KANSAS HEALTH INSTITUTE: Federal budget deal yields Medicaid savings

By Andy Marso
November 9, 2015

A budget deal in Washington, D.C., is helping Kansas balance its own books temporarily with an infusion of Medicaid cash.

But a Democratic senator says the savings should be used to provide home and community-based services to Kansans with disabilities.

Gov. Sam Brownback’s budget director, Shawn Sullivan, answered lawmaker questions Monday about the administration’s plan to shift about $125 million to the state general fund.

The transfers are needed because state revenue estimators revised tax receipt projections down for the fourth straight time last week, leaving Kansas with a projected deficit for the fiscal year that ends June 30.

Almost half of the $125 million comes from the state highway fund, but about $25 million of it comes from Medicaid.

Sullivan said some of that money is available because the D.C. budget deal reduced projected Medicare premiums for low-income residents who get their premiums paid through Medicaid.

Sullivan said the rest of the Medicaid savings comes from revised actuarial cost estimates that will not affect any recipients or providers within KanCare, the state’s managed care Medicaid system that serves more than 425,000 Kansans.

“It does not involve any service reductions or provider rate reductions or changes,” Sullivan said. “It is, this part, a change in the estimates.”

While facing a tight budget in the last year, the state has used increased federal money from the Children’s Health Insurance Program and a prescription drug rebate program to fill gaps.

Sen. Laura Kelly, a Topeka Democrat, asked Sullivan if the $25 million could be used to fund services for Kansans with disabilities on waiting lists for Medicaid programs that provide services to help them remain in their homes rather than institutions.

Sullivan said they could, but the state’s budget picture compels the administration to go a different route.

“Just like anything, when you have savings, you can either choose to use that for state general fund or reappropriate to something else,” he said. “Yes, we could do that, but in our case we’re helping with the state general fund shortfall.”

Sullivan said fully funding the current waiting lists would cost more than $100 million.

The Brownback administration has, in past years, used savings from the managed care switch to pare down some of the waiting lists.

After Monday’s meeting of the Legislative Budget Committee, Kelly said the administration also should consider using the latest savings to further reduce the number of people on the waiting lists, given that Brownback has made elimination of the lists a pre-condition of the state considering Medicaid expansion.

“We could take 25 percent of people off the waiting list, right now,” Kelly said.

The $125 million in fund transfers also includes $9 million from the Children’s Initiatives Fund, which pays for early childhood health and education programs.

Sullivan said the Children’s Cabinet that administers the fund had been improperly holding over money from the Early Childhood Grant Program from one year to the next. He said bringing the $9 million into the general fund would not affect the program.

Shannon Cotsoradis, president and CEO of the Topeka nonprofit Kansas Action for Children and a member of the Children’s Cabinet, disagreed.

In a statement released last week, Cotsoradis said nearly $60 million has been transferred out of the Children’s Initiatives Fund since passage of controversial income tax cuts in 2012.

“While Budget Director Sullivan continues to suggest these decisions are without consequences for our state’s children, that is simply false,” Cotsoradis said. “Unlike the tax plan that got us into this perpetual budget crisis, these are evidence-based programs that offer a tremendous return on investment for the state while changing the course of a child’s entire life.”

The latest budget transfers also include $5 million from the Kansas Bioscience Authority, an agency that provides start-up help for human and animal health innovations.

KBA advocates say several years of budget cuts have put the future of the agency in doubt.

Sullivan said the state also was transferring $3 million from the Health Care Access Improvement Program, $2.2 million from the Kansas Eligibility Enforcement System and $2.5 million from an Osawatomie State Hospital fee fund to help balance the budget.

He said the KEES savings came from payments that will not be made to the contractor Accenture due to ongoing delays in implementation of the computer system overhaul. The Osawatomie State Hospital savings came from increased funding from non-state sources, such as patient co-pays and insurance payments.

Some of the transfers are one-time money, but Sullivan said some may be carried over into the next fiscal year, when the state faces a projected deficit of $175 million.

Read more from the Kansas Health Institute.

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