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NYC Hospitals Want Changes in Carrying the Burden of Medicaid Cuts

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Billions of dollars in federal funding that would have gone to Medicaid disproportionate share hospital payments are set to be reduced on October 1st.

Last week, the New York City Council heard from representatives of the municipal health system that changes are needed when it comes to the way hospitals are forced to carry the burden of those cuts.

The fall of 2017 saw a round of cuts almost crippled the New York City Health + Hospitals Corporation. Funding was eventually put back in place by Congress in February of last year.

“NYC Health + Hospitals and several researchers have said voluntary hospitals that provide a small amount of charity care are overcompensated,” Crain’s New York Business has reported.

Mitchell Katz, M.D., President and Chief Executive Officer of NYC HEALTH + HOSPITALS, proposed in recent testimony before the City Council the elimination of the Indigent Care Pool (ICP) “Transition Collar:”

“In 2012, the State sought to better align ICP funding with provision of indigent care, and developed a methodology to distribute the funds based largely on the number or “units of service” a hospital provides to the uninsured,” he said. “In order to protect hospitals from large fluctuations in revenues under the new methodology, a 3-year “transition collar” was put in place. This meant that in the first year, no hospital could lose more than 2.5% of its previous 3-year average in ICP funding. By the end of the third year, no hospital could lose more than 7.5% of its previous three-year average.

In 2015, the NYS Legislature authorized another three years of transition payments, and by 2018, no hospital could lose more than 15% of its previous three-year average in ICP payments. The unintended consequence of extending the “transition collar” is some hospitals who serve the fewest uninsured continue to benefit from the pre-2012 ICP allocations, while some safety-net institutions, such as Health + Hospitals that provide care to large numbers of uninsured and Medicaid patients, are underfunded.”

Katz’s proposal is to remove the “transition collar” and reduce ICP funding for all hospitals in order to reinvest the funding in Medicaid rate increases for Safety Net and At-Risk/Other Needy hospitals.

Another proposal is to invest funds reduced from the ICP into across the board rate increases, or increases weighted to prioritize ambulatory and primary care. “The funding split between publics and voluntary enhanced safety net and at risk/other needy providers would remain proportional to the public/voluntary shares of ICP funding. There would also be dedicated funding for Critical Access Hospitals.”

Katz, in his statement, also addressed optimization of available federal funding to support these essential services. “The reduction in ICP funds reduces the State’s DSH spending, leaving that portion of the state-wide federal DSH allotment still available to be drawn down. Public hospitals can use Intergovernmental Transfers (IGTs) from their sponsoring entities to retain these federal funds. We assume that Health + Hospitals would access two-thirds of this federal funding, with the remaining third going to other public hospitals across the State.”

By: Logan MacNally

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