
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 14, 1990                   TAG: 9006140603
SECTION: VIRGINIA                    PAGE: A/1   EDITION: EVENING 
SOURCE: CHARLES HITE MEDICAL WRITER
DATELINE:                                 LENGTH: Medium

MEDICAID LAWSUITS ALLOWED

The Virginia Hospital Association, in a case that affects health-care institutions across the nation, today won the right in a U.S. Supreme Court decision to sue the state's Medicaid system for higher rates.

Virginia hospitals claimed for years that they have lost millions of dollars in treating Medicaid patients because the state's Medicaid payments were inadequate. The shortfall amounts to more than $52 million this year alone, hospital officials said.

Hospital officials argued that unless the state Medicaid system raised the rates, they would be forced to pass on Medicaid costs to other consumers of health-care services. In effect, the hospitals argued, the state had created a "hidden tax" on other patients by allowing the low Medicaid fees.

Hospital officials in Virginia and more than a dozen other states filed suits charging that Medicaid reimbursements did not begin to cover the rising costs of caring for the nearly 30 million Americans covered by Medicaid, a joint federal and state health insurance program for the poor and disabled.

Virginia officials went to the Supreme Court last year and asked that the hospital association suit be dismissed, arguing that only individual patients - not health-care providers - could challenge a state's reimbursement plan in federal court.

Officials from most other states had urged the court to rule against the Virginia hospitals, saying that allowing such lawsuits could affect hundreds of millions of dollars in federal and state funding and lead to an explosion in litigation.

"Obviously, we're very pleased," said Katharine Webb, vice president for planning for the Virginia association. The 5-4 Supreme Court ruling will allow the hospitals to go ahead with their challenge of the Medicaid payment system this December in U.S. District Court in Richmond, she said.

In Virginia, most hospitals are paid, on average, only 71 cents for every dollar spent for caring for Medicaid patients, the hospital association says. That means that from 1982 through this year, Virginia hospitals will lose nearly $220 million in Medicaid shortfalls, the association claims.

by CNB