Family Health Centers CEO fears Medicaid waiver will cause many patients to lose coverage

The CEO of Family Health Centers told a Louisville Metro Council committee this week that due to the upcoming implementation of Gov. Matt Bevin’s Medicaid waiver program, thousands of the nonprofit’s patients in Louisville are in danger of losing their coverage in the coming years.

Bill Wagner commented on the effects of the new Kentucky HEALTH program on Family Health Centers and their patients in a budget committee hearing, where he estimated that up to 1,680 of their patients could lose Medicaid coverage and benefits in the first year of its implementation, which is scheduled to begin in July.

Citing the Bevin administration’s own estimates that the number of Medicaid recipients in Kentucky is expected to decrease by 95,000 under the first five years of this new program, Wagner added that 8,400 of its patients are at risk of losing Medicaid coverage over that period.

If such estimates hold true, Wagner added that Family Health Centers — which treats all patients regardless of their ability to pay — could lose millions of dollars in Medicaid revenue in the coming years. He said this would increase the amount of uncompensated care paid for by the city, which has decreased by roughly $1.1 million annually since Kentucky expanded Medicaid under the Affordable Care Act.

Family Health Centers CEO Bill Wagner at the opening of their new Market Street facility in 2017. | Courtesy of Family Health Centers

Bevin’s Kentucky HEALTH waiver, approved by the Trump administration early this year, would require eligible “able-bodied” Medicaid recipients to make monthly premium payments of up to $15 in order to continue coverage, in addition to working or volunteering a certain number of hours each week. Failure to meet such requirements could lead to being locked out of coverage for six months.

This work requirement is currently being challenged in a federal lawsuit by 16 Medicaid recipients in Kentucky who argue that the approval of the state’s waiver violates the Social Security Act and Medicaid Act and endangers the health care of tens of thousands of low-income families in the state.

Arguments are being made in that court case on Friday, but as of now, the Kentucky HEALTH program is set to begin in two weeks, with the work and community engagement requirements set to begin in three northern Kentucky counties in July, August and September, and in Jefferson County in October.

Wagner told the council members that the new Medicaid waiver program is “of great concern” to the nonprofit, as he fears that its new requirements will lock patients out of coverage, inflate administrative costs and cause the city’s uncompensated care burden to increase to pre-ACA levels.

“There are a lot of potential downsides for persons who are currently covered by Medicaid, where they could lose coverage or lose benefits, have gaps in coverage that could have ripple effects throughout the health care sector here in the community and across the state,” Wagner said.

Noting that Family Health Centers treated 24,000 Medicaid patients in 2017, Wagner estimated that 8,400 would now be at risk of losing coverage or benefits in the next five years. He added that this could mean 1,680 fewer patients covered by Medicaid in the first year of Kentucky HEALTH’s implementation, which, if they visited 5,040 times, would lead to a $907,000 decrease in Medicaid revenue that shifts to uncompensated care.

In the current fiscal year, Family Health Centers received $786,900, less than 2 percent of its total revenue, through the city health department. That is less than half of what it received from the city as late as 2015, as uncompensated care costs plummeted with the ACA and Medicaid expansion.

Wagner noted that, in April of 2013, 51 percent of its patients were uninsured, but that figure had dropped to 19 percent this year. Family Health Centers treated 40,695 patients in 143,561 visits in 2017.

This sea change was largely due to 80,000 people in Louisville gaining access to Medicaid through the expansion when those with an income of less than 138 percent of the federal poverty level becoming eligible. Wagner pointed out that this has led to city appropriations for Family Health Centers decreasing by $1.1 million since that time.

A slide from Family Health Centers’ presentation | Courtesy of Metro Government

Referring to the new waiver’s impact on patients, Wagner said many are confused or uninformed about the new requirements to maintain coverage, including whether or not they will be deemed exempt from the requirements due to being “medically frail” or chronically homeless.

“A lot of patients don’t even know it’s coming,” Wagner said. “They’re getting letters in the mail from the state. They’re going to get premium notices in the mail any day now. They will be told if they’ve been designated medically frail based on their claims history. But people are confused, I’ll tell you that.”

Changes to the Medicaid system also include expected reductions in dental reimbursements and payments from managed care organizations (MCOs) and increased claims denials and payments delays.

“There’s a lot of bureaucracy and red tape that comes along with this program,” Wagner said. “We know we’re going to have higher administrative costs as a provider, and most providers will in trying to keep up with this.”

With less than four months until the expected start of the Kentucky HEALTH program in Louisville, Wagner said that their goal going forward is “to keep people covered,” though noting that will require an “all hands on deck” effort from the nonprofit and other health care advocates.

Family Health Centers has been busy training its 410-person staff about the changes and how to help people wade through the red tape to keep their coverage, he said.

The nonprofit has also hired temporary staff to help their Medicaid patients with the Citizen Connect website, where Medicaid recipients must set up an account and report their employment status, changes in earnings, volunteer hours and classes taken, in addition to tracking how much money is in their My Rewards account. Medicaid recipients earn money for their My Rewards account by completing qualifying activities such as getting a physical or a preventive dental health exam.

“This is very complicated for the populations we serve,” Wagner said, noting that many of their patients are low literacy, have little access to the internet or familiarity with computers to set up an account, and up to 5,000 are homeless.

Acknowledging that he is “very skeptical” about Bevin’s waiver plan being successful, Wagner said he has met with the administration and Kentucky HEALTH staff many times and shared those same concerns.

“I’m not telling you anything we haven’t told them,” Wagner said. “We’re very concerned.”

Councilman Kevin Kramer, R-11, pushed back against many of Wagner’s claims, saying that “every number you gave us is the worst-case scenario.” He added that Wagner did not acknowledge the possibility that current Medicaid recipients could find a better job and gain private insurance, instead of just losing health insurance coverage entirely.

“You’re planning is for this program to be a complete bust, and everything that can potentially go wrong will go wrong,” Kramer said.

Wagner replied that “we’re planning for the worst and hoping for the best.”

“This program as designed – as acknowledged by the governor and his staff – is going to be more expensive to serve fewer people,” Wagner said, adding that he should know what kind of effect the new program is having on patients by the early part of next year.

Council President David James, D-6, made a point of thanking Wagner “for planning ahead for the possibility of 8,400 citizens in our community being kicked off of health care because of our governor.”

The spokeswoman for Gov. Bevin did not return an email requesting comment.

This story has been updated to correct the number of homeless patients served by Family Health Centers, which is 5,000, not 500.