TOPEKA, Kansas — Hospitals in Kansas would pay higher fees and the state would capture projected savings from three companies managing its Medicaid proposals under new budget-balancing proposals that Republican Gov. Sam Brownback outlined Thursday.
Budget Director Shawn Sullivan has said legislators must close a shortfall of about $400 million in the budget for the next fiscal year, and Brownback's latest proposals would trim spending by nearly $64 million between now and the end of June 2016. The governor made them public ahead of a meeting of the House Appropriations Committee.
About half of the expected budget savings — nearly $33 million — would come from reducing the state's projected spending for Medicaid, which provides health coverage to 368,000 needy and disabled Kansas residents. The state contracted with three health insurance companies to manage the program.
Legislative researchers said that when previous cost estimates were made in November, the state was negotiating what it would pay the companies for each Medicaid participant. Forecasters predicted a 3.5 percent increase in those payments; the actual rate was 3 percent.
"That was the good news that we heard of the day," said Appropriations Committee Chairman Ron Ryckman Jr., an Olathe Republican.
The full Legislature returns April 29 from its annual spring break to wrap up its business for the year, and it must balance the budget for the next fiscal year. The shortfall arose after lawmakers aggressively cut personal income taxes in 2012 and 2013 at Brownback's urging to help stimulate the economy.
The proposed fee increase for hospitals of almost $19 million for the fiscal year beginning July 1 is also tied to the Medicaid program, which is funded by the state and federal government. The state uses the fee revenues instead of general tax dollars to attract federal dollars, which are then returned to hospitals when they care for Medicaid participants.
But Rep. Jerry Henry, of Atchison, the Appropriations Committee's ranking Democrat, said he's concerned that the move still could hurt some hospitals.
"There are a lot of rural hospitals right on the edge — their profitability is right on the edge," he said.
And Appropriations Committee members from both parties questioned whether the state can sustain its projected savings in rates paid to the Medicaid management companies into the future. Republican Rep. Don Hill of Emporia said an improving economy has put less pressure on Medicaid and social services.
"We're vulnerable that it could go the other way," Hill said.
Governor's latest budget proposals: http://1.usa.gov/1I0J7vA
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