New York hospitals and clinics would lose $350 million per year under Medicaid rule recently proposed

New York City's public hospitals and clinics would lose $350 million per year -- 7% of their annual budget -- under a Medicaid rule recently proposed by CMS, according to the New York State Department of Health and the New York City Health and Hospitals Corporation, the New York Times reports (Perez-Pena, New York Times, 1/24).

Under the proposed rule, state Medicaid reimbursements to health care providers operated by local governments could not exceed actual costs.

Health care providers, rather than state and local governments, would have to receive all Medicaid reimbursements to which they are entitled.

Dennis Smith, director of the Center for Medicaid and State Operations at CMS, said that the rule would help eliminate financing agreements under which health care providers receive state Medicaid reimbursements that exceed the actual cost of services and states receive extra matching funds from the federal government as a result.

The rule would save the federal government an estimated $3.9 million over five years, CMS said.

The rule states, "We expect this rule to have a significant economic impact on a substantial number of small entities, specifically health care providers that are operated by units of government."

CMS will issue a final rule after a 60-day public comment period (Kaiser Daily Health Policy Report, 1/16).

Cuts to New York public facilities would most affect outpatient services, according to city and state officials.

HHC President Alan Aviles said, "We would have to do a wholesale dismantling of our ambulatory care system and scale down our emergency departments."

HANYS President Daniel Sisto said, "You cannot rip away the safety net serving society today on the belief that a vision, a new system, will suddenly appear."

State and hospital officials said the rule likely would be challenged in court, and Sen. Charles Schumer (D-N.Y.) said Congress might take action to block it.

CMS does not require congressional approval in order to enact Medicaid regulations (New York Times, 1/24).