Kentucky Braces for Possible Medicaid Cuts

The health care proposal under debate in the U.S. Senate has been crafted and managed by Majority Leader Mitch McConnell (R), whose six terms in office make him the longest serving senator in the state’s history. The measure also is strongly supported by President Donald Trump, who won 62.5 percent of Kentucky’s votes last November.

Yet, the proposed cuts to Medicaid in the bill, which the Congressional Budget Office estimates would reach $770 billion over the next decade, would make it all-but-impossible for Kentucky primary healthcare providers to recruit physicians to their clinics and provide certain healthcare services in low-income communities.

Some clinics will be forced to reduce staff if Medicaid expansion is rolled back. Primary Care Centers of Eastern Kentucky was able to increase their staff by 10 to 15 percent because of Medicaid expansion through the Affordable Care Act. If they are no longer receiving the volume of payments they’ve gotten through the expansion, they will no longer be able to support the staff increases.

By 2024, the bill would phase out additional funding provided by the ACA to states that have expanded Medicaid coverage. Beginning in 2020, the proposal would limit the amount of Medicaid funding states receive, rather than increase funding as needed to cover eligible patients and procedures.

“Totally reversing the Medicaid expansion would probably have the biggest impact of anything,” Primary Care Centers CEO Barry Martin said. “It will mean layoffs. You take away 10 percent of our revenue, it would be hard to maintain that [level of employment].”

Primary Care Centers operates four clinics in Eastern Kentucky that serve eight counties that are among the most impoverished in the state. They treat more than 20,000 patients a year. Any disruption in the payments coming into the clinic means there will be impacts on staffing and the services they are able to provide. Martin, along with many other clinic administrators, is concerned about the level of uncertainty surrounding possible cuts. Providers have no way of knowing what to expect because the changes are not yet final.

McConnell had hoped to have a vote on the Senate plan before the July 4 congressional recess, but had to scrap that plan when he lacked the votes for passage. Negotiations are ongoing to try to cobble together a coalition for passage, but the uncertainty around the bill has made it even more difficult for providers to know what to plan for.

“It’s not really possible to prepare for these things,” Martin said. “We don’t even know exactly what kind of impact it’s going to have.”

David Bolt, Chief Operating Officer of Kentucky Primary Care Association, said KPCA providers have more questions than answers about potential federal cuts, as well as the 1115 state Medicaid waiver set to be adopted later this year. The 1115 waiver allows states to change Medicaid by waiving certain federal regulations. Kentucky Governor Matt Bevin proposed a 1115 waiver last year that would set work requirements for participation, create premiums with penalties for failure to pay, and that would end dental and vision coverage.

Providers have not been included in discussions about implementation of changes, and are worried about how the changes will affect their ability to provide a quality level of care to their patients.

“Any time you’ve got the dynamics of change we foresee in this waiver process, there needs to be complete understanding so that the people intending to serve the population can continue to do what they need to be doing,” Bolt said. “They have to keep the lights on and the doors open and the staff paid.”

Many of the clinics in the KPCA network are “safety-net providers,” or those that serve populations who otherwise would not have access to healthcare because of location or ability to pay. KPCA’s network includes 330 clinical locations across Kentucky that employ 1,200 medical providers, including behavioral health, dental and vision. This network manages almost 250,000 patients who use Medicaid.

Bolt said many of KPCA’s providers are worried they will lose Medicaid payments that have helped them expand services and recruit physicians.

“It’s a whole series of issues that may take more than three or four months to really get in place,” Bolt said. “That’s concerning because that kind of disruption takes away from everything else.”

It has taken some clinics up to two years to fully implement Medicaid changes in the past, Bolt said, and many clinic operators are concerned they are facing a similar situation now.

“[Making administrative adjustments] are an essential part of doing business, but the actual business is taking care of patients,” Bolt said. “We just don’t need more administrative burden. If we could simplify that, that would allow clinics to focus more on the patients.”

The other irony for Kentucky patients and providers is that changes to the application of the ACA would come after the state has emerged as one of the signature beneficiaries of the law. More than 400,000 previously uninsured people in Kentucky gained coverage through Medicaid expansion. According to the Kentucky Center for Economic Policy, drug treatment in a state plagued by the heroin and opioid crises increased by more than 500 percent, and 13,000 new jobs were created because of the expansion. In 2017 alone, Kentucky will receive $3.5 billion in Medicaid payments, and most of that money will go to providers.

KCEP Research and Policy Associate Dustin Pugel said the expansion helped Kentucky out of the 2008 economic recession, but the proposed House and Senate changes would effectively create a second Great Recession in the state. Data show that under the American Health Care Act passed by the House, 86,000 jobs would be lost by 2022 – 20,000 of them in the 5th Congressional District of Eastern Kentucky, where some of the highest rates of increased Medicaid enrollment occurred.

The AHCA would “effectively end Medicaid expansion,” Pugel said, adding that the proposed cuts to Medicaid would end work and family support, and create a per-capita cap, which limits the number of people who can enroll in Medicaid.

“Not only does the AHCA take us back to before Medicaid expansion, but it also takes us back even further, to when Medicaid started under LBJ in 1965,” Pugel said. “It doesn’t totally undo what LBJ signed into law, but it does permanently erode it.”

These types of predictions loom large for Kentucky healthcare providers, especially since Medicaid expansion allowed many of them to increase or maintain services for their patients that otherwise would have been lost.

The University of Kentucky recently ended OBGYN services in Hazard, which forced patients to drive long distances to the nearest provider. Patients could drive anywhere from 1 to 3 hours seeking care. But because of increased Medicaid payments, Martin and Primary Care Centers were able to fill the gap.

He partnered with the local hospital, Appalachian Regional Healthcare, to maintain the OB services in their community. Primary Care Centers agreed to hire and support the OBGYNs, if ARH would agree to improve their OB facilities. Now, there are full-time OBGYNs working in Hazard that serve patients from five surrounding counties.

It’s just one way Primary Care Centers is helping patients in Eastern Kentucky. They have partnered with Mountain Comprehensive Health Care on a program to help pregnant women who are addicted to opioids. “Pregnancy and Beyond” provides services for the mothers to help them recover, improve their health and the health of their baby. They can also pursue their GED and enroll in birthing classes while pregnant. Primary Care Centers is also a Diabetes Center of Excellence, with 1,000 patients currently enrolled.

“We’re just trying to respond the needs of our communities,” Martin said.

Responding to those needs may become more of a challenge if proposed Medicaid cuts take place. Bolt said clinics must operate based on their ability to generate cash flow, just like traditional businesses. Without the increased cash flow created by the Medicaid expansion, cuts to staffing and services will sometimes need to be made.

“If our clinics want to do something, they have to do a rather exhaustive business plan that makes the basis that it will be somewhat self-supporting,” Bolt said. “Sometimes, when you’re faced with tremendous cost, you say ‘It may be the right thing to do, but we just can’t afford it.’”

Regardless of whatever proposed changes actually happen, Bolt said it won’t make a difference to the providers’ mission of providing care and services to their communities regardless of their patients’ ability to pay.

“I’m fond of saying, ‘They were there before Medicaid expansion serving the under-served, and they will certainly be there after Medicaid expansion, serving the under-served,” Bolt said.

It’s a sentiment Barry Martin shares. While he admits that Medicaid expansion has been helpful to the economy and increased access to healthcare for the working poor, he’s confident that rolling back those changes will not prevent Primary Care Centers from providing care to their communities.

“We were growing before the expansion, and we’ll just try to continue to offer more services,” Martin said. “We’re planning on being around for a while.”

Ivy Brashear is the Communications and Appalachian Transition Associate at the Mountain Association for Community Economic Development in Berea, Ky

Editor’s Note: This article is part of a new effort at Spotlight on Poverty and Opportunity to feature reported journalism as part of its efforts illuminate news and trends in the field to promote a bipartisan dialogue.

The views expressed in this commentary are those of the author or authors alone, and not those of Spotlight. Spotlight is a non-partisan initiative, and Spotlight’s commentary section includes diverse perspectives on poverty.