Dartmouth-Hitchcock sues Vermont over Medicaid policy

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CONCORD, N.H. — The Dartmouth-Hitchcock medical system sued the state of Vermont last week to force Vermont to pay equal rates to the New Hampshire facility for care delivered to Vermont Medicaid recipients.

The lawsuit was filed in federal district court in Concord on Nov. 3 and names Hal Cohen, the secretary of Vermont's Agency of Human Services, as well as the federal officials who approved Vermont's Medicaid plan.

Dartmouth-Hitchcock contended in its filing that Vermont's policy was unconstitutional because it treats the Lebanon, New Hampshire-based health care provider differently from Vermont hospitals even though the services they deliver are the same as those delivered by Vermont hospitals. The policy also violates federal Medicaid laws, the lawsuit said.

Vermont's payment policy is unconstitutional, the lawsuit argues, because it discriminates against the New Hampshire system for no rational reason, and because it contravenes the 14th Amendment, which protects interstate commerce.

The amount of money involved runs to about $11 million per year, although roughly half of that would come out of the federal share of Medicaid payments.

Dartmouth-Hitchcock also argued that it should be paid the same as Vermont hospitals for what is called "disproportionate share" (an incremental payment for providers who treat large numbers of Medicaid and uninsured patients); finally, it said it should get the same kind of additional payments for medical education that Vermont now provides to the University of Vermont College of Medicine.

The lawsuit does not set out the amount of money that might be involved in either of the latter two categories. And John Kacavas, the general counsel for D-H, suggested that the disproportionate share and medical education increments might not be as important as the actual Medicaid reimbursement rates.

"What we are interested in here is parity," he said.

In a letter to Dartmouth-Hitchcock in September, Howard J. Pellotta, the general counsel for the Department of Vermont Health Access (DVHA), said that his department would undertake a rate review of the DH claim because DVHA takes it seriously. At the same time, however, he rejected entirely the D-H legal case: neither the constitutional argument nor the claim that Vermont is violating federal Medicaid statutes is valid, he wrote.

The Pallotta letter was written not in response to the actual lawsuit, but to a letter sent by D-H to DVHA last summer.

At the time of the earlier exchange, Lawrence Miller, Gov. Peter Shumlin's health reform chief, conceded that Vermont might have some "exposure" on the rate issue, but that the Vermont Legislature had refused this year to increase Medicaid reimbursement rates.

The lawsuit could be resolved either by a settlement between the parties, which could happen over the next few months, or litigated in the federal district court, which could take up to two years.


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