NH hospitals’ lawsuit says Vermont shorting them on Medicaid payments

Valley News Staff Writer
Published: 9/3/2020 9:49:49 PM
Modified: 9/3/2020 9:49:39 PM

CONCORD — Three New Hampshire hospitals in the Connecticut River Valley are suing Vermont and the federal government, asserting that they are being bilked out of hundreds of thousands of dollars annually through Medicaid reimbursements that are lower than those that similar hospitals located in Vermont receive.

Alice Peck Day Memorial Hospital in Lebanon, Valley Regional Hospital in Claremont and Cheshire Medical Center in Keene argue that they provide the same level of care and services to Vermonters provided by in-state hospitals, but are compensated at a lower rate under Vermont’s Medicaid plan. They also assert that that lower rate, which they describe as a form of “intentional discrimination,” has been approved by the federal Centers for Medicare and Medicaid Services.

The lawsuit, filed in U.S. District Court in Concord on Aug. 31, also involved the top lawyer for Dartmouth-Hitchcock Health, which oversees APD and Cheshire Medical Center.

“APD, Cheshire, and VRH are each deprived of substantial reimbursement ... solely because they are not geographically located within Vermont, even though a large volume of Vermont Medicaid patients utilize and benefit from their proximity, convenience, and high quality of care,” the suit said.

The three hospitals, in their suit, allege that in paying them a lower rate, the state of Vermont and CMS are in violation of the equal protection and commerce clauses of the U.S. constitution and a section of the federal Social Security Act that requires states to pay the same for services provided in another state as they do for services within their own boundaries.

APD and Valley Regional are both roughly 5 miles from the Vermont border; Cheshire is less than 20. Valley Regional and APD are both critical access hospitals with 25 beds, while Cheshire has 169 beds and offers a wider range of specialty services than the smaller hospitals.

The hospitals argue that due to their locations they all care for a “proportionally significant” number of Vermont residents and Vermont Medicaid beneficiaries, and they do so at a loss.

For inpatient treatment at APD, the suit asserts, the difference in Medicaid reimbursement rates between what it gets and what similar Vermont hospitals get amounts to more than $500,000 annually. At Valley Regional, the difference amounts to $37,000; and at Cheshire it’s $575,000.

For outpatient treatment, the suit said, APD should be getting about $200,000 more annually; Valley Regional should be getting about $70,000 more; and Cheshire is due an additional $80,000.

“This disparate treatment of, and the resulting annual deficiencies for, APD and VRH is not only unfair but also potentially threatens the sustainability of these New Hampshire (critical access hospitals) as providers to Vermont Medicaid beneficiaries,” the suit said.

Lower payments to Cheshire, also “potentially impairs the sustainability of Cheshire’s provision of health care services to Vermont Medicaid beneficiaries,” the suit said.

Valley Regional Interim CEO Deanna Howard declined to comment on the suit in a Thursday email. Mike Smith, secretary of the Vermont Agency of Human Services, was unavailable for comment by deadline on Thursday.

Spokespeople for APD and CMS did not immediately respond to emailed requests for comment on Thursday.

Upper Valley hospitals have long said that low Medicaid reimbursements are a problem.

APD pointed to Medicaid rates as one of the reasons it closed its birthing center in 2018.

This new suit echoes another action over Medicaid rates that Dartmouth-Hitchcock filed in 2015.

That suit led to Vermont adjusting its Medicaid rates to achieve parity in payments for Dartmouth-Hitchcock Medical Center in Lebanon and the University of Vermont Medical Center in Burlington.

APD and Cheshire are both members of the Dartmouth-Hitchcock Health system, while Valley Regional employs its CEO through a management contract with D-H.

The new filing is signed by attorneys from the Manchester-based firm Nixon Peabody, as well as D-H General Counsel John Kacavas.

D-H spokeswoman Audra Burns declined to comment on the suit in a Thursday email, saying, “We don’t comment on pending litigation.”

The hospitals, in the new suit, ask that the court “order and compel” CMS and the Vermont Agency of Human Services to treat them no differently “than similarly-situated in-state hospitals” in setting their Medicaid rates.

Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.

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