Kansas plans to reduce funding to providers of residential psychiatric care for children, an added challenge to facilities that already saw cuts earlier this year.

Providers and advocates worry the additional reduction could force some providers out of business and result in fewer children receiving care. The announcement comes after Gov. Sam Brownback cut Medicaid reimbursement rates by 4 percent in May to help balance the budget.

The move is expected to save about $350,000 from the state general fund.

Currently, residential psychiatric treatment facilities (PRTFs) receive a payment each day a child is in their facility. However, they also receive payment on days when the child is out of the facility but a bed must still be reserved — "reserve days." The child may be in the hospital, or at home, or elsewhere.

Kansas plans to reduce payment on reserve days by 40 percent. The Kansas Department for Aging and Disability Services informed providers of the policy change on a conference call earlier this week. According to an informational flier, the change becomes effective in March.

"The real tragedy in all of this is that it’s putting in financial incentives to keep kids from going home and working on reintegration," Christie Appelhanz, director of the Children’s Alliance of Kansas, said.

KDADS spokeswoman Angela de Rocha said the purpose of the change is to align reserve-day reimbursement with other facility reimbursement policies, such as those for intermediate care facilities and nursing facilities.

"Again, this policy is to align PRTF reserve-day reimbursement with (intermediate care facilities) and (nursing facilities) reserve-day rate policies and state regulation," de Rocha said. "So they will still be reimbursed 60 percent of their daily rate even when they are not providing care for the patient."

In total, the change will save about $800,000 in all funds, and $350,000 from the general fund, de Rocha said.

Appelhanz predicted fewer children will be able to receive services under the reduction, and that the number of providers in the state may shrink. Kansas currently has 11 providers, according to the KDADS website.

Dana Schoffelman, CEO of Topeka-based Florence Crittenton, expressed alarm at the prospect of the cut. At face value it may appear that reserve days would cost the providers less, but she said in reality that’s not the case.

"That’s not really the case and I think what (providers) are saying ‘We could barely manage the 4 percent cut and to cut 40 percent on reserve days are more than most of us can absorb,’ " Schoffelman said.

The cost of an absent youth is already captured within the cost of care, Appelhanz said. Services such as family therapy and crisis interventions are still provided, even when a child is gone, she said.

For Florence Crittenton, the reduction would cost the provider about $70,000 a year, Schoffelman said. The amount represents about 6 percent of its total revenue.

Combined with the Medicaid rate cut, the facility has seen a revenue reduction of about 10 percent within a year, she indicated.

The announcement of the cut comes as Brownback is developing a budget proposal amid a $350 million shortfall. The governor has been tight-lipped about his plans, though his office has ruled out furloughs, layoffs or "major cuts."

Lawmakers and Brownback have spoken of reversing the Medicaid rate cut. In August, the governor proposed increasing a tax on hospitals to allow restoration of the provider reimbursement rate.