MURRAY – With the agenda finished a mere 18 minutes after the call to order, last month’s meeting of the Murray-Calloway County Hospital Board of Trustees looked set to end in record time until a wide-ranging discussion on looming Medicaid cuts stretched the session to half an hour. But CEO Reba Celsor assured trustees that MCCH is already preparing for the disruption in funding sources.
Prompted by Congressman James Comer’s trip to Murray the day before, Judge-Executive Kenny Imes sparked the discussion, sharing some of the congressman’s comments about the “One Big Beautiful Bill Act,” which will cut nearly $1 trillion in federal Medicaid funding over the next 10 years, partly by imposing work requirements on certain beneficiaries.
“When I was in the legislature, I think that’s probably when Medicaid came down on us, and at that time – if I recall correctly – the feds were paying 90% of the bill and the state would pick up the 10%,” Imes recalled, referring to his stint representing District 1 in the state house from 2013-2018. “It was explained to us at the time that, gradually, the state was going to have to pick up more, so they have; but I do know that it’s a tremendous liability on the state budget.”
Since its inception in 1965, Medicaid has been a joint federal-state program that provides health insurance to disabled adults, low-income seniors, children and pregnant or postpartum individuals. Traditionally, parents could also qualify for benefits, though their annual income was capped at 57% of the federal poverty line (FPL), which translates to $18,326 for a family of four today. Adults without dependents were not eligible.
In 2014, Kentucky adopted Medicaid expansion, taking advantage of the Affordable Care Act’s option for states to broaden coverage by opening eligibility to all adults earning less than 138% FPL, or $20,783 per year for an individual. In 2013, the state’s uninsured rate for non-elderly residents stood at 18.8%. By 2015, it had fallen to 6.8%, one of the largest drops in the country following implementation of Medicaid expansion.
While there are states with waivers that allow them to institute work requirements for beneficiaries, federal eligibility criteria have not included employment status, until now. Beginning Jan. 1, 2027, able-bodied adults without dependents under the age of 13 must work or perform community service at least 80 hours per month to qualify for expanded Medicaid.
Imes said the intent, as explained by Comer, was to safeguard traditional Medicaid while tightening rules for able-bodied men on expanded Medicaid, although there are no explicit references to gender in the act regarding the new work requirements.
“It’s trying to help everybody get to the position of financial responsibility as well as take care of those that need it,” Imes said. “Men capable of work and of working age, there’s been, apparently, a lot of abuse of that. I think that’s one thing it’s trying to address.”
Later in the discussion, Trustee Gale Broach Sharp said questions about Medicaid eligibility often come down to “what’s really been misuse and what’s just soundbites.” She added that some view Kentucky’s broader coverage as a strength: “We’ve gone above and beyond, and we include people who are in recovery.”
And a growing body of evidence suggests that Medicaid expansion has played a key role in improving access to substance use disorder (SUD) treatment nationally, with Kentucky leading the way on many key benchmarks. For example, between 2013 and 2015, Kentucky’s uninsured rate for opioid-related hospitalizations dropped by 90%, and from 2014 to 2016, the state’s utilization rate for SUD treatment services increased by 700%.
Imes relayed some of Comer’s statistics, such as roughly 34% of Kentuckians receive Medicaid benefits, compared with about 18% in Tennessee. In some eastern Kentucky counties, upwards of 90% of residents are Medicaid beneficiaries. “So, I just found that interesting, while it will have significant impact, I guess, on us,” he said, referring to the hospital.
“Sounds about right,” said Celsor, who came to MCCH in April from a 75-bed hospital in Lebanon, Ky. “Actually, our population (in Murray) is a lower percentage of Medicaid than I’ve historically been accustomed to, so that’s an advantage that we have – the lower percentage.”
Ten years post-expansion, Medicaid covered 1.85 million Kentucky residents, the Cabinet for Health and Family Services (CHFS) reported for fiscal year 2024. Of those beneficiaries, approximately 1.1 million met eligibility criteria for traditional and 746,000 qualified through expanded Medicaid.
Locally, CHFS reported that, in FY24, roughly one-third of Calloway County residents received Medicaid benefits, and of those 13,019 beneficiaries, 4,722 were children. While the majority – 7,025 total – qualified for traditional Medicaid, 5,723 were covered through expanded Medicaid.
Kentucky Medicaid providers received more than $13 billion in payments for the services they provided to beneficiaries in FY24. In Calloway alone, Medicaid providers brought more than $79 million into the local economy through the services they provided, a boost of $4 million over FY23 and a staggering $32 million over FY22.
Celsor praised Kentucky’s Hospital Rate Improvement Program (HRIP), which provides additional reimbursements for inpatient and outpatient services provided to beneficiaries. By design, the program offsets Medicaid’s notoriously low reimbursement rates by aligning them more closely with commercial insurance rates, provided the facility meets certain quality standards.
“Of course, right now, as long as we have (HRIP), we see that Medicaid population because the reimbursement is good,” Celsor elaborated. “You know, it’s actually one of our better payors in the State of Kentucky.”
But under the new law, state-directed payments, like HRIP, cannot exceed the current Medicare rates. Starting in 2028, those payments will shrink by 10% every year until they match Medicare levels.
President and CEO of the Kentucky Hospital Association Nancy Galvagni told Kentucky Health News that, in Kentucky, those cuts would amount to a 90% loss of the current state-directed payments, adding, “if these state-directed payments are wiped out, that’s about half of hospitals’ revenue from the Medicaid program.”
“We had to know it would not last forever,” Celsor told trustees. “And thankfully, we have until 2028 to put a plan in place to protect us when they do start. It will be a gradual decrease, so I think we’ll be prepared for it when it comes.”
After adjourning, trustees took a short break before reconvening for a four-hour strategic planning session. That impending marathon helped explain the quick pace of the earlier meeting and all but guaranteed that Medicaid cuts would remain on the table that afternoon.
