Rural Hospitals Get $383M From KY, U.S. In Medicaid Settlement

Jun. 24--Kentucky and the federal government will pay $383 million to settle a long-running lawsuit with 54 rural hospitals that successfully challenged Medicaid reimbursement rates set a decade ago under former Gov. Steve Beshear.

Beshear's son, Gov. Andy Beshear, announced the settlement on Wednesday.

"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," Andy Beshear said in a prepared statement.

Kentucky will pay $94 million of the settlement, with the rest coming from the U.S. Centers for Medicare & Medicaid Services. Beshear credited U.S. Senate Majority Leader Mitch McConnell, R-Ky., for getting CMS to cooperate.

"The hard work from our office along with support from Majority Leader McConnell and federal partners has resulted in millions of dollars in savings to the state and immediate payment to our rural hospitals," Beshear said. "We expect to be issuing checks as early as next week."

Among the largest recipients are Baptist Health Paducah ($15.2 million), Jewish Hospital ($16.6 million), King's Daughters Medical Center ($19.6 million), Owensboro Health Regional Hospital ($33.6 million), Saint Joseph Hospital ($31.3 million), Saint Joseph London ($18.2 million), St. Elizabeth Medical Center ($28.7 million) and The Medical Center ($16.3 million).

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"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," said King's Daughters Health System President and CEO Kristie Whitlatch in Ashland.

The hospitals won a series of court rulings finding that their Medicaid reimbursement rates were unfairly low from 2007 to 2015. Last year, a unanimous three-judge panel of the Kentucky Court of Appeals sided with the hospitals, as had a circuit court judge.

The Kentucky Cabinet for Health and Family Services erred during the administration of Steve Beshear, the appeals court found.

"The hospitals may seek monetary damages for past underpayments from the cabinet," Judge Donna Dixon of Paducah wrote for the panel. "The cabinet waived its sovereign immunity for contract damages by entering into the provider agreements with the hospitals."

Medicaid is a joint federal-state health insurance program for the poor and disabled.

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