Hospitals denied more federal reimbursements

Eight hospitals lost their battle to squeeze more money out of the federal government for the care of low-income patients. A federal appeals court rejected the argument that the U.S. Department of Health and Human Services used the wrong formula to calculate reimbursement for services, the Arizona Daily Sun reports.

Roger Morris, the lawyer for the hospitals, contends that the hospitals received $20 million less than what they were entitled, not counting interest.

Under normal rules, Medicaid serves patients who meet certain income limits. For hospitals, more Medicaid patients means higher payment adjustments. If a hospital serves a disproportionate number of low-income patients, its payments will be adjusted to compensate for the added cost per patient of serving a high number of low-income patients.

Arizona's version of Medicaid, known as the Arizona Health Care Cost Containment System (AHCCCS), is a little unusual, because it consists of two separate groups. One qualifies for the federal Medicaid program, and one doesn't because the members' income disqualifies them from federal Medicaid funds. Members of that second group remain "medically indigent" and can count on the state providing care.

The hospital's lawyer argued that their reimbursements should be based on the total number of patients enrolled in AHCCCS, regardless of program. But CMS in 2007 contended that only people eligible for Medicaid should count.

Appellate Judge Betty Fletcher noted that state law defines who is classified as medically needy and not qualified to receive Medicaid services.

Doctors and health advocates already were worked up over major cuts to the state's Medicaid program to save $27 million. What's worse is that, according to the Phoenix Business Journal, the program expects a $1 billion budget shortfall next year when the federal matching program expires in July 2011.

Cuts in enrollee benefits, that went into effect Oct. 1 will mean the AHCCCS program will see $15 million less in federal matching funds for FY2010-11. The cuts include elimination of coverage for dental care, cochlear implants and well-person exams.

To learn more:
- read the Arizona Daily Sun article
- here's the Phoenix Business Journal article

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