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Suit by hospitals over Virginia Medicaid emergency budget cuts is dismissed
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Suit by hospitals over Virginia Medicaid emergency budget cuts is dismissed

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A federal judge on Wednesday dismissed a suit filed in July by hospitals and physicians over emergency Medicaid budget cuts they said will cost them $55 million in reduced payments for emergency room visits this year amid the pandemic.

U.S. District Judge Henry E. Hudson, ruling on a motion from the state to dismiss the suit, held that the Virginia Hospital & Healthcare Association and other organizations did not have standing to have the court bar the Virginia Department of Medical Assistance Services from enforcing emergency cuts enacted by the General Assembly in April.

In a 15-page opinion, Hudson noted that he "recognizes that the budget items may result in a substantial reduction in Medicaid reimbursement income for many Virginia hospitals and other health care providers."

And he added that he appreciates the plaintiffs' concerns that hospitals must continue to provide adequate care despite that Medicaid recipients tend to have less access to primary medical care and use emergency rooms at nearly twice the rate of persons with private insurance.

"However, this Court has no authority to grant the relief requested no matter how compelling it may be. Such recourse lies in the hands of the General Assembly," concluded Hudson.

The healthcare association, the Medical Society of Virginia and the Virginia College of Emergency Physicians alleged that Medicaid budget cuts approved by the General Assembly in April "will cause irreparable harm not only to needy patient populations, but also to hospitals and physician practices themselves, which are already struggling with increased costs and decreased revenue due to the challenges of the COVID-19 pandemic."

The assembly approved the cuts to Medicaid reimbursements for providers during its reconvened session on April 22, when it also suspended more than $2 billion in planned spending in response to the sharp economic downturn caused by the coronavirus crisis.

Legislators say the budget provisions are necessary to discourage Medicaid recipients from unnecessary use of emergency departments instead of seeking care from their doctors or urgent care centers.

Among other things, the plaintiffs alleged that the budget provisions was an "unlawful taking" of reimbursements they earn by treating Medicaid patients who come to emergency rooms because they are generally poorer, sicker and have less access to routine preventive medical care than other Virginians.

The hospital association represents 110 hospitals within 26 health systems in Virginia. The hospitals said they suffered a net loss of $1 billion from March through June, even with about $700 million in direct federal aid from the Provider Relief Fund created under the CARES Act. The hospitals estimate that their losses will exceed $3 billion for the full year.

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