The lawsuit stems from a 2018 case of a pregnant patient, who is not named in appellate court documents. She was 28 years old at the time and had an intellectual disability among other complications, including rapid weight loss caused by hyperemesis gravidarum.

The woman was originally admitted at Newman Regional Health in Emporia before she was transferred to Stormont Vail. Part of the hospitalization during her third trimester was covered.

But the final two weeks were not because Sunflower Health Plan, one of the managed care organizations in the state’s privatized Medicaid program known as KanCare, refused to reimburse for the patient’s continued hospitalization through the day the child was born via cesarean section.

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“We are here because the Kansas Medicaid program has wrongfully refused to pay for some of an inpatient hospitalization while a Medicaid beneficiary was at Stormont Vail,” said Amanda Wilwert, an attorney for the hospital, during oral arguments. “Stormont believes the inpatient care was medically necessary as defined by the Kansas Medicaid regulations.”

Court records and oral arguments show the state expected Stormont Vail to look into having a home health agency care for the patient in Emporia instead of continued hospitalization — even though home health generally does not take care of pregnant patients and her doctors believed the expectant mother was not stable enough to discharge.

“The way it’s supposed to work,” said Darren Sharp, an attorney representing KDHE, “is the managed care organization, in this case Sunflower Health, on behalf of KDHE reviews the medical records, asks about the appropriate level of care and whether there’s any other interventions that would be more cost effective or appropriate depending on the level of or depending on the patient’s records and the patient’s status.”

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Sharp argued medical records showed the patients was getting better because of total parenteral nutrition, or TPN.

“This is when a tube, a PICC, is inserted and your minerals and your electrolytes and all of your nutrition is then intravenously provided,” Sharp said.

He said the treatment “was eliminating her vomiting, her diarrhea, she had no fever, her glucose levels were stabilized.”

In their ruling, the judges indicated the KDHE appeals committee primarily cared about the cost saving of using home health versus hospitalization while disregarding the treating physician for insufficient reasons and ignoring evidence on potential benefits or harms to the patient.

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But the judges declined to resolve the dispute. Rather, unless the decision is appealed to the Kansas Supreme Court, the matter goes back to the KDHE administrative process.

There, the agency’s appeals committee must reconsider the case consistent with the Court of Appeal’s ruling. The published decision sets new precedent interpreting state laws and regulations on the Medicaid program.

“While this court provides no opinion on whether the disputed inpatient healthcare services met the definition of medical necessity,” Hurst wrote, “the record shows that some of the (appeals committee’s) factual findings were not supported by the record as a whole and that the (appeals committee) inaccurately applied the law when it failed to consider (the patient’s) individual characteristics and assess the harms and benefits of the healthcare intervention.

“In making a medical necessity determination, the reviewing agency must make an individualized determination based on the record as a whole.”

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Jason Alatidd is a Statehouse reporter for The Topeka Capital-Journal. He can be reached by email at jalatidd@usatodayco.com. Follow him on X @Jason_Alatidd.