Hospital sues over payment reduction
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By Brent Curtis Staff Writer - Published: November 18, 2009
Springfield Hospital is suing the heads of two state agencies in federal court to recover $1.2 million in special Medicaid funds cut from the hospital's budget this year.
In a 25-page lawsuit filed in U.S. District Court on Monday, a pair of Burlington attorneys representing the hospital argue that a new funding formula instituted by Susan Besio, director of the Office of Vermont Health Access, and Vermont Secretary of Human Services Robert Hoffman has halved funding used to support Springfield's unusually high number of low-income patients.
"Despite serving the largest combined Medicaid and uninsured patient population in Vermont, Springfield Hospital is the only hospital in Vermont to have its (state fiscal year) 2010 (disproportionate share hospital) funding significantly cut by the defendants," the hospital's attorneys, Heather Rider Hammond and Robert O'Neill, said in the complaint.
The Medicaid-prescribed disproportionate share hospital payments are designed to "safeguard the financial viability of hospitals, such as Springfield Hospital, that serve disproportionately large low-income patient populations. The payments ensure that hospitals have the "economic wherewithal" to provide care to those who can't afford it, according to the lawsuit.
In fiscal year 2009, Springfield received more than $2.5 million in DSH funds, which are distributed by the state. Calculations for that funding were approved in 2008 by the Centers for Medicare and Medicaid Services.
But after recalculations to the funding formula, the hospital was informed that its 2010 DSH payment would be $1,297,199. The hospital's lawsuit contends that the changes to the funding formula were never submitted to the CMMS for approval.
The hospital contends the state violated federal Medicaid procedural requirements and protections, due process clauses and Vermont law by adopting funding changes without notice or input that will have lasting effects.
The hospital is seeking a permanent federal court order requiring the state to return to the funding model approved in 2008.
In the lawsuit, Rider Hammond and O'Neill say hospital administrators sought answers from Besio's office about the reasons for the changes and the methodology used in the new calculations but never received a response. A call to Springfield Hospital Chief Executive Officer Glenn Cordner was not immediately returned Tuesday afternoon.
The lawyers also noted that cuts to the hospital's portion of the funds occurred in a year when the federal allotment of DSH funds increased by about $2 million.
Asked Tuesday about the changes described in the lawsuit, Besio declined comment on the grounds that she hadn't seen the lawsuit.
Hoffman, who was in Rutland on Tuesday, said he hadn't seen the legal complaint either, which was filed at the end of the day Monday.
However, the secretary said that in broad terms his agency's practices and policies have held up to legal scrutiny.
"The state prevails in the vast majority of lawsuits," Hoffman said.
brent.curtis@rutlandherald.com
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