Beshear halts planned Medicaid provider cuts after revenue surplus

Kentucky Medicaid providers will avoid a planned 4% reimbursement cut after Gov. Andy Beshear announced July 22 that an “unanticipated” corporate income tax payment and a state revenue surplus will cover the funding gap for the current fiscal year.

Beshear said $255 million from the tax payment, along with additional revenue, will postpone any Medicaid reimbursement reductions through the fiscal year, which ends next June.

The money also will fund the state’s senior meal program and Michelle P. Waiver slots, which provide Medicaid waiver services for Kentuckians with intellectual or developmental disabilities who need nursing facility or intermediate care facility-level care.

Beshear said he does not know which company made the tax payment — “and the Department of Revenue isn’t allowed to tell us” — and cautioned that the state should not count on similar payments each month. He also said that “this isn’t any type of data center payment.”

“Thanks to strong fiscal management by my administration and a strong economic surge late in the fiscal year, we turned a $156 million deficit into a $476 million surplus,” Beshear said during a press conference in Frankfort. “Additional good news… we believe that the surge is going to continue.”

The announcement followed a rally last Friday in Frankfort, where hundreds of Kentuckians called for the cuts to be reversed, particularly those affecting Medicaid waivers.

In June, the Beshear administration notified providers that Medicaid reimbursements would be reduced by 4% beginning Aug. 1. Beshear said Wednesday that new notices will be sent to providers “shortly.”

Beshear said the budget passed by the General Assembly left his administration with little choice but to pursue the cuts. Lawmakers have argued that the administration could better manage the funding they approved.

Under the changes announced Wednesday, Beshear will redirect $4 million to the Senior Meal program, fully fund all authorized Michelle P. Waiver slots and put $18 million into the road fund. The road fund had been a point of contention between the administration and the General Assembly after Beshear signed an executive order in May reducing the gas tax by 10 cents, later extending the reduction to local governments that requested it. Lawmakers said the action would cost the state’s road project fund $26.8 million for one month.

At the time, Sen. Jimmy Higdon, a Lebanon Republican who chairs the Senate Transportation Committee, said lawmakers could consider reducing road funding for local governments that participate in the gas tax reduction.
Beshear said the financial changes apply only to the current fiscal year. He said the legislature “absolutely” needs to reopen the budget in January to ensure sufficient funding for the next fiscal year.

“Today is not a magic wand. It’s not a magic bullet,” Beshear said. “There are still people out there suffering, but I know that there will be fewer that suffer in order to get their services because of this movement.”