Safety Net Hospitals Make Good On Their Threat To Sue

Six Massachusetts safety net hospitals, which treat the state's poorest patients, plan to file a lawsuit Tuesday accusing the state of not reimbursing them adequately for the health care they provide.

The hospitals suing the state mainly treat patients covered by Medicaid, Medicare and other government insurance programs, and they say reimbursement rates by those programs are so low that they're driving them out of business.

"It's getting to the point where we're really going to have, as hospitals, a hard time surviving," said Dr. Richard Salluzzo, president and chief executive officer of Cape Cod Healthcare, the parent organization of Cape Cod Hospital.

The hospital, which is a plaintiff in the lawsuit, reports that it has suffered a $17 million funding shortfall over the past three years due to lowered Medicaid reimbursement rates.

"Many of our hospitals — ours in particular — are the largest employers in their area," Salluzzo added. "So it's not just a health care issue; it's an economic issue for the area that we're serving."

Joining the lawsuit with Cape Cod Hospital are Berkshire Medical Center in Pittsfield, Holyoke Medical Center, Merrimack Valley Hospital in Haverhill, Quincy Medical Center and Signature Healthcare Brockton Hospital. Some of them have had to eliminate various patient services, cut staffs and employee benefits, and put in place other cost reductions.

Collectively, the hospitals say there is at least a $70 million gap between the health care services they have provided to Medicaid patients over the last three years and the amount they were reimbursed by the state for those services.

The three-year time frame is significant because it was approximately three years ago that Massachusetts passed its landmark health reform law, and the safety net hospitals say that law is a key factor in their financial distress. That's because many of the state's newly insured residents are low-income and elderly people who receive care from safety net hospitals.

The suit, which will be filed in Suffolk Superior Court, names the state's secretary of health and human services as a defendant.

Boston Medical Center filed a similar suit in July. It alleged that the state is violating a law that requires it to fairly reimburse hospitals that care for patients with government insurance. In some instances, Medicaid reimburses only 64 cents of every dollar hospitals spend treating low-income patients.

Boston Medical Center, however, has been able to negotiate additional payments from the state, and the safety net hospitals say they should be able to share in that extra money.

Asked what he would consider a satisfactory resolution of today's lawsuit, Salluzzo cited the additional money being paid to Boston Medical Center and said the state should be "dealing it out more fairly."

"It's not the ideal route to sue the state," he said. "It's just that we don't know how else to get to a different point in this whole relationship."

You can read previous coverage of this issue here.