Settlement of 13-year-old lawsuit means huge payments to some hospitals

FRANKFORT, Ky. (WTVQ)The settlement of a 13-year-old lawsuit over Medicaid reimbursement rates will provide a financial boost to 54 hospitals, many of whom have suffered because of the coronavirus pandemic.

The payouts, which could come as early as next week, range from more than $31 million to St. Joseph to $64,000 for Bourbon County Hospital.

The settlement was announced by Gov. Beshear, whose staff negotiated the deal with support from Senate Majority Leader McConnell. They successfully convinced the federal Centers for Medicare & Medicaid Services (CMS) to offer funding in combination with the state’s liability of $93.9 million, Beshear said in a release.

The previous administration had budgeted an estimated $425 million in state funding to settle the case, meaning the deal saves the state more than $300 million while getting money back to hospitals.

“The funding is much-needed relief to our rural hospitals and health care workers that have been on the frontlines helping to fight the global pandemic,” Beshear said.

“In the midst of the coronavirus crisis, I’m proud to work with the Trump Administration and Gov. Beshear to deliver urgently needed resources for more than 50 of Kentucky’s rural hospitals,” McConnell said.

“The $8,043,076 our hospital will receive could not come at a better time and will make a significant difference in our ability to deal with the ongoing pandemic and its financial impact,” said Pikeville Medical Center Chief Executive Officer Donovan Blackburn.

“The $19.6 million Kings Daughters will receive as part of this settlement will help us maintain critical health care services and providers in our communities,” said Kings Daughters Health System President and Chief Executive Officer Kristie Whitlatch. “This funding comes at a time of intense pressure, when our organization is managing both response to the COVID-19 pandemic and working to ensure access to care following the closure of Our Lady of Bellefonte Hospital.”

This litigation began with an administrative action in 2007 and then the lawsuit in 2013, all involving the rate setting methodology used for acute care hospitals for 2007-2015.

The hospitals claimed the methodology used by Kentucky Medicaid was invalid, and the Franklin Circuit Court and the Kentucky Court of Appeals agreed.

The case is pending before the Kentucky Supreme Court.

Earlier this year Beshear asked CMS to exercise its authority to dedicate federal Medicaid funds owed to rural hospitals. Following a request from the Beshear administration, McConnell’s office contacted senior officials at CMS and at the U.S. Department of Health and Human Services reiterating the importance of a quick and positive decision for Kentucky.s rural hospitals.

On April 3, Beshear and McConnell announced the Centers for Medicare and Medicaid Services (CMS) approved Kentuckys’ request to recover Medicaid federal match rates and provide federal funds for a payment.

To review the distribution of funds, click here.

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