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Hospitals Sue Bush Administration Over Medicaid Cuts

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    Hospitals Sue Bush Administration Over Medicaid Cuts

    Hospitals Sue Administration Over Medicaid Cuts
    Thu Mar 7, 5:25 PM ET
    By Todd Zwillich

    WASHINGTON (Reuters Health) - A group of public hospitals and trade groups sued the Bush Administration Thursday in an effort to stop proposed Medicaid cuts that they say will devastate their budgets and compromise the healthcare of low-income patients.

    The suit asks a federal district court judge in Arkansas to prevent Bush officials from rescinding extra Medicaid payments designed to pay county hospitals for healthcare services for the poor. The cuts are due to take effect March 19, a move federal health officials have long argued is needed to stop states from skimming dollars intended for hospitals and using them for other programs.

    Representatives from urban and rural public hospitals said they have come to rely on the extra money to fund rising healthcare needs among workers left without jobs or insurance by the recession. They filed the suit against the US Department of Health and Human Services (news - web sites) as "a last resort" because administration officials have so far ignored their pleas to avoid the cuts.

    "Some of these hospitals are going to be in dire straits without this funding," said Larry S. Gage, president of the National Association of Public Hospitals and Health Systems, one of the suit's plaintiffs.

    President Bush (news - web sites)'s Fiscal 2003 budget predicts $9 billion in savings over 5 years with the cuts. Hospitals say the cuts could cost them up to $27 billion in fund over the next decade.

    Officials vowed to fight the lawsuit and proceed with the cuts. They stressed a need to save money in the Medicaid program, which is expected to sustain an 11% rise in cost this year.

    The suit targets a Clinton-era regulation allowing non state-owned public hospitals to collect 150% of the cost of care they provide to Medicaid patients. The program, called the upper payment limit, was just 8 months old in August, 2001, when Bush Administration officials proposed halting the extra payments.

    Hospitals and other healthcare providers collect Medicaid payments from their states, which in turn recoup at least half of their costs from the federal government. According to officials, some states immediately began a policy of encouraging local hospitals to overcharge for the care. The move allowed state administrators glean more dollars from the federal treasury than state healthcare needs required.

    Public hospitals in the meantime came to rely on the increased funds to cover rising costs of care associated with rising numbers of uninsured patients seeking care and demands on hospitals to prepare for possible future terrorist attacks.

    If the cuts go through, "many Medicaid and other low-income people will effectively lose their access to essential health services, while entire communities will lose essential community-wide services and be less prepared for future emergencies," the suit states.

    Russell D. Sword, CEO of Ashley County Medical Center, said that the proposed cuts would cost his facility $200,000 per year. The shortfall could force the hospital to close its newly-opened obstetrics service, the only one serving the county, he said.

    Thomas A. Scully, the director of the federal Centers for Medicare and Medicaid Services, insisted he does not blame increasingly cash-strapped states from exploiting the regulation loophole.

    "When I was in the hospital business, I also used to push to keep it open," said Scully, a former hospital industry official.

    "But as a matter of public finance, it's not defensible. It's swapping a federal dollar for a state dollar," he said in an interview.

    The hospitals' suit accuses federal officials of using inaccurate data in concluding that states are abusing the payment program. Supporters contend that use of the upper payment limit since last January has stopped states from skimming Medicaid money.

    "Quite frankly, have we seen any abuse since then? No, we haven't," said Sen. Blanche Lincoln, an Arkansas Democrat who has sponsored legislation aimed at delaying cuts to the upper payment limit.

    The suit also accuses Bush Administration officials of enacting regulation that would cut payments before Congress has had the legally required 60 days to review the matter.

    One administration official, speaking on condition of anonymity, said the rules were hand-delivered to lawmakers well in advance of the 60-day limit but that security measures on Capitol Hill prevented the packages from being opened and officially received.

    "They didn't get it because of the anthrax lock-up," the official said.

    Real Impact

    My children receive medicaid and because of these cuts their pediatric practic dropped all Medicaid patients. This is a dedicated group of doctors but after not being able to obtain speciality care for their patients,with out tons of calls and appeals, they bowed out of Medicaid. FYI, 3 of the 4 kids have disabilities. The loss of continuity of care is devastating. It took me 7 hours and intervention by the state to get a cardiologist appointment for one child. All the specialist jumped ship.
    Every day I wake up is a good one