CHARLESTON, W.Va. -- Eight community health centers sued West Virginia's Medicaid program in federal court late Wednesday, alleging that Medicaid has illegally paid them less than the cost of care for 10 years, jeopardizing their ability to provide needed care.

"If the situation is not remedied immediately, the very viability of the health centers will be in serious jeopardy," the suit states, "with the ultimate harm to befall the vulnerable populations for whom they care."

"It's a serious thing to think about going to litigation with an agency that is also our partner," said Martha Carter, CEO of FamilyCare HealthCenter, which serves about 24,000 patients in Kanawha, Putnam and Boone counties.

"None of us took this lightly," she said, "but we need to be paid fairly and legally if we are to keep providing quality services."

FamilyCare was underpaid about $384,000 in 2009 alone, she said. "That's a substantial amount for our organization."

The centers are asking the court to order Medicaid to raise their payments to the federally prescribed level. "We believe that, without relief, irreparable harm will occur...," said Louise Reese, CEO of the West Virginia Primary Care Association.

The lawsuit is the latest protest of the state's Medicaid payments. In December, Beckley Appalachian Regional Hospital sued Medicaid for underpayment. In November, the University of Virginia medical center stopped accepting West Virginia Medicaid patients, saying it could not afford to treat them because the state pays less than other states do.

In a Jan. 21 letter to the health centers, state Department of Health and Human Resources said Medicaid's payments are not illegally low. Federal regulators approved the state's plan in 2001, attorney Susan Perry said.

Perry cited a California state court ruling that said dentists are not physicians and therefore adult dental care is not a mandatory Medicaid service.

The number of community health center patients is growing fast, Reese said. The federally funded centers must take all patients, regardless of ability to pay.

One in five West Virginians -- about 373,000 patients -- now get their primary care through the state's 28 community health centers.

About 27.5 percent are insured by Medicaid. "When Medicaid does not pay the cost of care, the centers have to take money from other funds" for people who have no insurance, Reese said.

At least eight of every 10 Medicaid dollars are federal. Federal Medicaid sends the money to the state, which then distributes it.  

Dave Sotak, CEO of New River Health Association in Fayette and Raleigh counties, said Medicaid underpaid his association by about $315,000 in 2009 alone. New River had to extend a line of credit at the end of 2010 to meet its payroll, he said.

Rainelle Medical Center has come close to shutting its doors because of Medicaid underpayments, according to CEO Kristi Rader.

All this is happening while the state is depending on community health centers to serve tens of thousands more Medicaid patients through federal health care reform, Sotak said. "We can do that, and the state needs us to do that, but we've got to be paid at least cost."

In 2014, an estimated 125,000 more West Virginians will become eligible for Medicaid under health care reform. "Many will come to community health centers," Reese said. "That is a major reason why it is very important to resolve this payment issue now."

The centers are specifically asking the court to order Medicaid to pay the federally prescribed cost of dental work, vaccines and labs and to stop cutting off payment for psychological services after 10 visits.

They are also asking the court to order Medicaid to calculate payment rates by the formula prescribed by federal Medicaid law. At this point, Medicaid is using a formula borrowed from Medicare, which covers less, according to the lawsuit.

In her Jan. 21 letter, Perry said federal regulators said West Virginia Medicaid could use Medicare caps and screens if they conduct a thorough financial analysis, to determine appropriateness. According to the lawsuit, there is no evidence they have done so.

The lawsuit lists numerous meetings and other attempts by the centers to resolve the issues. "We've got a long record of trying to extend the olive branch," said Andy Wessels, Primary Care Association business director.

Medicaid now has a reserve surplus of $360 million, but Medicaid officials say that money will be needed to prevent a deficit, now that federal stimulus funds are gone.

The lawsuit has been assigned to U.S. District Judge Thomas Johnson, Reese said. "I hope we will be before the judge within six to eight weeks," the centers' attorney, Edward Waters, said.

Waters is a partner with Feldesman Tucker Liefer Fidell of Washington, D.C.

The plaintiff centers include FamilyCare, New River, Cabin Creek Health Systems, Minnie Hamilton Health Care System, Inc., Rainelle Medical Center, E.A. Hawse Health Center, Senandoah Valley Medical Systems, and Valley Health Systems.

Reach Kate Long at katel...@wvgazette.com or 304-348-1798.