Beckley ARH Hospital Appeals Decision on Medicaid Reimbursement Rates

Major Policy Issue Is Involved

Aug 16, 2011, 10:47 ET from Appalachian Regional Healthcare, Inc.

BECKLEY, W.Va., Aug. 16, 2011 /PRNewswire/ -- Appalachian Regional Healthcare, Inc., is appealing a circuit court judge's decision 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 that threaten the continued operation of the not-for-profit Beckley ARH Hospital (BARH).

"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.  "We are filing our appeal."

On December 27, 2010, Appalachian Regional Healthcare filed a 10-count suit against DHHR and BMS, because Medicaid reimbursements were covering only two-thirds of BARH's costs for providing medical care.  In a decision issued July 27, Kanawha County Circuit Judge James Stucky granted the state's motion to dismiss the complaint without allowing BARH to conduct discovery into the internal rate-setting practices BMS uses to set the Medicaid rates it pays or to present evidence of those practices in the case.

"We are very surprised that the judge found that it doesn't matter how low Medicaid rates are, and even if they cover only 48 percent of BARH's costs, they would be considered reasonable and adequate under the law," Massey said.

"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."

In general, West Virginia's Medicaid reimbursements cover only 67 percent of BARH's costs, but for inpatient acute care services, they cover only 48 percent of costs.  BARH cannot simply opt out of the Medicaid program.  The federal Emergency Medical Treatment and Active Labor Act requires that it continue to see Medicaid patients who come to its emergency room.  Its not-for-profit status could be jeopardized if it stopped treating less-fortunate individuals in the community, and it is part of the hospital's mission to treat everyone in need.

"We think it would be wrong to deprive the residents of our community of their choice of health care providers, but it looks as though the state wants to close our doors and put more than 550 people out of work rather than pay us a decent rate," Massey said.  "The state is wrong in assuming Beckley's other acute care hospital could handle the load of patients from BARH in addition to its own patient load.  Also, there is no replacement for BARH's 60-bed inpatient psychiatric service, which is the only such service in Raleigh County and is full most of the time.  We simply cannot turn our patients out onto the street like the state has suggested but the court ignored the evidence of the effects this would have on the community."

Some hospitals may be able shift costs to private payers when government programs like Medicaid do not pay enough to cover their expenses, but 72 percent of BARH's payer mix consists of Medicaid patients, Medicare patients, patients covered by other government programs, and those who cannot pay anything because they have no insurance or other health care coverage.  Thus, there is no opportunity for BARH to break even on 72 percent of its patients, let alone shift costs to make up for the enormous shortfalls in Medicaid reimbursements.  And cost-shifting brought on by low reimbursements from government programs is one reason health care costs keep increasing.

"I don't know of any other type of service in which the state pays its contractors for only 67 percent of their costs," Massey said. "Road contractors don't expect to get paid 67 percent of their costs. They expect to make a profit.  State employees don't want just two-thirds of their paychecks. What we are asking for is the chance to cover our costs as a very efficient hospital.  I don't think that is unreasonable."

SOURCE Appalachian Regional Healthcare, Inc.