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Western Pa. hospitals sue over subsidies

| Monday, April 1, 2013, 1:15 p.m.

Two Western Pennsylvania hospitals say a federal program designed to help hospitals that serve large shares of low-income patients has shorted them more than $1.8 million since 1995.

Monongahela Valley Hospital in Carroll Township and St. Vincent Health Center in Erie sued the Department of Health and Human Resources in federal court on Friday, alleging the agency arbitrarily excluded a group of low-income Pennsylvania patients from the formula it uses to distribute the subsidy, costing the hospitals federal dollars.

Corinne Laboon, vice president of marketing and community relations for Monongahela Valley, said the agency's decision hasn't kept the hospital from treating those patients, but it has hindered the hospital's ability to upgrade facilities.

“It reduces the amount that we have for capital expenditures and expenses,” she said.

The Department of Health and Human Services didn't respond to requests for comment.

Roger Baumgarten, spokesman for the Hospital & Healthsystem Association of Pennsylvania, declined to comment.

The Disproportionate Share Hospital program offsets the losses hospitals take when they treat patients who are covered by Medicaid or are uninsured. The agency bases the subsidy on the percentage of a hospital's services that go to low-income patients.

Monongahela Valley and St. Vincent claim the agency's calculations for fiscal years 1995 through 2007 excluded Pennsylvania patients who received medical assistance through the state's General Assistance program even though their incomes were less than 50 percent of the federal poverty level.

By comparison, the agency granted other states waivers that allowed them to count patients with incomes as high as twice the federal poverty level, the lawsuit says.

The lawsuit says the agency's decision cost Monongahela Valley more than $1 million and St. Vincent more than $800,000 since 1995.

The hospitals are asking a judge to overturn the agency's decision and order it to pay them the losses plus interest.

Brian Bowling is a staff writer for Trib Total Media. He can be reached at 412-325-4301 or bbowling@tribweb.com.

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