Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 larry.campbell@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Larry L. Campbell, Director Laura Kelly, Governor

January 22, 2020

The Honorable Gene Suellentrop, Chairperson
Senate Committee on Public Health and Welfare
Statehouse, Room 441B-E
Topeka, Kansas 66612
Dear Senator Suellentrop:
SUBJECT: Fiscal Note for SB 252 by Senator Denning, et al.
In accordance with KSA 75-3715a, the following fiscal note concerning SB 252 is respectfully
submitted to your committee.
SB 252 would establish the Kansas Innovative Solution for Affordable Healthcare Act to expand
eligibility of medical assistance benefits. The Kansas Department of Health and Environment (KDHE)
and the Kansas Insurance Department would be required to submit to the U.S. Centers for Medicare and
Medicaid Services (CMS) and the U.S. Department of the Treasury any state plan amendment, waiver
request or other approval request to implement the Act. Upon approval from CMS, Medicaid services
would be expanded on or after January 1, 2021 to any adult applicants under 65 years of age who are not
pregnant and whose income does not exceed 138.0 percent of the federal poverty level (FPL) to the
extent allowed under the federal Social Security Act and subject to the 90.0 percent Federal Medical
Assistance Percentage (FMAP).
Upon approval from the State Finance Council, the Kansas Insurance Department would submit
to CMS a waiver request under Section 1332 of the Federal Patient Protection and Affordable Care Act
to establish the Health Insurance Plan Reinsurance Program, a reinsurance program for health insurance
plans sold in the Kansas individual market. Additionally, KDHE would submit to CMS a waiver request
under Section 1115 of the federal Social Security Act to provide Medicaid services to any adult
applicants under 65 years of age who are not pregnant and whose income does not exceed 100.0 percent
FPL. The Section 1115 waiver would also request to transition adult applicants under 65 years of age
who are not pregnant and whose income is greater than 100.0 percent FPL but does not exceed 138.0
percent FPL to health insurance plans on the health benefit exchange in Kansas. The Kansas Insurance
Department would be required to design the reinsurance program in coordination with KDHE to offset
any costs related to the Section 1115 waiver. The reinsurance program and the Medicaid eligibility
requirements in the Section 1115 waiver would begin on January 1, 2022, subject to approval by CMS
and the U.S. Department of the Treasury. If the State Finance Council does not approve submitting the
reinsurance program waiver, or if CMS or the U.S. Department of the Treasury do not approve the
reinsurance program waiver or the Section 1115 waiver, then Medicaid expansion up to 138.0 percent
FPL in effect on or after January 1, 2021 would continue.
The bill would require a $25 monthly fee to be charged to each person enrolled in the program,
not to exceed $100 per month per family. KDHE could grant hardship exemptions, as determined by
The Honorable Gene Suellentrop, Chairperson
Page 2—SB 252

the Secretary of Health and Environment. The state’s share of revenue collected from the monthly fee
would be credited to the State General Fund. KDHE would be allowed to use the Debt Setoff Program
administered by the Department of Administration for any covered individual who is delinquent by 60
days or more. Also, KDHE could require managed care organizations to collect the monthly fee.
KDHE would be authorized to establish a health insurance coverage premium assistance program
for individuals whose income is greater than 100.0 percent FPL but does not exceed 138.0 percent FPL
who are eligible for employer health insurance coverage but cannot afford the premiums. An
individual’s payment for a health insurance coverage premium cannot exceed 2.0 percent of the
individual’s modified adjusted gross annual income. Also, total premium payments cannot exceed 2.0
percent of a household’s modified adjusted gross income for all members of the household who
participate in the premium assistance program.
The bill would require KDHE to refer all non-disabled adults receiving benefits from the Act and
who are unemployed or working less than 20 hour a week to the KansasWorks program administered by
the Department of Commerce. The Department of Commerce would be required to track employment
outcomes for Kansas Innovative Solution for Affordable Healthcare Act participants. Full-time
postsecondary education institution or technical school students would be exempt from the referral
program.
If at any point the FMAP becomes lower than 90.0 percent, KDHE must terminate coverage
under the Act over a 12-month period beginning on the first day the percentage becomes lower than 90.0
percent.
The bill would create the Medicaid Expansion Privilege Fee Fund in the state treasury. Revenues
resulting from Kansas Innovative Solution for Affordable Healthcare Act members would be deposited
in the new fund and could only be spent on assistance payments for members. All revenues from drug
rebates associated with current and expanded medical assistance members would be credited to the State
General Fund. Under current law, revenues from drug rebates are remitted to the Medical Programs Fee
Fund in KDHE. KDHE would be required to certify to the Director of Legislative Research and the
Director of the Budget the amount of monies received from drug rebates. “Drug rebates” would be
added as a separate line on State General Fund receipt reports produced by the Legislative Research
Department and the Division of the Budget.
The bill would create the Hospital Medicaid Expansion Support Surcharge Fund. Revenues from
the fund would be used to offset costs related to Medicaid expansion. The surcharge would equal to the
number of unduplicated Medicaid expansion enrollees multiplied by $233 and be imposed on each
hospital provider proportionally as determined by the Healthcare Access Improvement Panel. However,
the total amount received from the surcharge cannot exceed $35.0 million in any calendar year and the
surcharge would discontinue if the FMAP falls below 90.0 percent. SB 252 outlines the procedures for
KDHE and the Healthcare Access Improvement Panel to collect the surcharge annually. On July 1 of
each fiscal year, the Director of Accounts and Report in the Department of Administration would record
a debit against Hospital Medicaid Expansion Support Surcharge Fund receivables and a corresponding
credit to the fund equal to 100.0 percent of revenues estimated by the Director of the Budget.
The bill would also create the Federal Medical Assistance Percentage Stabilization Fund. The
fund would be financed by any monies recovered by the Office of the Attorney General on behalf of
Kansas in the civil action Texas v. United States. If the state’s share of Medicaid costs increases as a
The Honorable Gene Suellentrop, Chairperson
Page 3—SB 252

result of a change to the FMAP, funds would be transferred from the Federal Medical Assistance
Percentage Stabilization Fund to the State General Fund to cover the costs. Conversely, if the states
share of Medicaid costs decreases because of a FMAP change, funds would be transferred from the State
General Fund to the Federal Medical Assistance Percentage Stabilization Fund. The Director of
Legislative Research and the Director of the Budget must certify any Medicaid cost increases or
decreases.
SB 252 would require the Department of Corrections to coordinate with county sheriffs who
request assistance in facilitating Medicaid coverage for any state or county inmate incarcerated in a
Kansas prison or jail.
The bill would create the Rural Hospital Advisory Committee to manage the new Rural Hospital
Transformation Program. The advisory committee would include KDHE; the Department of Labor; the
Board of Regents; the Kansas Hospital Association; the Kansas Medical Society; the Community Care
Network of Kansas; the Association of Community Mental Health Centers of Kansas; the Board of
Healing Arts; the Kansas Farm Bureau; the Emergency Medical Services Board; and other public and
private stakeholders. The advisory committee would identify one or more consulting firms to work with
target hospitals, as defined in the bill, to develop transformation plans as part of the Rural Primary Health
Center Pilot Initiative.
The Kansas Insurance Department would be required to study and prepare a report on any risks
associated with converting the health benefit exchange operated in Kansas under the federal Patient
Protection and Affordable Care Act from a federally facilitated exchange to a state-based exchange. The
study must be submitted to the House Committee on Health and Human Services and the Senate
Committee on Public Health and Welfare on or before January 11, 2021. In coordination with the Kansas
Hospital Association, Kansas Medical Society, Community Care Network of Kansas and other private
and public stakeholders, KDHE would be required to establish a task force to develop a plan to measure
and report uncompensated care provided by healthcare providers and hospitals in Kansas. A report must
be submitted to the House Committee on Health and Human Services and the Senate Committee on
Public Health and Welfare on or before January 10, 2022.
The bill would authorize the Kansas Insurance Department to make expenditures from the
Insurance Department Service Regulation Fund for FY 2021 and FY 2022 for costs related to studying
converting from a federally facilitated health benefit exchange to a state based exchange; preparing the
Section 1332 waiver request for the reinsurance program; determining the extent to which a $35.0 million
annual appropriation for the reinsurance program would decrease health insurance premiums on the
health benefit exchange in Kansas; and submitting the waiver request and actuarial analysis to the State
Finance Council for approval no later than 150 days after the effective date of the Act.
The bill would authorize KDHE to make expenditures from the State General Fund or any special
revenue fund for FY 2020 and FY 2021 to submit a waiver request to CMS to allow for Medicaid
reimbursement for impatient psychiatric acute care. The bill would appropriate $35.0 million from the
Health Insurance Plan Reinsurance account of the State General Fund to the State Finance Council for
FY 2022. The funds would be used to implement the Health Insurance Plan Reinsurance Program
beginning January 1, 2022 upon approval of the State Finance Council.
During calendar year 2021 and calendar year 2022, the Robert G. (Bob) Bethell Joint Committee
on Home and Community Based Services and KanCare Oversight would meet for an additional day per
The Honorable Gene Suellentrop, Chairperson
Page 4—SB 252

meeting in order to monitor the implementation of the Kansas Innovative Solution for Affordable
Healthcare Act.
The bill would require the following other reports to the Legislature on the Kansas Innovative
Solution for Affordable Healthcare Act:
1. KDHE, in coordination with the Department of Commerce, must submit a report annually to the
Legislature regarding the employment outcomes of individuals covered under the Act.
2. In January of each year, KDHE must submit a report on revenues received from the monthly
fees.
3. On or before January 10, 2022, and on or before the first day of the regular session of the
Legislature annually thereafter, KDHE must submit a report on Medicaid Expansion Privilege
Fee Fund revenues.
4. On or before January 10, 2022, and on or before the first day of the regular session of the
Legislature annually thereafter, KDHE must submit a report on the cost savings from the
movement of individuals to the higher FMAP rate.
5. On or before January 10, 2022, and on or before the first day of the regular session of the
Legislature annually thereafter, the Secretary of Corrections must deliver a report that identifies
cost savings from receiving Medicaid reimbursement for inmate inpatient hospitalization.
6. On or before February 15 of each year, the Secretary of Health and Environment must present a
report to the House Committee on Appropriations and the Senate Committee on Ways and Means
on the costs, cost savings and additional revenues generated during the preceding fiscal year.
7. On or before September 1 of each year, KDHE must submit a report on the FMAP and all
amounts transferred in and out of the Federal Medical Assistance Percentage Stabilization Fund.
8. On or before January 10, 2022, and on or before the first day of the regular session of the
Legislature annually thereafter, the Kansas Insurance Department must submit a report on any
cost shifting from hospitals to commercial health insurance plans as a result of implementing the
Act.
SB 252 would be come effective upon its publication in the Kansas Register.
The fiscal effect is divided into two parts. The first section shows the fiscal effect for Medicaid
expansion up to 138.0 percent FPL, which would be in effect for half of FY 2021 and all of FY 2022.
The second section shows the fiscal effect for Medicaid expansion for 100.0 percent – 138.0 percent
FPL with the reinsurance program, which would in effect for half of FY 2022 and all of FY 2023.
Medicaid Expansion: 138.0 percent FPL
Capitation
For the provisions of the bill that would expand Medicaid on or after January 1, 2021 to certain
adults whose income does not exceed 138.0 percent FPL, KDHE estimates that an additional 150,000
individuals would be eligible for Medicaid coverage in FY 2021 and 154,000 additional individuals
The Honorable Gene Suellentrop, Chairperson
Page 5—SB 252

would be eligible for FY 2022. In general, KDHE expects member counts and health costs to increase
by 2.5 percent, annually. Expenditures related to the expansion population would be eligible for the
enhanced FMAP rate in which the federal government’s share of the costs would be 90.0 percent and
the state’s share 10.0 percent. Because of the start date of January 1, 2021, the agency estimates that the
total cost of care for the newly eligible beneficiaries would be $562.5 million for half of FY 2021. The
federal share at 90.0 percent would be $506.25 million and the state share at 10.0 percent would be $56.3
million before offsets. The cost of care for the newly eligible beneficiaries for the full year in FY 2022
is estimated to be approximately $1,139.1 million, with a federal share of about $1,025.2 million and a
state share of $113.9 million before offsets.
Revenue Offsets
KDHE estimates additional revenue of $2.2 million in FY 2021 and about $4.4 million in FY
2022 from increased drug rebates which would be deposited into the State General Fund. KDHE
estimates additional revenue of $32.5 million in FY 2021 and $65.7 million in FY 2022 from the 5.77
percent privilege fee, which would be deposited into the Medicaid Expansion Privilege Fee Fund. Also,
revenues from the Medicaid expansion surcharge would total approximately $35.0 million in FY 2022,
which would be credited to the Hospital Medicaid Expansion Support Surcharge Fund. Additional
revenues from drug rebates, the privilege fee and the Medicaid expansion surcharge would be used to
meet state share requirements.
Population Movement Savings
KDHE indicates that the bill would create health care cost savings for certain populations, such
as members of the MediKan Program or Medical Needy Spend-Down Program, that are part of the
current covered Medicaid population and would be eligible for the enhanced FMAP rate. For expansion
to 138.0 percent FPL, KDHE estimates the savings for these populations would total $10.6 million in
FY 2021 and approximately $21.5 million in FY 2022. There would be additional savings from state
correctional facility inmates who would be eligible for the enhanced FMAP rate. Those savings are
described below.
Monthly Fee
SB 252 would require KDHE to assess a monthly fee of $25 for each eligible member. The
analysis that KDHE performed to determine the net revenue from this program assumed various levels
of compliance with the monthly payments, based on historical compliance with premiums in the CHIP
program. KDHE estimates that the total annual revenue collected from the monthly fee would be
between $3.7 million and $5.9 million in FY 2021 and between $7.4 million and $11.8 million in FY
2022. However, the agency would be allowed to retain only 10.0 percent of the monthly fee collections
and must return 90.0 percent to the federal government. It is estimated that KDHE would gain revenue
of about $300,000 to $600,000 in FY 2021 and $600,000 to $1.2 million in FY 2022. The revenue
gained would be credited to the State General Fund.
There would also be a cost to administer the monthly fee program by KDHE’s fiscal agent.
KDHE estimates the cost to administer the monthly fee program would be about $3.0 million from all
funding sources annually. KDHE receives a 50.0 percent match from the federal government on this
portion of administrative expense, leaving an annual state cost of about $1.5 million. Between
anticipated revenues and known expenses, KDHE estimates the monthly fee program would require
additional expenditures of $300,000 to $700,000 from the State General Fund for FY 2021 and FY 2022.
The Honorable Gene Suellentrop, Chairperson
Page 6—SB 252

Incremental Administrative Costs
The state would also incur incremental administrative costs associated with expanding the
program. KDHE would require the addition of 120.00 FTE positions, the majority of which would be
eligibility staff a