PHOENIX—Arizona hospitals are suing to block the latest rate reduction for the state's Medicaid program's payments.

The lawsuit filed in federal court by the Arizona Hospital and Healthcare Association targets a 5% rate reduction that took effect Oct. 1. The reduction is part of cost-cutting efforts to help balance the state budget. The hospital group says provider rates cut are dropping Medicaid reimbursements below hospitals' actual costs for providing care, forcing some to eliminate services. The Oct. 1 rate cut follows a 5% reduction implemented last April and a three-year rate freeze that combine to leave reimbursements 33% below actual costs. Gov. Jan Brewer's office says a state-commissioned study concluded that the rates cover enough costs so that hospitals won't drop out of Arizona's Medicaid network. Meanwhile, three hospitals announced they are partnering with Brewer's office on a plan to fund care for the state's uninsured adults and children. The three hospitals—344-bed Phoenix Children's Hospital; 578-bed Maricopa Integrated Health System, Phoenix; and 351-bed University of Arizona Medical Center, Tucson—will contribute a total of $113 million in order to secure $229 million in federal funds for uncompensated care, according to a news release from Brewer's office. An Arizona law passed this year will allow the funds to be routed through local government, serving as the state match for federal dollars. Some of the funds will be used to enroll nearly 20,000 children in KidsCare, a health coverage program for children.

COLORADO SPRINGS, Colo.—Healthcare professionals serving on a task force helping to decide the fate of the city-owned Memorial Health System can offer advice but will not have a vote on the panel's recommendation for which bidder should get a long-term lease of the system's namesake 547-bed hospital and other assets. After questions were raised about whether there might be a conflict of interest if Memorial staffers and task force members Dr. David Corry and intensive-care nurse Carolyn Flynn had a vote, it was decided that only the four City Council members on the panel would get to vote. Other task force members reduced to an advisory role were Dr. Michael Welch, medical and dental vice president of Peak Vista Community Health Centers, and Steve Schaefer, the CEO of 56-bed HealthSouth Rehabilitation Hospital in Colorado Springs. The city's other major hospital is Centura Health's 423-bed Penrose-St. Francis Health Services. “It would almost be impossible to find a healthcare professional without a conflict in town,” said Jan Martin, task force chairwoman and City Council pro tem. “It's really important that we continue to have their healthcare expertise.” Bids were received by Banner Health, Centura Health, Community Health Systems, HCA-HealthOne, Sisters of Charity of Leavenworth Health System, University of Colorado Hospital Authority (a joint bid with the Poudre Valley Health System), and Memorial Health System itself. Banner Heath and Community Health Systems have since stated they are no longer interested.