Today, the New York Safety Net Hospital Coalition released a policy proposal to make Medicaid reimbursement more equitable for safety net hospitals by matching government rates to the regional average commercial rate. In turn, establishing equitable reimbursement rates would enable these critical anchor institutions to stabilize operations, modernize infrastructure and invest in community and population health services. Furthermore, this proposal would allow New York state to maximize the amount of federal funding needed to support safety net hospitals.
“We are grateful to Governor Hochul for increasing some aspects of Medicaid spending. However, we are disappointed that the budget does not address the underlying issue of inadequate Medicaid reimbursement rates that aren’t keeping up with inflation and the costs that all hospitals incur,” said the Coalition. “We must change how safety net hospitals are reimbursed for doing the same work as non-safety net hospitals, which is why we have proposed a solution that will lead to permanent stability for safety net hospitals. We stand ready to work in partnership with the Governor and the State Legislature to make this solution is a legislative reality and establish New York as the model state for health care equity.”
The Coalition is proposing targeted Medicaid rate reforms, expanded eligibility criteria for safety net hospitals, and other measures designed to provide permanent stability to safety net hospitals. This will greatly impact the neighborhoods served by safety net hospitals, which are home to more than 4.7 million New Yorkers. These are communities where up to 76% of the residents are people of color, and have suffered from higher poverty rates, higher rates of uninsurance, and significantly worse health outcomes when compared to wealthier neighborhoods.
Last year, some safety net hospitals received an $800 million investment from the state through a one-time budget allocation. However, the emergency allocation was not enough to address the fact that current Medicaid reimbursement rates are inadequate, which have not been meaningfully increased since 2008, while at the same time CPI-Medical costs rose by 43%.
Specifically, the Coalition’s proposal will:
- Expand on the state’s existing Directed Payment Program for safety net hospitals, by extending eligibility to public hospitals that also serve high volumes of Medicaid and uninsured patients. Under the Coalition’s proposal, the program would expand from 18 to more than 30 eligible safety net hospitals.
- Tie Medicaid rates for safety net hospitals to regional average commercial rates to ensure access to adequate funding for inpatient and outpatient services. Enhanced rates will also enable hospitals to stabilize their operations, make necessary capital expenditures in their infrastructure, and invest in programs and services.
- Better maximize the use of federal funding, by enabling the state to shift away from programs that rely on lower federal matching rates (i.e., Disproportionate Share Hospital funding) and state-only funding (e.g., Vital Access Provider Assurance Program), and provide enhanced Medicaid rates through the Directed Payment Program, which has a higher federal match.
- Operationalize enhanced rates initially through managed care, with a long-term plan to include fee-for-service. In the near-term, enhanced rates will be implemented in managed care only by updating the state’s existing Directed Payment program. In the long-term, the state will develop a plan for transitioning to a state plan amendment to enhance rates both in Medicaid fee-for-service and managed care.
- Establish annual DOH reporting requirements for eligible hospitals and managed care plans to support program integrity and evaluation. Reporting for hospitals will include validation of program eligibility and monitoring of key metrics related to health equity, such as patient access, patient quality and operational efficiency. Reporting for managed care plans will include certification that plans are paying enhanced rates to eligible hospitals and a public-facing dashboard to monitor claim denials.
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