A Franklin County judge refused to grant a restraining order against the Ohio Bureau of Workers' Compensation for its reduced payments to hospitals, which will go into effect today as planned.
The Ohio Hospital Association, which represents 170 hospitals statewide, filed suit yesterday to stop the changes, objecting to the process by which Tina Kielmeyer, the workers' comp agency's interim administrator, amended the reimbursement policies.
After a pair of investment scandals and research by the Service Employees International Union District 1199 showed that the bureau overpaid hospitals for treating injured workers, Gov. Bob Taft asked the bureau to consider restructuring its payment system.
"The Taft administration's plan to cut $50 million in hospital payments for care to injured workers through 2006 is an inappropriate response to political problems at the Bureau of Workers' Compensation," OHA president James Castle said.
At an August meeting of representatives for employers, employees, and health-care providers, the bureau initially proposed to cut the percentage of charges it reimbursed.
"They were at the symposium and the administrator made it very clear that she would welcome any additional input after that," said bureau spokesman Jeremy Jackson, who claimed that the bureau was surprised by the lawsuit.
"We considered their input," Mr. Jackson said. "Their solution was to do nothing."
In response to concerns raised by stakeholders, the bureau decided to implement a different plan. During the next 15 months, hospitals will be repaid for the cost of a medical treatment plus 12 percent for an inpatient procedure and 16 percent for an outpatient procedure.
Coupled with freezes in Medicaid spending, Ohio Hospital Association officials claim the new policy could have a dire impact on hospitals' finances. The organization estimates that 110 hospitals will receive less money under the plan.
Mary Yost, an OHA spokesman, said the bureau ignored following the appropriate procedures for approving the revised payment plan. The grounds for the lawsuit by the hospital association and the Genesis HealthCare System in Zanesville are that the changes needed to be vetted with hearings and a commission, a process that usually takes 90 days, Mrs. Yost said.
Judge Richard Frye of Franklin County Common Pleas Court found that this argument did not merit a restraining order. But Judge Frye declined to take further action because he was substituting for Judge Beverly Pfeiffer, who was assigned to the case, Mrs. Yost said.
The hospital association plans to ask Judge Pfeiffer for a preliminary injunction, an order prohibiting the bureau from instituting the payment system, Mrs. Yost said.
Even if the basis for the lawsuit is procedural, SEIU executive vice president Scott Courtney said the hospital association's rationale was sour grapes.
"Because you don't like the outcome of something, doesn't mean you get to run out and sue them," he said, adding that hospitals are upset because they can no longer wring profits from the bureau. "Somebody ought to sue them to get back the half a billion dollars they made since 1997," Mr. Courtney said.
In separate news, two investment experts were appointed to join the bureau's oversight commission, one of the reforms prompted by the bureau's troubled ventures in rare coins and an offshore hedge fund.
Ohio Treasurer Jennette Bradley announced on Thursday that Edwin McCausland, president of Investment Perspectives, a management consultant based in Columbus, will join the commission. Denise Farkas, senior vice president of Spero-Smith Investment Advisers in Cleveland, will also join the commission, after receiving an appointment from state Senate President Bill Harris (R., Ashland) and House Speaker Jon Husted (R., Kettering).
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