West Virginia Supreme Court takes up Medicaid reimbursement case - Beckley, Bluefield & Lewisburg News, Weather, Sports

West Virginia Supreme Court takes up Medicaid reimbursement case

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Photo courtesy of the West Virginia Supreme Court. Photo courtesy of the West Virginia Supreme Court.
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Is the West Virginia Department of Health and Human Resources obligated to pay a higher Medicaid rate to the Beckley ARH hospital?

This was one of the main questions presented to the West Virginia Supreme Court in the Kanawha County case of Appalachian Regional Healthcare doing business as Beckley ARH Hospital, against the West Virginia Department of Health and Human Resources, Michael L. Lewis, the West Virginia Bureau for Medical Services and Nancy Atkins.

In its brief to the state's highest court, Bar-H said Medicaid only pays 67 percent of the cost for providing care and those low levels violate federal and state regulations.

The DHHR and Bureau for Medical Services said in their brief they are not required to pay rates that meet Bar-H's cost because it is not a state government-operated hospital.

The Beckley hospital disagreed with the lower court's July 2012 decision to dismiss the suit, saying the decision allowed the DHHR to have "unfettered authority to set Medicaid rates in the arbitrary and capricious manner they have employed."

In its order, the court also held the hospital didn't have the right to challenge the way the DHHR sets its Medicaid reimbursements and said federal law preempts a state court action, the brief notes.

However, the hospital argues if the decision stands, the circuit court's interpretation of state law could raise issues with the federal supremacy clause.

Bar-H filed the action seeking declaratory and injunctive relief because it said the DHHR and the Bureau for Medical Services didn't follow federal and state law when administering the Medicaid program. This caused the hospital, the brief argues, to lose money and could threaten future access to services.

The DHHR and the bureau, however, say the motion to dismiss was appropriate because the agencies applied the right standards when setting reimbursement rates. Their brief said the agencies use the same rate methodology for federal reimbursements to set West Virginia hospital reimbursement rates.

The agencies also said the hospital doesn't have the legal right to challenge their Medicaid rates and the agencies don't have the legal duty under state code to reimburse for all costs, according to the brief.

The hospital said in its brief that it costs $14.7 million a year to treat West Virginia Medicaid patients but the DHHR only covers $9.9 million, or 67 percent of the costs.

As an example, the hospital said in 2009, it paid $1.4 million in provider taxes to West Virginia — the federal government paid $8.2 million of the $9.9 million in Medicaid payments, according to the brief.

According to the brief, Bar-H says since it paid that $1.4 million of the state match, the DHHR only needed to get $800,000 from other sources for the state match and to completely cover all Medicaid costs. Instead, the hospital said it had a $4.8 million Medicaid loss.

The hospital says the Affordable Care Act will make it worse with the expansion of Medicaid to eligible people younger than 65 with incomes up to 133 percent of the federal poverty limits, according to the brief.

The hospital argues when Medicaid is expanded and the federal government already bases payments on "grossly inadequate Medicaid rates," then losses will "skyrocket."

In the oral argument hearing, Stephen Price Sr., representing the hospital, said the hospital's mission as a 401C3 organization is to provide services to the indigent and at risk population. Price said 20 percent of the hospital's business would be affected.

"The practical matter is they can't lose 20 percent of their business," Price said. "That's why adequate reimbursements are important."

The DHHR argued, however, that the bureau has "wide discretion" to set Medicaid rates if it's consistent with access to quality care. Their brief states the hospital has not alleged Medicaid patients in their services area do not have access to those services.

In the brief, the hospital also argued that although the DHHR sets the rates in the same way for state-owned facilities as it does for hospitals like Bar-H, it makes additional payments to the state-owned hospitals to make up for "inadequate rates."

The hospital argues the West Virginia Health Care Authority was given the right to set Medicaid rates in 1983 and that authority was transferred to the DHHR. However, the DHHR argues the health care authority never had that right to set Medicaid rates.

The lower court's ruling held that the DHHR and the bureau were not required by state code to set adequate Medicaid rates and said requirements had been met.

In their brief, the DHHR and the bureau said participating in Medicaid is voluntary.

"It may not be petitioners' remedy of choice, but not participating in the Medicaid program is a remedy," the brief states.

The hospital acknowledged that participation is voluntary but argued the state must comply with federal Medicaid regulations.

Another remedy, the DHHR's brief states, could be to go to public hearings it holds when making change for reimbursement rates.