Frankfort, Kentucky (April 1, 2026) – Members of the General Assembly moved to strengthen access to care for Medicaid patients, particularly in rural and underserved communities, while supporting provider retention and aligning reimbursement with quality outcomes with final passage of House Bill 689. The measure, sponsored by Representative Amy Neighbors of Edmonton, would provide the statutory authority for Kentucky to implement a Medicaid state-directed payment program for physician and non-physician professional services provided through qualifying hospital-affiliated groups, pending federal approval.
“Currently, many providers affiliated with teaching hospitals are not eligible for existing state-directed payment programs, creating a significant funding gap for those serving large Medicaid populations,” said Neighbors. “House Bill 689 would allow Kentucky to use an existing federal mechanism to help close that gap.”
Medicaid state-directed payment programs are designed to enhance Medicaid reimbursement, helping support providers and strengthen access to care for Medicaid patients. According to Neighbors, the program is estimated to generate approximately $29 million each year in new federal Medicaid dollars with no impact on the General Fund. Payments would comply with federal law and increase Medicaid reimbursement up to the Medicare rate while also requiring participating providers to meet state identified quality metrics.
Neil Thornbury, CEO of T.J. Regional Health, said, “We deeply appreciate Rep. Amy Neighbors and all of our state’s leadership in advancing HB 689 for the positive impact it will have on rural hospitals and the patients we serve. HB 689 is an important and forward-thinking investment in Kentucky Medicaid care delivery. For hospitals like ours, it creates an opportunity, subject to federal approval, to better support physician and professional services for Medicaid beneficiaries, which ultimately helps preserve access, improve care coordination, and strengthen the long-term sustainability of caring for underserved patients.”
Thornbury added, “We are also proud to work alongside outstanding university partners that are vital to the growth of residency programs which strengthen healthcare access for rural Kentuckians. This means more providers, better access, and a stronger future for healthcare in our community and the Commonwealth.”
“This legislation is about access to care, stability for our health care system, and supporting the providers who care for some of Kentucky’s most vulnerable citizens,” Neighbors added. “I was honored to champion House Bill 689 this session, and I am proud that it advanced through both the House and Senate with strong support. With final passage of House Bill 689, we are advancing meaningful reforms that would strengthen our health care system and access to care for Medicaid patients.”
HB 689 passed the Senate with changes via Senate Committee Substitute 1. The House concurred with the changes, sending the measure to the Governor for consideration. For more information on HB 689, please click here or visit legislature.ky.gov.
Photo: Representative Amy Neighbors discusses House Bill 689 before the Kentucky House on March 18.
(Emily O’Connor, Communications Specialist – Office of the Speaker — Kentucky House of Representatives)