Hospitals drop lawsuit over 5% state Medicaid cuts

The Arizona Hospital and Healthcare Association (AzHHA) has dropped its lawsuit against the U.S. Department of Health & Human Services and the state that sought to halt a 5 percent reduction in payments to hospitals, the association announced yesterday.

In the fall, attorneys for the hospital association had argued that enacting the latest cut would prevent Medicaid providers from guaranteeing equal access to services and therefore would violate federal law. According to the hospital group, its members would receive just two-thirds of what it costs to provide care, FierceHealthFinance previously reported.

However, a federal judge last week rejected the hospital group's motion for a preliminary injunction to postpone the cuts, which went into effect last October, according to AHA News Now.

Citing the importance of hospital-policymaker collaboration, AzHHA President and CEO Laurie Liles said, "As we look ahead, we know the state and Arizona hospitals will continue to face economic challenges and we look forward to working with state leaders like Senate President Steve Pierce to prepare for the future and grow our state's economy."

Amid the decision to drop the suit, Arizona hospitals have been struggling to deliver emergency care to a growing number of uninsured patients. In fact, the hospitals provided 75 percent more in charity care in the last quarter of 2011 year-over-year, according to the association.

Meanwhile, the hospital association lost its three largest hospital systems March 1 due to concerns about the group's legislative and regulatory views. Representatives from Abrazo Health, Banner Health and Dignity Health said they withdrew because the association was no longer consistent or reflective of their collective interests on reimbursement reduction.

To learn more:
- AzHHA press release (.pdf)
- read the AHA Now News brief
- here's the Arizona Republic article

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