Boston Medical sues state for funds

Boston Medical Center filed suit yesterday against the state, accusing officials of illegally cutting payments made to the hospital for treating thousands of poor patients, a decision executives said could financially unravel the urban hospital’s key services.

The 26-page complaint - filed in Suffolk Superior Court against Dr. JudyAnn Bigby, health and human services secretary - follows two years of payment negotiations between the state and its largest provider of medical care to poverty-stricken families. It argues that the state has financed its landmark health insurance law, a model for national healthcare overhaul, on the backs of poor residents by cutting money to the hospital that cares for many of them to pay for expanded coverage.

The lawsuit could influence the national debate on healthcare by warning of the potential repercussions for hospitals that treat the poor. “This absolutely has implications for the national debate,’’ said Larry Gage, president of the National Association of Public Hospitals.

Bigby, in a statement to the Globe last night, said: “The administration is greatly disappointed that BMC, which has received $1.5 billion in state funding in the past year, has chosen this path. At a time when everyone funded and served by state government is being asked to do more with less, BMC has been treated no differently.

“We are confident that the administration’s actions in this area comply with all applicable law and will be upheld,’’ she said.

In interviews with the Globe last week, state officials questioned BMC’s request for more funding, considering the state’s extraordinary budget crisis and the hospital’s large cash reserves.

The $1.5 billion the state paid the hospital in the past year went not just to the hospital, but also to its community health centers and health insurance plan, officials said.

BMC - where half of the patients earn less than $20,000 annually, 30 percent do not speak English, and one-third are on Medicaid - estimates that it will lose $175 million in the fiscal year starting Oct. 1, an 18 percent operating loss. By the end of this year, the hospital is likely to be $38 million in the red, its first loss in five years.

Hospital executives blame these projected losses on the state’s decision to slash the amount it pays BMC for treating a Medicaid patient in the hospital from $12,476 per admission last year to $9,323 this year and for paying what the hospital considers inadequate rates to care for uninsured patients and newly insured patients.

The state calculated the new Medicaid rate by considering the average cost of caring for Medicaid patients at Massachusetts hospitals, and paying 75 percent of that amount to encourage efficiency, the lawsuit says.

BMC argues this approach is illegal, because a 1991 law requires the state to pay hospitals that treat large numbers of poor patients based on each institution’s unique financial needs and BMC’s need is great. The hospital employs 75 translators, more than any other Boston hospital, and treats nearly 70 percent of the city’s trauma cases, among other added expenses required to care patients from the city’s poorest neighborhoods.

Source: boston.com