Appalachian Regional Healthcare Inc., plans sue the West Virginia Department of Health and Human Resources and its Bureau for Medical Services, the nonprofit health system announced last Thursday.

Inadequate Medicaid reimbursement rates are threatening the system's Beckley ARH Hospital's ability to keep its doors open, according to the release.

About 22 percent of the hospital's patients are Medicaid beneficiaries. In fiscal year 2009, BARH received $9.9 million for the $14.7 million it spent to treat Medicaid patients, according to the release.

Out of the total amount, $8.2 million came from federal funds. Of the $1.7 million West Virginia put in to match the federal funds, $1.4 million "essentially came from BARH itself through the Medicaid provider tax the hospital pays," according to the release.

The hospital said the state only contributed about $300,000 of its own funds for the hospital's 2009 Medicaid reimbursements.

"If the state had put in just $800,000 more, the federal government would have matched it with an additional $4 million," Rocco Massey, the hospital's CEO, said in prepared remarks. "That would have covered BARH's Medicaid deficit in fiscal year 2009."

The 173-bed facility serving patients of southern West Virginia isn't the first to issue its intent to sue the state. The hospital's decision follows the notice to sue West Virginia by the West Virginia Primary Care Association, which represents community health centers in the state. That group is suing for the same reason: inadequate Medicaid reimbursement.

"We do not take this step lightly but do it to protect our patients," Massey said. "Medicaid reimbursements have been covering only two-thirds of our costs for providing medical care, so BARH has been suffering a substantial financial loss. These Medicaid rates jeopardize BARH's continued ability to provide medical services to all of its patients."

According to state law, potential litigants must provide a 30-day notice of intent to sue to provide the state with enough time to settle the issue without litigation.

"The Bureau for Medical Services is required by statute to set Medicaid rates that are reasonable and adequate to meet costs incurred by efficiently and economically operated hospitals," Stephen Price, an attorney with Wyatt, Tarrant & Combs of Louisville, Ky., and counsel for the health care system, said in prepared remarks. "The bureau also is required to take into account the situation of hospitals that serve disproportionate numbers of low-income patients."

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