State financial actions putting strain on MEPCO [Richmond Register, Ky.]

Feb. 06--RICHMOND -- State government's efforts to cut its spending and shift more of its financial burden to local governments, school boards and public agencies is beginning to take its toll on MEPCO, the home health organization run by the Madison County Board of Health.

Last week, MEPCO, which serves residents of Madison, Estill and Powell counties, reported a $455,500 deficit at the midpoint of its fiscal year.

The deficit was recorded even after MEPCO has cut expenses by about $383,000.

However, health department officials said they remain optimistic that MEPCO can reverse the situation by year's end.

For MEPCO to post a deficit at mid-year is "normal and expected," said David Reed, the health department's financial director.

Much of MEPCO's loss of revenue stems from a decision by the administration of Gov. Steve Beshear to reduce the state's Medicaid costs by delegating reimbursement decisions to four managed care organizations. Instead of state employees approving claims by providers such as MEPCO, most decisions now rest with an MCO.

About $530,000 that MEPCO has billed the state through the MCOs remained unpaid Dec. 31, Reed said.

Not only are the MCOs delaying decisions, sometimes their decisions are inexplicable, he said. An MCO recently listed a MEPCO claim as "paid," but when he checked the amount paid, it was "zero," Reed, whose frustration was evident, told the health board on Wednesday.

Regardless of how the billing issues are resolved, MEPCO has $487,000 in reserve, a "war chest that will help it weather the peaks and valleys of the revenue stream," Reed said.

State government appears intent on draining any surpluses held by health agencies, Dr. William Reynolds, said last year when he was the board's optometry representative. That had happened to funds held by the state optometry board, he said.

Although the agency already has slashed expenses dramatically, Billie Dyer, MEPCO's nurse administrator, said she believes some expenses still can be trimmed.

"If the cash flow issue can be resolved, then the efficiencies we have attained will significantly improve the budget outlook," she said.

"Our nurses, aids and support staff are dedicated and loyal, and they really care about the people we serve," Dyer said. "Whatever has come our way, the commitment to our mission of providing quality caring services is what keeps us going."

Health department finances, which are separate from MEPCO's, also showed a mid-year deficit, about $156,000.

A mid-year deficit for the health department is not unusual, Reed said, because reimbursements are received months after services are rendered. In some recent years, the department reported mid-year deficits of up to $700,000, but still managed to end up "in the black."

Last year, the department's mid-year deficit was about $200,000, and it still ended the year with a positive balance.

However, the governor's proposed 8.4-percent state budget reduction would drop state funding for the health department by $110,000.

On the expense side, the state is requiring the health department to boost its contribution to the state pension fund this year by $225,000. Its total contribution for pensions equals 23.61 percent of the department's salaries, Reed reported.

The governor's budget also would raise the department's share of employees' state health insurance by $20,000.

Madison County's health department is stronger than most in Kentucky, said Nancy Crew, its director. The state department of public health has indicated 10 to 20 of Kentucky's 58 local health departments are in financial jeopardy and is sending management-assistant teams to review their operations.

Some Kentucky health departments serve more than one county.

The Madison County department has been operating in a cost-cutting mode "for several years," Crew said.

"We will continue to adjust operations to meet our financial challenges," she said.

Bill Robinson can be reached at [email protected] or at 624-6622.

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