Steve Beshear said payments to health care providers who see Medicaid patients would fall by 30 percent if the General Assembly does not approve his proposal to balance the program's mammoth budget.
For hospitals, a 30 percent cut in Medicaid reimbursement for six months would amount to a $247 million loss, said Mark Neff with the Kentucky Hospital Association.
"A reduction of this magnitude in provider rates is unacceptable," Beshear said. "It is unnecessary and would be crippling to the Kentucky economy, impacting thousands of health care jobs and would mean many in the program would have less access to adequate health care."
Beshear predicted Wednesday the General Assembly will approve his plan to shift $166.5 million from next year's Medicaid budget to the current year. To make up the resulting shortfall in fiscal year 2012, Beshear said the state would expand the use of private contractors to provide Medicaid services.
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But Senate President David Williams, R-Burkesville, said the Democratic governor, whom Williams hopes to challenge in this year's general election for governor, first must fulfill his pledge from last year to cut costs in Medicaid by $125.5 million.
"I don't believe anything he says," Williams told reporters in his office shortly after Beshear held a news conference to rally support for his plan.
Beshear's proposal also got a cold reception from the advocacy group Kentuckians for Nursing Home Reform, which said the state should require nursing homes and hospitals to prove the cuts would hurt their quality of care.
Bernie Vonderheide, the group's founder and president, called the plan "laughable and ridiculous."
"We suggest that Gov. Beshear and the legislature use what they are doing as a bargaining tool to get better care," Vonderheide said. "The nursing home industry could start by agreeing to minimum staffing regulations to solve a serious staff shortage at many facilities."
Joined by several House Democratic leaders and health care providers and advocates, Beshear said Kentucky had expected to receive an additional $238 million from the federal government for Medi caid but will get only $138 million. That leaves a $100 million shortfall in this year's Medicaid budget, prompting the need for the fund transfer from next year, Beshear said.
If the money is not transferred, Beshear said, the impact on health care providers that participate in the health insurance program for the poor and disabled will be devastating.
"The only available option to reduce spending quickly in fiscal year 2011 would be to drastically cut provider reimbursement rates," Beshear said.
On average, provider rates would have to be cut 30 percent or more, he said.
Beshear announced last November the state will use more private contractors for the $6 billion federal-state Medicaid program.
He said his plan will not mean reduced services for recipients or reduced fees for providers.
Asked about a scathing audit last year that showed problems at Passport Health Plan, a Medicaid managed-care plan based in Louisville, Beshear said those problems dealt with managers and not delivery of services.
Health and Family Services Secretary Janie Miller said her cabinet has initiated increased oversight of managed-care programs.
House Speaker Greg Stumbo, D-Prestonsburg, and House budget chairman Rick Rand, D-Bedford, said they backed Beshear's plan.
Sheila Schuster, executive director of the Kentucky Mental Health Coalition, called Beshear's plan "a necessity."
Still, Williams said Beshear has failed for three years to contain Medicaid costs.
He said the Senate will have "tough discussions" on the issue when lawmakers return to Frankfort on Feb. 1 to resume this year's legislative session.