Rural Ky. hospitals to get ‘hundreds of millions in damages’ from old lawsuit with the state, with federal government paying the bill

By Melissa Patrick
Kentucky Health News

More than 50 rural hospitals in Kentucky are set to receive “hundreds of millions in damages” to settle an old lawsuit with the state, and the federal government is paying the bill, Gov. Andy Beshear and Senate Majority Leader Mitch McConnell announced Friday.

That is likely welcome news to an industry that is gearing up for a surge of covid-19 patients at a time when many of them are struggling to stay afloat.

“We fought hard for this funding, which will now help dozens of Kentucky’s rural hospitals with the crucial support they need to help fight against covid-19 and confront this pandemic in the Commonwealth,” Beshear said in a news release, thanking McConnell “for helping us secure this essential funding for our rural health-care providers.”

McConnell said, “I was proud to raise this important Kentucky priority to the highest levels of the federal government. I look forward to continuing to work with Gov. Beshear and our rural hospitals to help give them the tools necessary to care for patients and fulfill their mission.”

The issue stems from rural hospital claims that between 2007 and 2015, under then-Gov. Steve Beshear, the governor’s father, the state Cabinet for Health and Family Services used a Medicaid reimbursement formula for hospitals that was too low.

Two Kentucky courts have said this was not legal; and the cabinet had appealed these decisions to the state Supreme Court. The Lexington Herald Leader reported in February that the Supreme Court had not yet decided to take the case, giving the two sides extra time to negotiate a settlement.

According to the release, the Centers for Medicare and Medicaid Services approved the state’s request for funding, which was initiated by Beshear and followed up on by McConnell, to cover the Medicaid federal match rates for the shortfall and that the total amount is still to be determined.

“As Kentucky’s rural hospitals and medical professionals stand on the frontline of the coronavirus crisis, I’m glad the Trump administration answered our call to deliver these critical federal funds,” McConnell said.

Nancy Galvagni, president of the Kentucky Hospital Association thanked both Beshear and McConnell for their efforts in securing these funds and said the association was “delighted with the outcome of this lawsuit.”

“These funds couldn’t come at a better time, given the challenges all hospitals are facing,” Galvagni said in an e-mail. ” In order to prepare hospitals for a possible surge in patients and conserve personal protective equipment for health care workers, Kentucky hospitals have cancelled all elective procedures in response to the covid-19 emergency. While hospitals were ready and willing to do everything in their power to protect their health care workers and the public, this has caused a significant reduction in revenue. These funds will be invaluable to the involved hospitals.”

The state has been anxiously awaiting this decision because if the federal government did not agree to pay for part of the bill, it would have fallen to Kentucky taxpayers.