Kansas increases Medicaid rates paid to hospitals by 30%

The Kansas House advanced a $25 billion budget Tuesday that sprinkled millions on World Cup soccer and earmarked funding for 5% pay raises to state workers, expansion of services to people with physical and intellectual disabilities and a 30% increase in Medicaid rates paid to hospitals.

The Republican-led House defeated a conservative Democrat’s amendment to jettison the House Appropriations Committee’s budget bill and replace it with recommendations offered in January by Gov. Laura Kelly, which included expansion of Medicaid eligibility and addition of $75 million for K-12 special education. Wichita Rep. Henry Helgerson’s failed amendment spent about $380 million less than the GOP bill and diverged from the governor’s option by proposing creation of a $1.2 billion state fund dedicated exclusively to reducing residential property taxes.

“This is an opportunity to vote for lower expenses, Medicaid expansion and to tell your people back home that you are going to make a serious effort at reducing property taxes,” Helgerson said before his amendment was overwhelmingly defeated.

In an unexpected twist, House members adopted an amendment offered by El Dorado Rep. Will Carpenter that would double a 3% tax assessed on Kansas hospital inpatient and outpatient services for the purpose of qualifying for extra federal funding. The current $180 million in annual revenue from the hospital tax qualified Kansas for $315 million each year in federal aid, and a 6% hospital tax could double that federal revenue stream.

“There are rural hospitals failing in states that have expanded Medicaid, too,” Carpenter said. “So, it is not the savior for all rural hospitals. Folks, this is all hands on deck to save rural hospitals.”

Rep. Susan Ruiz, a Kansas City Democrat, said it was baffling Republicans consented to a budget with millions of dollars in Medicaid fee enhancements and a 100% increase in a hospital tax. But, she said, those same Republicans refused to take the political leap to advance Medicaid expansion, extend care to about 150,000 lower-income Kansans and deliver hundreds of millions of dollars annually in federal aid to the Kansas health system.

The drama on Medicaid and Kansas hospitals transpired one day before House and Senate committees scheduled public hearings on a Medicaid expansion bill.

The rival versions of the House and Senate budget move to six-person negotiation committee in an attempt to work out differences. For example, the Senate budget bill featured $15 million to cover the cost of sending Kansas National Guard forces to the Texas border with Mexico. Gov. Laura Kelly could exercise veto authority of the entire House and Senate compromise or make line-item vetoes of individual elements of the bill.

Disability services
Rep. Troy Waymaster, the Bunker Hill Republican who chairs the House budget committee, said House Bill 2273 would provide $45 million necessary to offer services to 500 more intellectually or developmentally disabled Kansans. The current waiting list for I/DD services in Kansas has grown to 5,300, with some people waiting years for services they were qualified to receive. The House bill also added 500 slots for physically disabled Kansans that would pare down a waiting list that stood at 2,300 in February.

During House floor debate, House Minority Leader Vic Miller, D-Topeka, offered an amendment that would devote $13 million to removing an additional 500 Kansans from the I/DD waiting list. He said it could be paid for by drawing on the state’s special rainy-day reserve fund.

“If this situation does not present a rainy day, I don’t know what would,” Miller said. “It comes down to one thing: Money. Until we put the money that is necessary into opening up more slots, we will not be reducing the waiting list. In this particular case, the status quo is just not good enough.”

Waymaster pushed back, arguing that the state couldn’t expand its network of trained professionals sufficiently during the next year to deliver on the extra 500 slots sought by Miller. He said Miller’s amendment was “noble and well-intentioned,” but was unsustainable. Miller’s idea was defeated 50-71.

Rep. Stephanie Sawyer Clayton, an Overland Park Democrat, said the solution to the labor problem in delivery of disability services was the intolerably low wage of about $15 per hour offered those workers. She said the House should demonstrate to constituents they valued the most vulnerable people in Kansas by investing to shrink waiting lists and improve wages paid to providers of disability services.

Budget highlights
The House agreed to dedicate $10 million to support hosting of World Cup soccer games in 2026 in the Kansas City area and earmarked an additional $18 million in future funding if warranted.

Waymaster said the bill sought to balance the geographic ledger by offering $17 million to support housing and retail development in northwest Kansas. It would deliver $6 million to repair roads in western Kansas damaged by heavy truck traffic tied to expansion of the dairy industry and appropriate $20 million to upgrade facilities at the state’s law enforcement training facility in Salina.

It would provide $30 million to the joint health science complex to be built in Wichita by the University of Kansas and Wichita State University. That would bring to $194 million the funding set aside for that health science facility. Elsewhere in the budget, $75 million was authorized to support construction of a cancer research and treatment building on the campus of the University of Kansas Medical Center in Kansas City, Kansas.

Emporia State University would receive an extraordinary $9 million appropriation to help the campus deal with a severe enrollment decline as it retooled academic offerings. There was $40 million set aside to build a new Kansas Bureau of Investigation laboratory at Pittsburg State University. The bill required leadership of Kansas Board of Regents universities to certify they were complying with diversity directives contained in recent U.S. Supreme Court decisions.

Meanwhile, Waymaster said the House was intent on earning a better return on the state’s $1.8 billion rainy-day fund. The bill would require 50% of that budget stabilization account to be invested for a 12-month period whenever the state government had a 7.5% ending balance at close of the fiscal year. Currently, those funds have been placed in short-term investments that had modest financial returns.

The 5% salary increase for state employees would consume $175 million and boosting the hourly minimum wage for state employees to $15.03 would cost the state $3 million annually. At the same time, the bill opened the door for the State Finance Council to allocate $11.8 million to increase compensation of state legislators.

The budget bill allocated more than $3.4 million to the Kansas judicial branch due to costs incurred by a ransomware attack on the court system’s computer network. The legislation added $2 million for a statewide program to encourage women to give birth rather than have an abortion. Kansas Reflector