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Hospital appealing reimbursement decision to W.Va. SC

By Jessica M. Karmasek | Aug 16, 2011

BECKLEY, W.Va. (Legal Newsline) - A West Virginia hospital is appealing a circuit court judge's decision to dismiss its lawsuit against two state agencies for inadequate reimbursement rates.

Appalachian Regional Healthcare Inc., based in Lexington, Ky., filed a lawsuit against the West Virginia Department of Health and Human Resources and the DHHR's Bureau for Medical Services.

The company says the state's poor reimbursement rates threaten the continued operation of the not-for-profit Beckley ARH Hospital.

"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 Tuesday.

"We are filing our appeal."

In its 10-count suit, filed Dec. 27, 2010, Appalachian Regional Healthcare said 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, he said, already has the second-lowest costs of any hospital in West Virginia.

"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," Massey said.

"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 the company, West Virginia's Medicaid reimbursements cover only 67 percent of BARH's costs. For inpatient acute care services, they cover only 48 percent of costs.

And BARH cannot simply opt out of the program, the company says.

The federal Emergency Medical Treatment and Active Labor Act requires that it continue to see Medicaid patients who come to its emergency room.

But its not-for-profit status could be jeopardized if it stopped treating less-fortunate individuals in the community, the company says.

"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.

He said the state is wrong to assume that 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, Massey said.

"We simply cannot turn our patients out onto the street like the state has suggested," he said," but the court ignored the evidence of the effects this would have on the community."

Massey said some hospitals may be able to shift costs to private payers when government programs, like Medicaid, do not pay enough to cover their expenses.

But BARH doesn't have that luxury, he said.

The hospital's "payer mix" consists of Medicaid patients, Medicare patients, patients covered by other government programs and those who simply can't pay anything because they have no insurance or other health care coverage.

Thus, there is no opportunity for BARH to shift costs to make up for the enormous shortfalls in Medicaid reimbursements, Massey said.

"What we are asking for is the chance to cover our costs as a very efficient hospital. I don't think that is unreasonable," he said.

From Legal Newsline: Reach Jessica Karmasek by email at

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