Fri, Dec. 06

State hospitals contend they are being short-changed by AHCCCS

PHOENIX -- Attorneys for the state want a federal judge to throw out claims by Arizona hospitals that they are being illegally denied adequate payment for their services to the poor.

Attorney Logan Johnston who represents the Arizona Health Care Cost Containment System said the reductions in payments to hospitals implemented last month were not only justified but were within the power of the state to enact. He also said the Arizona Hospital and Healthcare Association, which filed the suit, had more than sufficient time to review the changes and submit comments, as did the association's individual members.

And if that is not enough, Johnston told U.S. District Court Judge David Campbell that the hospitals have no legal right to even go to court because the rate reductions were not enacted unilaterally by the Legislature but by AHCCCS itself after a study -- and then approved by the required federal agency.

It will now be up to Campbell to decide whether to let the hospitals present their claims at trial.

The reductions at issue were part of the way AHCCCS complied with a legislative mandate earlier this year to cut its budget by more than $500 million.

Much of that was achieved by changing the standards for who can enroll in the program, eliminating coverage for some despite a 2000 voter-approved measure requiring free care for everyone below the federal poverty level. The state Court of Appeals has rejected a separate lawsuit filed on behalf of those denied care; that case now goes to the Supreme Court.

This lawsuit involves the decision by AHCCCS to cut reimbursement to hospitals by 5 percent for services billed directly to the agency. That came on top of an earlier 5 percent cut in April.

That change alone is estimated to save the state $95 million.

Hospital officials sued, saying the move "results in rates that are so low that they violate the mandate of federal law.' And they charged that AHCCCS would be paying hospitals just two-thirds of what it actually costs them to provide care, meaning they would have to shift those costs to others.

That contention is disputed by Monica Coury, an assistant AHCCCS director.

"Our experts believe that the one-year, 5 percent rate reduction would not impact access to care,' she said. "And there are efficiencies that can be achieved in the hospital industry to help them absorb those cuts.'

The hospitals are fighting not just AHCCCS but the Center for Medicare and Medicaid Studies, the federal agency which reviewed the rate reduction -- along with the state's own study which said the lower rate would cover the hospitals' costs and would not result in hospitals refusing to provide care to AHCCCS patients. CMS eventually gave its approval.

"The hospital association has found its own expert who disagrees with the state,' Court said.

"And since they could not get CMS to side with them, they're trying their hand with the court,' she continued. "That's really what this litigation is about.'

Laurie Liles, the association's president, has said the bottom line is that the hospitals need to cover their costs and that whatever is not paid by AHCCCS will have to come from somewhere else. She called the move "a hidden health-care tax on all consumers.'

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