News & Events

6 hospitals to sue state over payment shortfalls

Call for parity with Hub facilities

By Robert Weisman, Globe Staff  |  December 1, 2009

Six community hospitals, squeezed by the economic downturn and the Massachusetts budget crunch, are set to file a lawsuit in Suffolk Superior Court this morning seeking millions of dollars from the state for unpaid health care services.

The suit charges that Massachusetts violated a law requiring adequate reimbursement to hospitals for patients insured by the government. The hospitals contend the state set repayment rates so low they do not cover the cost of such medical care.

The plaintiffs are part of a group of health care providers known as “disproportionate share hospitals,’’ institutions at which at least 63 percent of patients, mostly low-income or elderly, are covered by public insurance plans such as Medicaid or Medicare. Many of the hospitals are losing money, or barely breaking even, after taking on thousands of patients newly insured by public plans under the state’s 2006 health care overhaul.

The lawsuit, which names the state secretary of health and human services as a defendant, focuses on reimbursements from Medicaid, the state-administered program for patients who can’t afford medical care.

State officials yesterday said they have not seen the complaint and do not comment on litigation. But they expressed confidence that their reimbursement policies would be upheld.

The hospitals, serving regions stretching from the Merrimack Valley to Cape Cod to the Berkshires, maintain they have absorbed a combined shortfall of more than $100 million in the past three years, the difference between the cost of care provided to Medicaid patients and the amount the hospitals were reimbursed. That has resulted in hundreds of layoffs and millions of dollars in cost cuts, they say.

“By ignoring its statutory, contractual, and other obligations to the plaintiff hospitals, [the state] has undermined and directly threatened their ability to provide care to the vulnerable and under-served safety net population they are mandated to serve,’’ the lawsuit says.

The hospitals in the lawsuit are Berkshire Medical Center in Pittsfield, Signature Healthcare Brockton Hospital, Cape Cod Hospital in Hyannis, Holyoke Medical Center, Merrimack Valley Hospital in Haverhill, and Quincy Medical Center. They are all midsized hospitals whose executives argue state government shows preferential treatment to Boston Medical Center and Cambridge Health Alliance, two providers that treat a similar patient population, but receive more money proportionately.

Officials in the office of state Health and Human Services Secretary JudyAnn Bigby yesterday said that starting Nov. 1, the state boosted payments to all disproportionate share hospitals by 10 percent for the coming year, an increase of $18 million above the $700 million paid to those hospitals in the past year. The increase – by MassHealth, the state program that administers Medicaid – was based on higher in-patient care at the hospitals, they said.

“We recognize the important role that these hospitals play in our health care system and continue to work with them,’’ said Juan Martinez, spokesman for the Office of Health and Human Services. “While we cannot comment on the lawsuit itself, we are confident that the state’s actions comply with all applicable law and will be upheld.’’

In a reflection of how the state’s budget crisis has rippled through the health care sector, Boston Medical Center filed suit against Bigby’s office in July, accusing state officials of cutting payments for treatment of thousands of low-income patients. That complaint is pending in Suffolk Superior Court in Boston.

Michael F. Collins, chief executive of Merrimack Valley Hospital, a 110-bed hospital that has had to cut the equivalent of 30 full-time jobs in the past year, said the state’s financial woes have fallen largely on hospitals like his, in areas of high unemployment that lack the political clout Boston area hospitals carry on Beacon Hill.

The state has undercompensated Merrimack Hospital by $4.4 million for Medicaid patients over the past three years, he said.

“There’s a huge gap between our cost of care and what we get from the state, and that gap has to close,’’ Collins said.

“This is a tough time for the state,’’ he said. “For the six of us to say we want more money is not a message people want to hear right now. But it’s about fairness and equity. The state can’t give more money to Boston Medical Center and Cambridge Health Alliance all these years and ignore the rest of us.’’

At Holyoke Medical Center, the hospital’s endowment trust fund has tumbled to $3 million from $12 million a decade ago and it has become increasingly difficult to borrow money to replace old equipment, said chief executive Hank J. Porten.

Porten said the 212-bed hospital, where 71 percent of patients are covered by Medicaid or other public insurance, has been forced to lay off 88 employees over the past year.

Citing Holyoke’s high poverty rate, he said: “There’s not a lot of other places people here can go for care. Long term, we have to get a solution to our funding.’’

Robert Weisman can be reached at