A claim that lax regulation costs Kansas millions has top GOP officials scrapping

TOPEKA, Kan. (AP) — An audit released Tuesday by Kansas’ attorney general concluded that the state is losing more than $20 million a year because its Insurance Department is lax in overseeing one of its programs. The department said the audit is flawed and should be “discounted nearly in its entirety.”

The dispute involves two elected Republicans, Attorney General Kris Kobach and Insurance Commissioner Vicki Schmidt, who are considered potential candidates in 2026 to succeed term-limited Democratic Gov. Laura Kelly. Their conflict flared a week after the GOP-controlled state Senate approved a bill that would give Kobach’s office greater power to investigate social services fraud through its inspector general for the state’s Medicaid program.

The audit released by the inspector general said the Insurance Department improperly allowed dozens of nursing homes to claim a big break on a per-bed tax that helps fund Medicaid. It said that from July 2020 through August 2023, the state lost more than $94 million in revenues, mostly because 68% of the certificates issued by the Insurance Department to allow homes to claim the tax break did not comply with state law.

But Schmidt’s office said the inspector general relied on an “unduly harsh and unreasonable” interpretation of state law and “unreliable extrapolations” to reach its conclusions. Also, the department said, the conclusion that most applications for the tax break were mishandled is “astronomically unreflective of reality.”

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