The school health services gamble: Ky. health departments could win on the state’s bet against Kentucky Spirit’s appeal of ruling

By Molly Burchett
Kentucky Health News

Kentucky’s health departments may soon get money for school nurses, based on a court ruling in May that said Medicaid managed-care firm Kentucky Spirit must pay for treatments provided by the nurses. The money wouldn’t be coming from Kentucky Spirit, at least immediately, but from funds the state is withholding from the company, betting the payments on a court victory.

Circuit Judge Phillip Shepherd of Frankfort ruled in May that Kentucky Spirit must pay $8 million for services provided by school nurses, and the state has been withholding payment to the managed care company until it complies with the ruling, reports Ronnie Ellis, Frankfort correspondent for Community Newspaper Holdings Inc. On Monday, Shepherd told attorneys for the Cabinet for Health and Family Services and Kentucky Spirit that he is “inclined” to order the state to pay the health departments out of those withholdings.

The cabinet wants Kentucky Spirit to post bonds to cover the disputed payments during the company’s appeal process. If the state made payments directly to the health departments, it would be gambling at its own risk, reports Ellis. If Kentucky Spirit wins its appeal of Shepherd’s earlier ruling, the state would have to refund the money, and the health departments would keep the payment.

This lawsuit originally came about when Kentucky Spirit stopped providing coverage for school health services last summer. The company said its state contract didn’t require payment for such services, even though the state’s Medicaid program has always paid for these services and other managed care companies were providing coverage for them. The court ruled that Kentucky Spirit must pay health departments, and the company appealed the decision.

Regardless of the source of funds, health departments and school districts could find some relief if payments are made because many school nurse programs were threatened by cutbacks and closings as a result of Kentucky Spirits failure to pay for school services.

Shepherd will allow attorneys for the state to respond to the motion and hear arguments on July 25, Ellis reports.

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