Judge rejects bid for dismissal of hospitals' Medicaid lawsuit ...

September 29, 2012 2:00 AM

CONCORD ? A lawsuit filed last year by Exeter Hospital and nine other of the state's largest hospitals about changes in Medicaid policies and reimbursements will be allowed to continue.

On Thursday, U.S. District Court Judge Steven McAuliffe ruled against the state's motion to dismiss the suit. In his ruling, McAuliffe said he had multiple questions that still needed to be answered about the case and that a hearing would be scheduled on Nov. 1.

The 10 hospitals sued the N.H. Department of Health and Human Services, which administers the state's Medicaid program, over changes in Medicaid policies and reimbursements. One of the suit's core arguments is the state failed to provide hospitals with notice and an opportunity to comment on the reduced rates before they were finalized. The hospitals argue the state reduced reimbursements to accommodate state-budgetary preferences.

McAuliffe ruled the hospitals have proven they suffered hardships because of the cuts and are entitled to a hearing.

"(The) plaintiffs have made a substantial showing that hardship is being suffered by both providers and Medicaid-eligible patients due to the reduced rates, and that continuing enforcement of those rates, if unlawful, will at some point result in irreparable injury (e.g., loss of medical care facilities, providers and the concomitant inability of Medicaid patients to obtain needed care)," McAuliffe wrote in his hearing.

McAuliffe said he wants the U.S. Secretary of Health and Human Services to answer the following series of questions at the Nov. 1 hearing:

* Should the court stay the Medicaid reductions pending a federal review of the cuts.

* Do federal officials believe the proper Medicaid rules were followed by the state in making the cuts.

* Do federal officials plan to take action against the state over the cuts.

* Do federal officials plan on approving the cuts.

The biggest hit to the hospitals during the most recent budget cycle were changes made to the Medicaid Enhancement Tax.

The MET is a 5.5 percent tax on net patient service revenue on all hospitals in the state. Up until recently, the tax revenue was returned to the hospitals through the Disproportionate Share program, but those reimbursements were eliminated in the recent budget, resulting in $250 million in cuts to the state's 13 largest hospitals, including Exeter.

"While state budgetary concerns cannot conclusively dictate Medicaid reimbursement rates, they do play a significant and legitimate role in the rate-setting process," McAuliffe wrote in his ruling. "But, even where significant state budget issues arise, still, Medicaid reimbursement rates must be set by participating states in accordance with methodologies and standards that are published in a state plan and approved by the United States Secretary of Health and Human Services (currently through the Centers for Medicare and Medicaid Services), and those rates must meet minimum federal statutory standards."

As a result of the Medicaid cuts, hospitals across the state made numerous staff reductions. Exeter Hospital cut 110 full-time equivalent positions throughout Exeter Hospital, Core Physicians, Exeter Healthcare and Synergy Health & Fitness. It also closed Exeter Healthcare, a skilled-nursing facility that accepted patients who need long-term access to ventilators. Eight patients using the facility were transferred elsewhere in the state.

Exeter Hospital officials applauded the most recent ruling. "We're pleased the judge has recognized the legal merit of the case," said Exeter Hospital spokeswoman Debra Vasapolli.

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Source: http://www.seacoastonline.com/articles/20120929-NEWS-209290317

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