Beshear, McConnel settlement secures $383 million for rural hospitals

Gov. Andy Beshear and U.S. Senate Majority Leader Mitch McConnell announced $383 million in state and federal dollars for 54 rural hospitals by settling a 13-year-old dispute regarding Medicaid funding rates.

The settlement negotiated by Gov. Beshear, with support from Senate Majority Leader McConnell, successfully convinced the federal Centers for Medicare & Medicaid Services (CMS) to offer funding in combination with the state’s liability of $93.9 million. The previous administration had budgeted an estimated $425 million in state funding to settle the case.

The settlement saved the state more than $300 million and provides long-awaited funds immediately back to rural hospitals.

This litigation began with an administrative action in 2007 and then the lawsuit in 2013, all involving the rate setting methodology used for acute care hospitals for 2007-2015. The hospitals claimed the methodology used by Kentucky Medicaid was invalid, and the Franklin Circuit Court and the Kentucky Court of Appeals agreed. The case is pending before the Kentucky Supreme Court. 

Earlier this year Gov. Beshear asked CMS to exercise its authority to dedicate federal Medicaid funds owed to rural hospitals. Following a request from the Beshear administration, Sen. McConnell’s office contacted senior officials at CMS and at the U.S. Department of Health and Human Services reiterating the importance of a quick and positive decision for Kentucky’s rural hospitals.

On April 3, Gov. Beshear and Senate Majority Leader McConnell announced the Centers for Medicare and Medicaid Services (CMS) approved Kentucky’s request to recover Medicaid federal match rates and provide federal funds for a payment.

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