Beshear signs bill to bolster Kentucky’s rural hospitals


FRANKFORT, Ky. — Gov. Andy Beshear signed into law Monday a bipartisan measure that’s meant to bolster access to healthcare across Kentucky by injecting additional funding into hospitals.

The infusion will help shore up financially ailing hospitals in rural Kentucky, supporters said. One hospital administrator called it “a lifesaving action” to preserve hospital services and jobs.

The bill expands the Medicaid Hospital Rate Improvement Program to include outpatient care as well as inpatient care. It will support Kentucky hospitals by boosting Medicaid payment rates for outpatient procedures performed at hospitals. The program allows the state to draw down federal funds to pay a supplemental Medicaid payment to hospitals. Hospitals pay an assessment to fund the state match.

“We must do everything we can to support our hospitals and ensure they are equipped to provide the services and care needed in their communities,” the Democratic governor said in a news release.

State Republican Rep. Brandon Reed referred to House Bill 75 as “a lifeline” for rural Kentucky hospitals.

“With HB75 now granting access to hospitals to be reimbursed for outpatient services, hospitals will be able to harness federal resources while using no state funds,” said Reed, the bill’s lead sponsor.

Medicaid is the state-federal health insurance program for low-income people.

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The Kentucky Hospital Association advocated for the measure, which passed the House 95-0 and cleared the Senate on a 33-3 vote. State Republican Rep. Danny Bentley was another lead co-sponsor of the bill. It contained an emergency clause, meaning it took effect after the governor’s signature.

Several hospital administrators joined the governor and lawmakers at the bill signing.

Donovan Blackburn, CEO at Pikeville Medical Center in eastern Kentucky, called it a “lifesaving action” that will save jobs and services at hospitals. He spoke of his hospital’s financial challenges in a region with high disease rates and many patients on Medicaid coverage.

“So our operational costs are higher, our payments are lower and our margins oftentimes are even lower,” he said.

The new law requires the state’s Department for Medicaid Services to assess outpatient services and provide additional payments to hospitals to reduce payment gaps between Medicaid reimbursements and what would be paid by private health insurance.

It also allows Medicaid to create a hospital rate increase program for individuals enrolled in its fee-for-service program to pay up to the upper payment limit of the federal Medicare program. The legislation is retroactive to Jan. 1, 2023, the governor’s office said in a news release.

Without the legislation, some Kentucky hospitals would have been forced to start cutting costs, the bill’s supporters said.

“Now imagine what would happen to the people we serve in our region if we were forced to cut services, or God forbid, even close down services due to these financial challenges,” Blackburn said.

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