Policymakers call for Medicaid reimbursement equity for safety-net hospitals

Crain’s Health Pulse

Amanda D'Ambrosio

State lawmakers introduced legislation on Thursday that would increase Medicaid reimbursements to safety-net hospitals, aiming to reach pay equity with hospitals that care for a higher proportion of patients with private insurance.

The bill, known as the Health Equity Stabilization and Transformation Act, would require the state’s health commissioner to seek federal approval to set reimbursement rates for essential safety-net hospitals equal—or as close as possible—to the regional average commercial rate.

If approved, the legislation would make funds available through the Medicaid-directed payment program, which would authorize the state to make payments to providers outside of the traditional managed care model.

The legislation is sponsored by state Sen. Gustavo Rivera, who chairs the Health Committee, and is co-sponsored by Sens. Zellnor Myrie and Kristen Gonzalez.

Providers have repeatedly called for higher Medicaid reimbursement rates to hospitals, including safety-net facilities, following the state budget proposal. The Senate and Assembly released their own one-house budget plans this week, calling for increased Medicaid reimbursement rates, as well as $1 billion and $850 million to distressed safety-net facilities, respectively.

But while increased funds for safety-net hospitals are needed, it's critical to change the way that these institutions are paid, Rivera said. 

"It's not just about the funding, it's also about how that funding is being distributed," Rivera told Crain's. "This bill will provide higher reimbursement rates through a different mechanism, so that these institutions can look forward to stability, and not look forward to a rescue."

Safety-net hospitals in the state provide care for patients with Medicaid or those who are uninsured—a population that makes up at least 36%, but often more, of their payer mix, according to the New York Safety Net Hospital Coalition.

Many safety-net institutions are left financially strained because Medicaid reimburses providers at a lower rate. When treating patients with commercial insurance, doctors get a reimbursement rate that is five to seven times higher than that of Medicaid insurance, Ramon Rodriguez, president and CEO of the Wyckoff Heights Medical Center in Bushwick and a member of the coalition, said at a news conference Friday.

Despite financial distress faced by many safety-net hospitals, New York has not meaningfully increased Medicaid reimbursement rates since 2008, Rodriguez said.

“It’s inadequate,” Rodriguez added. “We have a two-tiered system of health care that must be changed, and must be changed now.”

Without additional funding, the future of safety-net facilities such as Wyckoff Heights Medical Center is uncertain, because they cannot keep up with modernization and staffing demands under the current payment model, Rodriguez said. He called on the governor and the state Legislature to promote health equity for the patients served by safety-net hospitals.

“No matter who you are, you deserve the best care,” Rodriguez said.