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Kentucky Medicaid Crisis

March 14, 2011

Thank you to Clyde Lang for providing ANCOR with this information.


Medicaid Issues Provider Rate Reduction Notices


TheKentucky Cabinet for Health and Family Services' Department for Medicaid Services (DMS) is issuing public notice, as required by federal regulations, related to changes in Medicaid provider reimbursements.


With this action, the Cabinet will significantly reduce payment for specified services for hospitals, nursing facilities, home health agencies, community-based services, pharmacies, comprehensive care centers, primary care centers, local health departments and other providers of Medicaid services in the Commonwealth. The rate reductions are approximately 35 percent. This action is necessary to balance the FY 2011 budget shortfall in the Medicaid program.


While a special session of the General Assembly to begin on March 14 has been called to address the Medicaid budget, the Cabinet must prepare for the possibility that the General Assembly may not reach agreement. If the General Assembly reaches consensus regarding a solution by April 1, these reductions will be rescinded.


Examples of rate reductions impacting KAHSA members are as follows:



  • DMS will reduce the standard price reimbursement paid to each price-based nursing facility by 35%

  • DMS will reduce

    • Reimbursement for non-ancillary services provided in privately-owned intermediate care facilities for individuals with mental retardation or a developmental disability (ICF MR DD) by 35%

    • The payment derived from the calculation of cost-to-charge ratios for ancillary services provided in privately-owned ICF MR DDs by 35%

  • DMS will establish a final reimbursement for state fiscal year 2011 which reflects a 35% reduction in reimbursement for the following:

    • Non-ancillary services provided in privately-owned ICF MR DDs that are reimbursed on a cost basis

    • Ancillary services provided in privately-owned ICF MR DDs

  • DMS will reduce the fixed per diem rate paid to nursing facilities with a Medicaid-certified brain injury unit by 35%

  • DMS will reduce the fixed per diem rate paid to nursing facilities (hospital-based and freestanding) with a distinct part ventilator unit by 35%

  • DMS will reduce the per diem reimbursement for dually-licensed pediatric facility services by 35%

  • DMS will reduce reimbursement for swing bed services (hospital-based skilled nursing facility) from a rate equal to the average rate per patient day paid for routine services to a rate that is 35% lower than the average rate per patient day paid for routine services

  • DMS will reduce the upper payment limit for supports for community living (SCL) waiver services by 35%

  • DMS will reduce the intensity payments for SCL waiver services by 35%

  • DMS will reduce the upper payment limits for home and community based (HCB) waiver services by 35%

  • DMS will reduce reimbursement for adult day health centers as follows:

    • Level I and Level II service rates by 35%

    • The upper payment limit for ancillary therapy services from $75 per encounter to $48.75

  • DMS will reduce the fee for dispensing prescriptions as follows:

    • Generic drugs from $5.00 per prescription to $3.25 per prescription

    • Brand name drugs from $4.50 per prescription to $2.90 per prescription

  • DMS will reduce reimbursement for drug acquisition cost as follows:

    • Generic drugs from average wholesale price (AWP) minus 14% to AWP minus 56%

    • Brand name drugs from AWP minus 15% to AWP minus 57%

  • DMS will reduce the reimbursement for home health services by 35%

Please click here for a complete listing.


Action Requested: Please contact members of the Kentucky House and Senate and ask them to resolve the Medicaid budget shortfall and to stop these rate cuts.