Exclusive: Safety-net hospitals map out a Medicaid lifeline

POLITICO

Maya Kaufman

Hospitals across New York have been chasing higher Medicaid reimbursement rates for years, noting that the program pays roughly 61 cents for each dollar of care they provide. Large, prestigious academic medical centers can make up the difference with much higher rates from commercial insurers, but other hospitals are left struggling to shoulder their expenses.

Now the New York Safety Net Hospital Coalition, whose 19 member hospitals primarily care for the city’s poorest and most underserved communities, is rolling out an ambitious proposal to ameliorate longstanding inequities between Medicaid rates and what other insurance plans pay.

The plan, which the coalition shared exclusively with POLITICO, would involve structural reforms to how Medicaid rates for safety-net hospitals are calculated rather than the kind of across-the-board increase that other health care lobbying groups have requested.

Currently, safety-net hospitals receive enhanced Medicaid rates and supplemental funding from the disproportionate share program, both of which support facilities that serve a large number of Medicaid and uninsured patients.

Instead, the coalition proposes pegging Medicaid rates for a given service to the regional average for that service under commercial insurance, noting that commercial rates at wealthier hospitals are up to seven times higher than at safety-net facilities. The state would apply to do that under the federal government’s Medicaid direct payment program, enabling it to take advantage of higher federal matching rates.

The result, the coalition said, would be an additional $4.3 billion in Medicaid funding for 32 public and not-for-profit safety-net hospitals statewide. The state would have to shell out $1.2 billion more in incremental funding to make it work, but the new framework would also free up about $2 billion in state funding that goes to the disproportionate share program, according to the coalition’s proposal.

The coalition’s hospitals hope to persuade lawmakers to pass the proposal as part of the fiscal 2024 state budget.