The Solution
Safety net hospitals need structural payment reform that is sustainable and allows them to maintain appropriate operating margins to meet the needs of the communities they serve.
Safety net hospitals primarily serve diverse communities, where patients are largely uninsured or rely on Medicaid. In New York City, they serve more than 4.7 million New Yorkers, 76 percent of which are people of color, and have long suffered from disproportionate rates of chronic diseases, poor social determinants of health, and had significantly worse health outcomes when compared to wealthier neighborhoods during the pandemic.
To accomplish necessary reform, the New York Safety Net Hospital Coalition developed a solution that would ensure targeted Medicaid rate reforms, expand eligibility criteria for safety net hospitals, leverage a greater share of federal funding for New York, and introduce other measures designed to provide permanent stability to safety net hospitals and spending transparency. In order to fund this proposal, the Coalition is calling on the Governor to restore the $700 million in funding for safety net hospitals from last year’s budget and allocate an additional $600 million to stabilize operations and allow safety net hospitals to invest in services and programs.
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 over 30 eligible safety net hospitals. In addition to Coalition members, eligible hospitals include Bon Secours Community Hospital, BronxCare Health System, Brooklyn Hospital Center, Crouse Hospital, Erie County Medical Center, Montefiore Medical Center, Montefiore Mount Vernon, Nassau University Medical Center, Richmond University Medical Center, St. Johns Riverside, St. Joseph Yonkers, UPMC Chautauqua at WCA, and Westchester Medical Center.
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.