Nine hospital groups, including the American Hospital Association, are asking the U.S. Supreme Court to review a case that could affect how states compensate out-of-state hospitals for treating Medicaid patients.
At issue in the case is whether hospitals and other providers have the ability to sue states over Medicaid disproportionate-share payments. Such payments, made in addition to routine Medicaid reimbursement, are supposed to cover the extra costs incurred by hospitals that care for a large number of indigent patients.
Hospitals fear that without that ability to sue, states would be free to cheat them out of extra funds that they are entitled to under federal law.
"Without the ability to make sure the states actually comply with the law, hospitals that care for a large number of Medicaid patients are in trouble," said Charles Luband, counsel for the Washington-based National Association of Public Hospitals, one of the groups that worked on the brief. "HCFA plays some role in enforcing the requirements, but obviously they're not doing enough."
Indicating the significance of the issue, the hospital groups last week submitted a friend-of-the-court brief in the case of 77-bed Children's Seashore House in Philadelphia. The 20-page brief argues that hospitals have a right to sue under the disproportionate-share provision of the federal Medicaid law--despite the 1997 repeal of the Boren amendment, which required states to pay "reasonable and adequate" Medicaid rates.
Children's Seashore, which is now part of 304-bed Children's Hospital of Philadelphia, alleged in its 1998 federal lawsuit in U.S. District Court in Trenton, N.J., that the state of New Jersey was not making disproportionate-share payments to the hospital in violation of Medicaid law and the Civil Rights Act of 1964. Children's Seashore argued that it was entitled to the payments because it is a federally designated disproportionate-share hospital and serves a number of Medicaid patients from New Jersey.
"New Jersey is discriminating against out-of-state hospitals," said Mark Gallant, an attorney with Cozen & O'Connor in Philadelphia who is representing Children's Seashore. Gallant is HCFA's former litigation chief and a 10-year veteran of the U.S. Justice Department.
New Jersey argued that because the hospital was in Pennsylvania, it did not have to pay the hospital for disproportionate-share costs.
The lower court dismissed the case in December 1998, but a year later the 3rd U.S. Circuit Court of Appeals in Philadelphia ruled that Children's Seashore could sue the state under the Civil Rights Act, which prohibits discrimination, but not under the Medicaid laws.
The appeals court sent the case back to the lower court for a trial on the merits. Children's Seashore decided to make a narrow appeal to the Supreme Court on the issue of suing under Medicaid while the case is being tried.