Hospitals rejected in bid for higher MassHealth paybacks

Wednesday September 19, 2012

PITTSFIELD -- The state's highest court has dismissed a lawsuit originally filed by seven hospitals, including Berkshire Medical Center and Boston Medical Center, that sought higher MassHealth paybacks to cover safety-net patients who rely on the Massachusetts version of Medicaid to cover hospital bills.

The decision by the Supreme Judicial Court last Friday upholds a lower court ruling in 2010 which advised that the dispute over inadequate payments to the hospitals should be resolved in the state Legislature. BMC withdrew from the lawsuit before it was appealed to the state's highest court.

"We decided that it would be more beneficial for us to participate with the state in seeking an equitable resolution to the problem outside of the court system, and we are continuing to do that," said Michael Leary, a spokesman for Berkshire Health Systems, which operates BMC.

First filed in 2009, the hospitals' suit argued that the state had improperly cut paybacks to medical centers that care for an especially large number of lower-income patients. Other facilities involved in the legal action included Cape Cod Hospital, Merrimack Valley Hospital, Holyoke Medical Center, Quincy Medical Center and Brockton Hospital.

The hospitals contended that they were shortchanged by the landmark health care law passed by the state Legislature and signed by Gov. Mitt Romney in 2006.

Those who took part in the legal action are known as "disproportionate share" facilities because, on average, at least 63 percent of their patients are on MassHealth, the state-federal program for lower-income residents, or on Medicare and other government

At Berkshire Medical Center, 67 percent of patients are covered by government programs. MassHealth recipients account for 15.5 percent of the hospital's total, according to Leary.

On Dec. 22, 2010, the original lawsuit was dismissed in Suffolk Superior Court on the grounds that judicial review of reimbursement rates to hospitals set by the state's Health and Human Services department is not covered by state or federal law.

"We originally joined the lawsuit because state law requires that MassHealth rates be set at a level that reasonably covers the cost of caring for MassHealth beneficiaries," said Leary. "Dispro por tionate share hospitals like Berkshire Medical Center are receiving reimbursement that does not cover those costs, and we were hoping to compel the state to establish rates that did so, as the law requires."

But, Leary continued, "unfortunately, the court found that there is no legal remedy and that providers cannot challenge the rate-setting process or obtain any kind of legal relief if rates are too low to reasonably cover costs of care."

Berkshire Health Systems is the county's largest private employer with 2,700 full-time equivalent positions.

At BMC, the MassHealth payment rate covers 70 percent of the cost of the delivery of care, Leary said.

When the original lawsuit was filed, the Pittsfield hospital had reported a $4.8 million shortfall in state payments from 2006 to 2009.

That shortfall, caused in part by a dramatic drop in state tax revenues as the Great Recession took hold, along with a drop in the number of patients seeking treatment, led BMC to cut the equivalent of 130 full-time positions in 2009. Lower MassHealth paybacks also were cited when 130 full- and part-time BMC employees lost their jobs in August 2010.

At the time, Gov. Deval Patrick had implemented emergency cuts in state payments for health care services, including a $3 million slash at BMC.

"The hospitals are unable to recoup these staggering losses from the small percentage of privately insured patients that they serve," according to the 2009 lawsuit.

Over the past 12 months, BMC has logged 440,000 patient visits, including 57,000 to the emergency room.

Information from The Boston Globe and The Associated Press was included in this report.

To contact Clarence Fanto: or (413) 496-6247. On Twitter: @BE_cfanto


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