Beshear, McConnell: Settlement secures $383M for rural hospitals

13-year-old litigation settled; funds go to 54 rural hospitals

FRANKFORT, Ky. — Gov. Andy Beshear and U.S. Senate Majority Leader Mitch McConnell announced Wednesday $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 Beshear, with support from 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 governor said the settlement saved the state more than $300 million and provides long-awaited funds immediately back to rural hospitals.

“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,” Beshear said. “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. We expect to be issuing checks as early as next week.”

“In the midst of the coronavirus crisis, I’m proud to work with the Trump administration and Governor Beshear to deliver urgently needed resources for more than 50 of Kentucky’s rural hospitals,” said McConnell. “As the only congressional leader not from New York or California, I’m constantly working to direct national attention and federal resources to rural America, and especially Kentucky. The medical professionals at our rural hospitals have shown their courage and dedication every day throughout this pandemic, and it’s my privilege to thank and support them.”

Pikeville Medical Center CEO Donovan Blackburn said: “I want to thank Governor Beshear and Senator McConnell for bringing a positive resolution to this longstanding issue. The $8,043,076 that our hospital will receive could not come at a better time and will make a significant difference in our ability to deal with the ongoing pandemic and its financial impact. I am glad to see actions that help preserve and protect Kentucky’s hospital infrastructure to enable hospitals to continue to provide vital health care access across the commonwealth.”

“The $19.6 million King’s Daughters will receive as part of this settlement will help us maintain critical health care services and providers in our communities,” said King’s Daughters Health System President and CEO Kristie Whitlatch. “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. Governor Beshear has been extremely supportive, and we appreciate his leadership and advocacy. We thank Senator McConnell for his assistance in helping to resolve this matter.”

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 Beshear asked CMS to exercise its authority to dedicate federal Medicaid funds owed to rural hospitals. Following a request from the Beshear administration, 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, Beshear and McConnell announced that CMS approved Kentucky’s request to recover Medicaid federal match rates and provide federal funds for a payment.

To review the distribution of funds, click here.