Beckley ARH Hospital Issues Intent to Sue West Virginia's Medicaid Program

BECKLEY, W.Va., Nov. 11, 2010 /PRNewswire/ -- Appalachian Regional Healthcare, Inc., is issuing a 30-day notice of its intent to sue the West Virginia Department of Health and Human Resources and DHHR's Bureau for Medical Services for inadequate Medicaid reimbursement rates that threaten the continued operation of the not-for-profit Beckley ARH Hospital (BARH).

"We do not take this step lightly but do it to protect our patients," Rocco Massey, community chief executive officer of BARH, said. "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."

In fiscal year 2009, BARH received only $9.9 million for the $14.7 million the hospital spent to treat Medicaid patients. Of the $9.9 million in Medicaid reimbursements BARH received, $8.2 million came from federal funds. Of the $1.7 million the state put in that year to match federal funds, $1.4 million essentially came from BARH itself through the Medicaid provider tax the hospital pays. Thus, the state put in only about $300,000 of its own funds that year for Medicaid reimbursements for BARH.

"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."

BARH's notice of intent to sue West Virginia's Medicaid program is the second such notice issued recently. 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.

A disproportionately large percentage of BARH's patients, about 22 percent, are Medicaid beneficiaries, 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 (paying less than cost, if anything at all).

"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," Stephen Price, an attorney with Wyatt, Tarrant & Combs of Louisville, Ky., and counsel for Appalachian Regional Healthcare, said. "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."

Appalachian Regional Healthcare, Inc., is a not-for-profit health system serving 350,000 residents across eastern Kentucky and southern West Virginia. Operating nine hospitals, multi-specialty physician practices, home health agencies, HomeCare Stores and retail pharmacies, ARH is the largest provider of care and single largest employer in southeastern Kentucky and the third largest private employer in southern West Virginia.

The ARH system employs 4,700 employees and has a network of more than 600 active and courtesy medical staff members representing various specialties. Firmly committed to its mission of improving the health and promoting the well-being of all people in eastern Kentucky and southern West Virginia, in the past 12 months alone, ARH provided more than $120 million in uncompensated care for the uninsured and underinsured.

Beckley ARH Hospital is a not-for-profit, 173-bed facility serving the needs of southern West Virginia. The facility offers a 60-bed Behavioral Science Unit, state-of-the-art imaging with advanced CT and MRI units, the largest emergency department in the region, home health services, pediatric services, HomeCare Store, cardiac catheterization, physical, occupational & speech therapy, cardiopulmonary services, general & specialty surgical services and sleep lab services. With over 550 employees, Beckley ARH is the third largest employer in Raleigh County.

SOURCE Appalachian Regional Healthcare, Inc.

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