Health centers seek injunction in W.Va. Medicaid rate dispute

The West Virginia Primary Care Assn. says the state has not paid health centers adequately for years.

By Alicia Gallegos — Posted April 18, 2011

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A federal judge heard arguments April 1 in a lawsuit filed by eight West Virginia health centers that claim significant Medicaid underpayments from the state.

The West Virginia Primary Care Assn. sued the West Virginia Bureau for Medical Services in January in the U.S. District Court for the Southern District for the State of West Virginia at Charleston. The association alleged that for years, the agency had failed to pay its health centers adequately for Medicaid services.

The state is using a Medicare cost model that is inappropriate for Medicaid patients and continues to apply improper payment caps on services, said Louise Reese, the association's executive director.

The group has asked the judge to grant it a preliminary injunction against the state, requiring that the bureau immediately remove payment screens that limit rates and comply with federal law, Reese said.

A spokeswoman for the state Medicaid bureau said the agency had no comment on the lawsuit. The state requested that the court dismiss the suit, a motion the judge denied. A decision on the injunction is expected in May.

The association has chosen to expedite the court process by pursuing the injunction, but Reese said it still might go back to state court to recover back payments.

Funding shortfalls claimed by the health centers differ depending on their sizes, she said. One large health center in the suit estimates about $1.3 million in lost payments in a year, while another claims an $850,000 loss during the last 10 years.

The underpayments "have had a huge impact," Reese said. "Some health center employees have not been given raises, some don't have any retirement plans, others have had to limit providers. They just can't make those dollars stretch."

Second challenge pending

The association is not the only one waging a legal battle over Medicaid payments in West Virginia.

Appalachian Regional Healthcare, a nonprofit health system in West Virginia, has sued the state on behalf of Beckley ARH Hospital, one of its nine hospitals. Case arguments are scheduled for May 4 before the Circuit Court of Kanawha County.

Medicaid enrollees at Beckley account for 22% of hospital visits, but the state pays only 67% of the hospital's costs for treating them, said Stephen Price, ARH's counsel. Price said the federal government has determined reasonable rates for Medicaid payments, but the state is not adhering to those rates for the hospital.

"We haven't really gotten a good answer" as to why, he said.

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