Hospital Sues WV Over Medicaid Reimbursements

John Commins, for HealthLeaders Media , November 12, 2010

BARH's 30-day notice of intent to sue West Virginia's Medicaid program is the second such notice issued recently. Last month, the West Virginia Primary Care Association, representing community health centers, filed a similar notice of intent to sue over inadequate Medicaid reimbursements.

About 22% of BARH's patients are Medicaid beneficiaries, so low reimbursements affect the hospital's ability to operate or make capital expenditures. BARH has little opportunity to shift costs to other payers because 47% of its patients are on Medicare—which pays 90% of costs—and 14% are on other government programs or are considered bad debt or charity cases, the health system says.

"The Bureau for Medical Services is required by statute to set Medicaid rates that are reasonable and adequate to meet costs incurred by efficiently and economically operated hospitals," said Stephen Price, an attorney for Appalachian Regional Healthcare. "The bureau also is required to take into account the situation of hospitals that serve disproportionate numbers of low-income patients."

West Virginia law provides that potential litigants must give 30-day notice before suing the state so that it might be possible to settle issues without litigation. "We hope that state officials will use the next 30 days to revise Medicaid reimbursement rates and raise them to adequate levels so we can avoid legal action, but we are prepared to move forward if we cannot reach agreement," Price said. "We understand the state has limited funds, but state law requires it to pay Medicaid costs. This proposed legal action is similar to actions Appalachian Regional Healthcare has taken successfully in Kentucky."

Appalachian Regional Healthcare, Inc. is a nine-hospital, not-for-profit health system that serves about 350,000 people in eastern Kentucky and southern West Virginia, with 4,700 employees and a network of more than 600 active and courtesy medical staff. ARH provided more than $120 million in uncompensated care for the uninsured and underinsured. With more than 550 employees, Beckley ARH is the third largest employer in Raleigh County in Southern West Virginia, the health system says.

John Commins is a senior editor with HealthLeaders Media.

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