Lawsuits raise states' costs for Medicaid services

October 29, 1991|By New York Times News Service

WASHINGTON KHB — WASHINGTON -- Hospitals and nursing homes around the country are successfully suing states to force them to increase Medicaid payments to levels that more nearly reflect what it costs to treat patients.

The multimillion-dollar judgments, propelled by a 1990 Supreme Court decision permitting such suits, are severely straining the budgets of the federal and state governments, which jointly finance the program to provide medical care to low-income people.

Judges are finding that Medicaid payments to health care providers do not meet the standard of "reasonable and adequate" compensation under the law. Instead of reimbursing hospitals and nursing homes based on the costs incurred by efficient health care providers, states often base their payments on budget considerations, the courts say.

No such suits have been brought in Maryland.

Nelson J. Sabatini, secretary of the state's Department of Health and Mental Hygiene, said it is unlikely that Maryland hospitals would challenge their Medicaid reimbursements because they are the same as the rates paid by private insurers and patients. "Our system is different than any other hospital system," he said. "Everyone pays the same rate."

Nursing homes, however, are receiving about $13 million less in Medicaid reimbursements than they did in the past because of )) the state's fiscal crisis, Mr. Sabatini said. "We are concerned that the cuts we've had to make could put us close to a problem of having to face litigation," he said.

A survey of hospitals by the American Hospital Association showed that, on average, hospitals receive 78 cents for every dollar it costs to care for Medicaid patients. Judges have reached similar conclusions.

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