State and advocates try to keep eligible Kentuckians on Medicaid

State employees staffed a booth at the Kentucky State Fair to help people understand Medicaid changes and how to apply for the program or other coverage. (Ky. Lantern photo by Deborah Yetter)

By Deborah Yetter
Kentucky Lantern

Some patients find out they’ve been dropped from Medicaid when they come in to pick up a prescription. Others, when they arrive for a doctor’s appointment.

And some are struggling to cope with paperwork or documentation required to prove eligibility for Medicaid under new rules that require such information for the first time in three years.

Ashley Shoemaker, director of outreach for the Family Health Centers in Louisville, recalls the relief one man expressed when he was contacted as part of an effort to alert patients about the Medicaid changes.

“He said, ‘I’ve been trying to do this on my own and I don’t know where to start,’” Shoemaker said. “He’s eligible; he just didn’t know where to begin.” Staff helped him complete his application.

But around 70,000 people in Kentucky have been terminated from the health plan for low-income and disabled individuals through June, the latest numbers available from the state.

Mosyt lost coverage for not responding to paperwork, or not properly completing it.

How to renew your Medicaid

What’s going on with the program? If you get health coverage through Medicaid, you may have to resume the annual process of proving you are still eligible for the federal-state health plan for low income and disabled individuals. The requirement was suspended for three years during the Covid-19 pandemic but in Kentucky, resumed in May.

What do I need to do? Watch for a notice in the mail from state Medicaid officials, and be sure to read it and return it with any information requested. If your address has changed in the past three years, make sure the state has your current address either by notifying the state Department for Community Based Services in your county or by calling 1-855-306-8959.

If you have an account through kynect, the state’s online health insurance site, you can log in and update your information and check to see whether you have any messages requiring action. The kynect phone number is 1-855-4kynect (459-6328).

Where can I get help? If you don’t apply by mail or online, you can visit any Department for Community Based Services office; there’s one in every county.

You also can call the kynect hotline listed above to ask help finding a kynector — workers trained to help people get health coverage. They are located at agencies, clinics and other sites.

What if I no longer qualify for Medicaid? Visit the kynect site or meet with a kynector or local insurance agent to look for other options. A number of low-cost health plans are available with federal subsidies that make them affordable.

Health advocates in Kentucky — as well as nationwide — are watching and working to ensure people who are eligible remain insured as states transition back to yearly recertification for Medicaid. The state began sending the first round of notices in May, based on a member's renewal month.

“For three years, people didn’t need to respond to notices they received because their coverage was going to continue,” said Emily Beauregard, executive director of Kentucky Voices for Health, which is closely monitoring the situation.

During the pandemic that began in 2020, the federal government suspended the annual requirement that people prove they are eligible for the coverage which is based largely on income.

Kentucky’s $15 billion-a-year Medicaid program covers 1.6 million people, including adults, children and individuals in nursing homes, with the federal government covering 70% to 80% of the costs.

With the recent decision to lift the federal public health emergency, the states must again begin requiring annual renewal by members.

And that’s proving difficult among people who aren’t used to the annual requirement, may not understand the process or don’t have access to technology required to complete online applications and upload documents, such as income verification, advocates said.

“It’s hard to know if people understand what they need to do and are taking those steps,” Beauregard said.

70,000 Kentuckians terminated through June

Molly Lewis, CEO of the Kentucky Primary Care Association, said she worries that people who have benefited from expanded mental-health and addiction treatment in recent years could suffer if they inadvertently lose Medicaid coverage.

“I am most concerned about all those who have benefited from behavioral-health services,” said Lewis, who represents a network of clinics that see about one million patients a year.

Through June, 70,000 of the around 900,000 Kentucky adults covered by Medicaid have been dropped from the health plan, most losing coverage for “procedural reasons,” such as failing to respond to a renewal notice sent by the state.

Other states are posting similar numbers, with 75% of disenrollments nationwide due to procedural reasons, according to the Kaiser Family Foundation, a non-partisan health policy organization which offers a Medicaid enrollment tracker on its website.

That doesn’t mean all Kentuckians who lose Medicaid lack health coverage.

Eric Friedlander, secretary of the state Cabinet for Health and Family Services, which administers Medicaid, said Kentucky structured its 12-month recertification plan to first target those who are most likely to have obtained other health coverage. That includes up who people 65 and qualify for Medicare, the government plan for older Americans, or who have obtained coverage through employment.

Advocates agree with the approach but still worry that too many people who are eligible are losing coverage for failing to receive or respond to notifications from the state. With only a few months of data available, it’s hard to tell, said Beauregard.

“At this point, it’s too soon to know how many people are walking around uninsured and either don’t know it or think they are not eligible,” she said.

Preliminary numbers show as many as 40% of those losing Medicaid coverage may have obtained other health insurance. And about 3,000 people who lost coverage have been reinstated once they provided applications or documentation, such as proof of income or address, Friedlander said.

Meanwhile, about half of those targeted each month for Medicaid recertification don’t have to do anything at all. They are deemed eligible through “passive” renewal, in which the state is able to validate information such as income and household size by checking state and federal databases.

And those whose income has increased, making them no longer eligible for Medicaid, may be eligible for low-cost, federally-subsidized private plans through kynect, Kentucky’s online health insurance exchange, Medicaid Commissioner Lisa Lee said: “There really is something for everyone.”

Stakes high for kids

Kentucky's approach means thatg it has avoided cutting children from Medicaid. Advocates have sounded sound the alarm about other states where high numbers of children are losing coverage — most often for procedural reasons.

The tens of thousands of children losing coverage in some states prompted one group that monitors Medicaid to suggest states suspend terminating kids to determine what’s going wrong.

In Idaho, for example, around 23,000 children have been removed for failing to return recertification forms, according to the Idaho Capital Sun. Arkansas also has moved aggressively to cut people, including children, from Medicaid.

“The stakes are high,” said a blog post on the Georgetown University’s Health Policy Institute Center for Children and Families. “Gaps in coverage are problems for anyone — but especially for children, who, while not expensive, are regular users (or should be) of health care.”

Children and adults in rural states including Kentucky are especially dependent on Medicaid for health care, the center reported.

Nationwide, seven rural counties have half or more of their adults covered by Medicaid and six of those counties are in Kentucky, it said.

Around 600,000 Kentucky children have health coverage through Medicaid or the Children’s Health Insurance Program, known as CHIP, a Medicaid program for children whose parents earn too much to qualify but are still considered low-income.

That’s more than half the state’s children.

They will be among the last to be recertified under the 12-month process Kentucky began in May, Friedlander said.

‘Health care is expensive’

Meanwhile, state officials, advocacy groups, community clinics and others are working to alert Medicaid patients to the changes through notices, fliers, mail, phone calls, text messages and other means.

State officials set up an exhibit at the Kentucky State Fair to inform the public about changes, with private booths where state workers helped people apply for or renew coverage.

Advocates are especially concerned about those who might unknowingly lose coverage by not receiving or responding to a notice.

“It is important that individuals have insurance coverage because health care is expensive,” Lewis said. “A medical bill for something that’s not covered can be really debilitating.”

It could also affect community clinics that serve a high percentage of Medicaid patients and operate on tight budgets.

“It definitely can affect us from the bottom-line standpoint,” said Kirstie Matzek, CEO of the Shawnee Christian HealthCare Center, a federally authorized community health service in Louisville.

Matzek said her clinic staff has been attending events such as festivals and church picnics to hand out information. Staff also has been notifying patients about the Medicaid changes, she said.

“I know there’s a level of responsibility for the patient,” Matzek said. “But I think we have a responsibility as well.”

Report says 16 rural Kentucky hospitals are at risk of closing; provides 2017-18 financial data for hospitals, 2019 for most

By Melissa Patrick
Kentucky Health News

Forty percent of America's rural hospitals are struggling to stay open, and 16 of them are in Kentucky, according to an analysis by the Center for Healthcare Quality and Payment Reform.

Maps from "Rural Hospitals at Risk of Closing" report

The report doesn't name the 16 hospitals, but it does offer a wealth of financial and payer-mix information about most of the short-term, acute-care hospitals in the rural areas of each state.

Harold Miller, president and CEO of the center, told Kentucky Health News that the report doesn't name the hospitals the center considers at risk because it's hard to say exactly what is going on in each of them without digging a bit deeper into their individual stories, and he doesn't want to imply that the only hospitals struggling are the ones he puts on a list.

"This was more intended to say to the state, 'Guess what, you have a bunch of hospitals that are not doing well and you shouldn't ignore that problem'," he said.

The "Rural Hospitals at Risk of Closing" report says that of the 69 hospitals in Kentucky that it considers rural, 16, or 23%, are at risk of closing. Among those, 12 are at immediate risk of closing and four are at a high risk of closing, it says.

The report says hospitals with an immediate risk of closing have had persistent financial losses, meaning "the hospitals had a cumulative negative total margin over the most recent three-year period for which financial data were available" and had a low or non-existent financial reserve, meaning the hospitals either "had total liabilities exceeding all assets other than buildings or equipment or had assets greater than liabilities, but only by enough to sustain continued losses for at most two years."

If the hospital is losing money and its net assets are so small that it would exhaust them in just a couple of years, Miller said, they were classified as being at immediate risk. 

At first glance, one hospital that seems to fit those criteria is what is now called the Ephraim McDowell James B. Haggin Hospital in Harrodsburg.

The report shows this hospital lost $863,095 in 2017-19, a margin of minus 3.7%. But just as Miller cautioned, there is often more to a hospital's story than just the numbers.

William Snapp, executive vice-president and chief financial officer of Danville-based Ephraim McDowell Health told Kentucky Health News that when this hospital became part of the McDowell system in 2017 it was losing money, but since becoming part of McDowell's centralized system, along with some changes in how it operates, it now has a positive margin and is at no risk of closing.

"We have no intention of closing James B. Haggin," Snapp said. Later adding, "The synergy of all of these together as a system is quite effective, and so that makes Haggin a very valuable asset to the system as a whole."

Kentucky Health News unsuccessfully sought comment from two other hospitals with similar figures in the report, the Kentucky River Medical Center in Jackson and AdventHealth Manchester.

The report says the Jackson hospital lost an average of $1.6 million a year in 2017-19, an operating margin of minus 5.2%. The hospital did not respond to a request for comment. 

The Manchester hospital, part of a nine-state chain based in Florida, showed a minus 4.1% margin in 2017-19, representing a loss of $2.4 million. The hospital's marketing manager, said its CEO was traveling and would return the call, but the CEO had not by Sunday night.

The report says the primary cause of rural hospital closures is that payments from government and private health-insurance plans is less than the cost of delivering care to patients in rural communities; that these payments are not enough to sustain their essential services.

Rural hospitals' financial troubles are often blamed on low reimbursement from Medicare and Medicaid, but Miller said some small rural hospitals have more trouble with private health plans, which pay them less than big hospitals for the same care, and less than the cost of delivering that care.

"It's not as if there is just one thing that explains why they're losing money," Miller said. "In some cases, it's more Medicaid patients, in some cases, it's bad payments by commercial payers. In some cases, and it's hard to tell that from these data, it's sometimes the mix of services that hospital offers."

The report shows the payer mix of hospitals and what they make or lose on patient services in addition to their total margins. It reviews many of the problems faced by rural hospitals and analyzes many of the proposed solutions, and offers a new approach.

It proposes a two-part payment model that would require an up-front payment from both public and private insurers based on the number of plan members who live in the community, regardless of the number of services provided, along with a service-based fee much lower than current payment models.

This "patient-centered payment system" would ensure "that the hospital has adequate revenues to support the minimum standby costs of essential services, such as the emergency department, inpatient unit and laboratory," and the service fee "would ensure that if patients need more services, the hospital would receive sufficient additional revenue to cover the added costs of delivering those services, rather than being forced to delay or ration care," the report says.

"We need to do something different," said Miller. "All the stuff we've tried so far hasn't worked."

What's Kentucky doing to help?

Kentucky lawmakers passed a bill last year to help rural hospitals, but didn't fund it. This year, they are working to pass one that would increase Medicaid funding for many of them.

In the 2020 legislative session, the General Assembly passed House Bill 387 to create a revolving loan fund for distressed rural hospitals, but didn't fund it. If funded, it would allow the state Cabinet for Economic Development to make loans to struggling hospitals for three things: maintain or upgrade facilities; maintain or increase staff; or to provide health services not currently available. The loans could run 20 years and would be available to hospitals in counties with fewer than 50,000 people.

This year, Rep. Brandon Reed, R-Hodgenville, has filed House Bill 183, which would allow Kentucky hospitals to get more money from Medicaid, at an "average commercial rate" instead of the current Medicaid rate, which is often below that amount. The program would not cost the state anything because Kentucky's hospitals have agreed to cover the cost. And to receive the funds, hospitals will have to abide by higher quality standards that are still being decided by the Kentucky Hospital Association and the Cabinet for Health and Family Services.  The House passed the bill and sent it to the Senate on a 93-0 vote Feb. 11.

Reed told the House that Kentucky hospitals have encountered additional financial challenges during the pandemic and are facing $2.6 billion in losses because of it.

That number comes from a KHA report, which says, "Many rural hospitals were in dire financial shape prior to the pandemic and are at risk of closing. The additional stress of Covid-19 puts them at further risk, threatening access to needed care in several Kentucky communities."

Five hospitals have closed in Kentucky since 2009, four since 2014. The most recent was Our Lady of Bellefonte Hospital in Russell, which closed in April.

The center's report includes data on the size and financial status of each hospital, their margin trends for the past three years in most cases, their payer mix and margins, the sources of their profits and losses, and their assets available to cover their losses.

The data was obtained from cost reports that hospitals are required to submit each year to the Centers for Medicare and Medicaid Services. Data was only included if the report covered a full fiscal year and provided operating expenses, according to the report's methodology page.

Center for Healthcare Quality and Payment Reform table includes Kentucky hospitals that averaged a three-year loss. Click here for all the data. The other column to pay attention to is "Total net assets."