Appalachian Regional Healthcare officials have announced plans to sue the West Virginia Department of Health and Human Resources and its Bureau for Medical Services over allegedly inadequate Medicaid reimbursement rates.
"We do not take this step lightly but do it to protect our patients," said Rocco Massey, community chief executive officer of Beckley ARH Hospital, a 173-bed facility in Beckley, W.Va. and one of nine hospitals in the ARH system, which serves eastern Kentucky and southeastern West Virginia. "Medicaid reimbursements have been covering only two-thirds of our costs for providing medical care, so BARH has been suffering a substantial financial loss. These Medicaid rates jeopardize BARH's continued ability to provide medical services to all of its patients."
Officials say that in fiscal year 2009, BARH received $9.9 million for the $14.7 million the hospital spent to treat Medicaid patients. Of that, $8.2 million came from federal funds.
Of the $1.7 million the state put in that year to match federal funds, hospital officials said, $1.4 million came from BARH itself through the Medicaid provider tax paid by the hospital.
"If the state had put in just $800,000 more, the federal government would have matched it with an additional $4 million," Massey said. "That would have covered BARH's Medicaid deficit in fiscal year 2009."
About 22 percent of BARH's patients are Medicaid beneficiaries, officials said, so shortfalls in Medicaid reimbursements significantly affect the hospital's ability to operate or make necessary capital expenditures. BARH, a not-for-profit hospital, has little opportunity to shift costs to other payers, because about 47 percent of its patients are on Medicare (which pays 90 percent of costs) and another 14 percent are on other government programs or are considered bad debt or charity cases.
"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 with Wyatt, Tarrant & Combs of Louisville, Ky., and counsel 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."
State 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."
Less than four weeks ago, the West Virginia Primary Care Association, representing community health centers, filed a similar notice of intent to sue over inadequate Medicaid reimbursements. Also, as of December 1, the University of Virginia Health Systems will terminate provider agreements with West Virginia Medicaid.