Appalachia Regional Healthcare Inc. announced it is appealing the late July decision by a circuit court judge to dismiss its lawsuit against the West Virginia Department of Health and Human Resources and DHHR's Bureau for Medical Services for inadequate reimbursement rates.
The hospital operator filed the 10-count lawsuit in late December because it maintains the level of reimbursement at its Beckley ARH Hospital accounts for only 67 percent of costs. Continued losses on the care it provides for state-insured patients could put the hospital in jeopardy.
[See also: Health system sues West Virginia over inadequate Medicaid reimbursements]
"Although we are disappointed with the judge's decision, we expected all along that the case would go eventually to the West Virginia Supreme Court, because this case involves major policy issues," Rocco Massey, community chief executive officer of BARH, said in a statement announcing the filing of the appeal.
The struggles between ARH and the state are not new. Prior to filing the lawsuit, the hospital operator filed an intent-to-sue notice last October as required by state law. ARH hoped to use that action as an opportunity to work out a settlement with the state to help it cover its shortfall. When those efforts failed, it followed up with a formal legal action.
For Beckley, the problem of low payments for Medicaid patients is more acute than it is for other hospitals. According to ARH, roughly 72 percent of its patients are covered by public programs such as Medicare, Medicaid or other government programs. Many hospitals routinely cost-shift to other payers to make up the difference in reimbursement rates for patients on public insurance, but that is virtually impossible for Beckley since such a high percentage of its patients rely on public insurance.
The hospital has already done all it can to face this reality, Massey noted.
"BARH already has the second lowest costs of any hospital in West Virginia," he said. "Anyone who comes here for medical care knows we are a very down-to-earth, no-frills hospital that provides compassionate, high-quality care with the resources we have. The fact that we have an 80 percent occupancy rate tells you that the community believes in this hospital and there is a need for our services. So we are disheartened to learn that the state believes BARH's only recourse is to abandon its Medicaid patients and discontinue services if the state's reimbursement rates are too low to sustain our programs."
According to information released by Beckley, in 2009 the hospital was reimbursed $9.9 million for the $14.7 million spent providing care to Medicaid patients. Of that, $8.2 million came from federal Medicaid funds, with the state kicking in $1.7 million. Since the hospital paid roughly $1.4 million for its Medicaid provider tax, the outlay by the state amounted to roughly $300,000.
"If the state had put in just $800,000 more, the federal government would have matched it with an additional $4 million," Massey said in December when the hospital filed its lawsuit. "That would have covered BARH's Medicaid deficit in fiscal year 2009."
Beckley isn't the only organization that has pressed the state to re-examine and raise its reimbursement rates for Medicaid. In October, the West Virginia Primary Care Association filed a 12-page legal brief on behalf of its 30 member community health centers charging the Bureau of Medical Services does not follow federal law or even its own state plan for Medicaid reimbursement funding.
"The WVPCA and individual members have repeatedly tried in meetings and written communication to help the BMS understand its obligations to pay health centers in accordance with the law," said Louise Reese, CEO of WVPCA in a statement. "Their refusal has meant that, over the years, community health centers have been denied millions of dollars in Medicaid funding to provide preventive and primary care services. It hamstrings their ability to hire professional and support staff, and to obtain needed equipment and maintain facilities."