Hospitals sue to block Medicaid reduction
March 10, 2008
WASHINGTON (AP) - Groups representing most of the nation's hospitals announced Tuesday they were suing federal health officials to block the enactment of regulations that some hospitals claim threaten their survival.
The regulations would restrict federal Medicaid payments so that they don't exceed the cost of providing care. But hospital officials said the rules would make it harder to offset the expense of treating the uninsured.
Hospitals with a large percentage of patients with private insurance charge those patients more to offset health care for the indigent. Hospitals with a large percentage of poor patients don't have that ability. They're reliant on Medicaid to make ends meet, said Wright Lassiter III, the chief executive office of the Alameda County Medical Center in Oakland
Lassiter said the rule would trim about $85 million to $100 million from his hospital's annual operating budget, or about 20% of revenue. Such a cut in Medicaid payments would require the hospital to review whether it could maintain trauma care, clinics to treat AIDS patients, and outpatient programs to treat patients with substance abuse or psychiatric problems, he said.
"The first question that I have to consider and discuss with our board and community is: Can we find a way for the system to still be viable?" Lassiter said during a press conference announcing the lawsuit.
The cost limits sought by the Bush administration affect health care providers supported financially by local governments. The administration has said the limits would make it harder for states to use financing schemes that increase the federal government's share of Medicaid expenses without increasing their own share similarly.
The lawsuit, which will be filed in the United States District Court for the District of Columbia, would bar federal health agencies from enacting the Medicaid regulations. A copy of the lawsuit says the Department of Health and Human Services would be in violation of federal law if it enacted payment limits that Congress previously rejected.
Last year, Congress imposed a moratorium that prohibited the regulations from going into effect, but that moratorium expires May 25.
HHS officials estimated the regulations would save the federal government about $3.8 billion over five years, which is just a fraction of the $1.2 trillion that it will spend on Medicaid during that time. Medicaid officials note the program will continue to grow more than 7% annually, even if the regulation is enacted.
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