ACA will cost Kentucky hospitals $7B

Kentucky is the first Southern state to expand Medicaid under the Affordable Care Act, but the healthcare reform law has Bluegrass State hospitals in dire straits, according to a new report from the Kentucky Hospital Association (KHA).

By 2024, Kentucky hospitals will face nearly $7 billion in cuts, the report states, and will lose more money under the ACA than increased coverage nets them in new revenues.

"Kentucky has been highly successful in the rollout of federal health reform legislation," said KHA President Michael T. Rust in a statement to press, "and the commonwealth has significantly reduced the number of Kentuckians without health insurance. This ciation, Medicaid Expansion, readmission penalties, Uncompensated Care success, unfortunately, has come at significant cost to Kentucky hospitals."

The report blames several factors for the projected cuts, including:

Reimbursement rates: Neither Medicare nor Medicaid reimbursement rates have kept up (or will keep up) with inflation, according to the report. Currently Medicare and Medicaid only pay 86 percent and 82 percent, respectively, of the cost of healthcare delivery.

Readmission penalties: Kentucky, the report states, has higher-than-average rates of poverty and chronic disease, factors that lead to high readmission rates, but are beyond a hospital's control. 

Charity care payment cuts: Kentucky already faces a shortfall in charity care costs, with a price tag of more than $2 billion compared to only $186.5 million in disproportionate share hospital (DSH) payments that year, and forthcoming DSH payment cuts will only exacerbate the deficit, according to the report.

Hospital-acquired conditions: Kentucky hospitals face Medicare reimbursement cuts if their HAC rates go up, regardless of the size of the increase.

Despite the alarming picture, the report offers potential solutions, including more standardized procedures and policies for Medicaid managed care organizations or allowing providers to appeal denials of payment.

Gov. Steve Beshear said Friday that $506 million in new hospital revenue since last January would likely offset the cuts to some extent, according to the Courier-Journal. He added that his office will continue to work with hospitals to find solutions to the problems addressed in the report, which Rust said will be an ongoing project.

To learn more:
- here's the report (.pdf)
- read the article