Fri, Dec. 06

Hospitals seek negotiations with state Senate over cuts

PHOENIX -- Rebuffed by a federal judge in their lawsuit against the state, Arizona hospitals now want to talk.

Laurie Liles, president of the Arizona Hospital and Healthcare Association, said Thursday it is dropping the lawsuit it had filed against the state contesting the 5 percent cut imposed last year on what it pays for services to patients in the Arizona Health Care Cost Containment System.

Instead, she has opened negotiations with state senators to see if lawmakers can provide its members with needed financial relief. Liles said that covers not just that 5 percent cut but other changes in how the state's Medicaid program works which has reduced the hospitals' income.

Liles acknowledged her announcement comes less than a week after a federal judge refused the association's request to immediately order the state to restore payments to their prior levels. Judge David Campbell said the hospitals were unlikely to win when the case goes to trial.

And Campbell totally dismissed several of the hospitals' complaints of irregularities in how the state made the cuts and how they were approved by the U.S. Department of Health and Human Services.

But Senate President Steve Pierce, R-Prescott, who has set up a committee to negotiate with the hospitals, said the fact they were suing the state up until last week is irrelevant.

"That's behind us,' he said, calling the offer to talk "an olive branch.'

"We all have to work together,' Pierce continued. "Whatever happened in the past, it's time to move on, put things in scope, and do what's right for Arizona.'

At the heart of the issue are cutbacks the Legislature ordered Gov. Jan Brewer to make in the AHCCCS program last year to help balance the budget.

One element of that was the 5 percent cut in payments for direct services. That was on top of an identical cut several months earlier, which came after a three-year freeze in rates.

The hospitals sued, contending the cuts were unjustified.

But the bigger problem financially for hospitals has been that the AHCCCS program overall was scaled back and is now covering fewer people. The result is people showing up at the hospitals without insurance and without the finances to pay their bills.

"We have faced significant challenges in recent months and we've shared that information with legislators and with the public,' Liles said.

In essence, the hospitals want the state to find ways of reducing their "uncompensated care.'

Pierce said lawmakers are willing to listen. But he held out little hope of immediate relief.

"There is no surplus,' he said of the budget being prepared for the new fiscal year that begins July 1. Instead, Pierce said any change in how AHCCCS operates -- or any other financial relief -- likely would have to wait for another year.

Liles said the hospitals understand.

"We know that legislators and the governor face very hard choices, as do hospitals,' she said. "The point is, we're working together and looking forward, not backward.'

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