Appalachian Regional Healthcare, which operates hospitals in Kentucky and West Virginia, filed a lawsuit Monday against West Virginia for inadequate Medicaid reimbursement rates.
The suit, filed in Kanawha Circuit Court, said the low rates paid by the state's Department of Health and Human Resources threatened the continued operation of the not-for-profit Beckley Hospital, which is owned by ARH and treats a high percentage of Medicaid patients.
Appalachian Regional Healthcare operates Kentucky hospitals in West Liberty, Middlesboro, Williamson, Hazard, Harlan, Whitesburg and McDowell. In West Virginia, it operates the Beckley hospital and a hospital in Summers County at Hinton.
ARH is the largest provider of care and the single largest employer in southeastern Kentucky.
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Marsha Dadisman, a spokeswoman for West Virginia's Department of Health and Human Resources, said that she could not comment because the matter is in litigation.
However, Stephen Price of Wyatt, Tarrant & Combs of Louisville, the counsel for Appalachian Regional Healthcare, said that there is some indication that West Virginia health-care officials want to discuss the matter.
In West Virginia, the process for appealing Medicaid reimbursements differs from that in Kentucky. In Kentucky, there are three levels of administrative appeal before a case is filed in Franklin Circuit Court. Price said that Medicaid reimbursements are being challenged for ARH hospitals in Hazard, Harlan, Middlesboro, Whitesburg and Williamson.
"We'd like for a hospital that is efficiently operated to at least have an opportunity to cover its costs," he said.
In November, the health-care chain provided West Virginia with a 30-day notice of intent to sue. Rocco Massey, community chief executive officer of the Beckley hospital, said in a release that Medicaid reimbursement has covered only two-thirds of the hospital's costs.
In fiscal year 2009, the Beckley hospital received only $9.9 million for the $14.7 million that the hospital spent to treat Medicaid patients, according to the hospital.
The chain said that about 22 percent of the Beckley hospital's patients are Medicaid patients, and about 47 percent are on Medicare, which pays 90 percent of costs.
Fourteen percent are on other government programs, are charity cases or are considered bad debts.