Health Care

NH hospitals’ lawsuit says Vermont shorting them on Medicaid payments

This article by Nora Doyle-Burr was first published in the Valley news Sept. 3.

Alice Peck Day Memorial Hospital CROPPED
Alice Peck Day Memorial Hospital in Lebanon, New Hampshire, is among New Hampshire hospitals that say they are receiving Medicaid payments from Vermont that are lower than the standard paid to Vermont hospitals. Photo by Geoff Hansen/Valley News

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 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 as 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 Alice Peck Day and Cheshire Medical Center.

The three New Hampshire hospital “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 allege that, in paying them a lower rate, the state of Vermont and the Centers for Medicare and Medicaid Services are in violating 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.

Alice Peck Day and Valley Regional are both roughly 5 miles from the Vermont border; Cheshire is less than 20. Valley Regional and Alice Peck Day 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 Alice Peck Day, 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; at Cheshire, it’s $575,000.

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For outpatient treatment, the suit said, Alice Peck Day 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, (Alice Peck Day and Valley Regional) 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.

Upper Valley hospitals have long said that low Medicaid reimbursements are a problem. Alice Peck Day 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 Medical Center 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.

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

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