Public Hospitals File Lawsuit To Block New Medicaid Rules
On Tuesday, a coalition of public hospitals in the Bay Area and groups representing other hospitals nationwide filed a federal lawsuit to derail Medicaid regulations that the hospitals say will cut payments to them by $5 billion over five years, the San Francisco Chronicle reports. A congressional moratorium on the regulations expires May 25 (Fernandez, San Francisco Chronicle, 3/12).
The rules would limit Medicaid payments to hospitals funded by local governments. Under the rules, payments could not exceed the cost of care (AP/Wall Street Journal, 3/12).
The national coalition of hospitals who filed the lawsuit in the U.S. District Court for the District of Columbia includes the:
- National Association of Public Hospitals and Health Systems;
- American Hospital Association; and
- Association of American Medical Colleges (Johnson, CQ HealthBeat, 3/11).
Alameda County Medical Center is the only named public hospital serving as a plaintiff in the lawsuit, which asks for a preliminary injunction to keep the regulations from being implemented (San Francisco Chronicle, 3/12).
The suit asks the court to bar the rules from taking effect because the regulations -- in violation of federal law -- would adopt payment limits that Congress previously rejected (AP/Wall Street Journal, 3/12). In addition, CQ HealthBeat reports that the suit argues that the rules should not be permitted to take effect because:
- CMS overstepped its regulatory authority by setting the governmental status of jurisdictions under states' authority; and
- CMS improperly issued the rule on the same day that the congressional moratorium took effect (CQ HealthBeat, 3/12).
The Bush administration said the cuts are intended to keep states from adopting Medicaid funding strategies that draw more federal funds without increasing states' financial contribution to the program (CongressDaily, 3/12).
CMS spokesperson Jeff Nelligan said that the rules would preserve Medicaid's "integrity" and that CMS believes the new regulations "will bring greater transparency to the financing of the Medicaid program" (San Francisco Chronicle, 3/12).
However, the hospitals argue that the cuts would make it more difficult for public hospitals to offset the cost of treating the uninsured by increasing Medicaid charges (AP/Wall Street Journal, 3/12).
Amy Weitz of the California Association of Public Hospitals estimates that the regulations would reduce Medicaid funding at California public hospitals by $600 million. The local cuts would include:
- $31.6 million at Santa Clara Valley Medical Center;
- $24 million annually at San Francisco General Hospital;
- $11 million at San Mateo Medical Center; and
- $8 million for Contra Costa Health Services.
Under the regulations, ACMC also could lose its status as a publicly funded hospital and $100 million annually, or 20% of its budget, because of the way ACMC is structured (San Francisco Chronicle, 3/12).
Wright Lassiter, CEO of ACMC, said such a cut in Medicaid funds would force 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 (AP/Wall Street Journal, 3/12).
Today, leaders from public hospitals in San Francisco, Alameda and Santa Clara counties will meet with members of Congress to request an extension of the moratorium (San Francisco Chronicle, 3/12). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.