- Associated Press - Tuesday, March 15, 2011

FRANKFORT, Ky. (AP) — A trade group representing the family-owned corner drug stores in many small towns in Kentucky warned Tuesday that cuts to the Medicaid program could have dire consequences, including closures.

“Many of the independent pharmacists that I represent don’t have the financial resources to take this type of reduction, even for a short period of time,” said Cathy Hanna, vice president of American Pharmacy Services Corp.

The House Appropriations and Revenue Committee also heard concerns about the impacts the potential Medicaid cuts could have on hospitals, nursing homes and physicians. It was the second day of a special legislative session called to shore up the program that serves more than 800,000 elderly, poor and disabled Kentuckians.

Democratic Gov. Steve Beshear notified Medicaid providers last week that reimbursements will have to be cut 35 percent for the remainder of this fiscal year unless lawmakers take action quickly.

The House is considering legislation that shifts $166.5 million from next fiscal year’s appropriations to be used to balance this year’s Medicaid budget. The Senate is considering a competing bill that would cut all government services to free up money to balance the Medicaid budget.

What should have been a relatively simple chore of plugging the Medicaid deficit has become politically charged, leaving a Republican majority in the Senate and the Democratic majority in the House at an impasse.

They ended a legislative session last week without reaching a resolution, and Beshear, a Democrat, called them back.

The Beshear administration originated the House proposal for filling the Medicaid budget gap with an inter-agency financial transfer, followed by a move to privatize selected Medicaid services. Senate President David Williams, one of three Republicans seeking the GOP gubernatorial nomination to run against Beshear in the fall, is insisting on across-the-board cuts to free up money for Medicaid.

The result has been heated political rhetoric. The House heard testimony in the education and judiciary committees on Monday from people lamenting the hardships of the Senate’s proposed cuts.

State Rep. Rick Rand, D-Bedford, chairman of the House budget committee, said independent, family-operated pharmacies are important to many small towns.

“I fear that a 35 percent cut would put many under,” he said. “It would be tragic.”

Kentucky Medical Association attorney Bill Doll said the potential cuts could also hurt physicians, especially pediatricians who care for Medicaid-dependent children. Doctors, he said, would have to absorb about $41 million of the overall cuts.

“It sends a scary message to physicians,” Doll said.

Michael Rust, president of the Kentucky Hospital Association, urged lawmakers to move quickly to head off the cuts that would cost Kentucky hospitals about $130 million.

Rust said rural hospitals that have a larger load of Medicaid patients would be among those most severely impacted.



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