By ALEX COSTELLO
Paterson’s plan calls for reducing hospital Medicaid funding by more than $300 million, of which about $37.5 million will come from Long Island hospitals. Cuts of that size —millions of dollars from hospitals throughout the Island — would invariably lead to service cuts in hospitals, which translates to layoffs.
“[Hospitals] have to balance budgets as well,” said Janine Logan, director of communications for the Nassau/Suffolk Hospital Council. “So what they will now do is go back and see what programs might need to be eliminated or curtailed, and with that would come staff reductions.”
In 1981, the state implemented the Medicaid payment plan that it still uses now. Medicaid takes the average prices of services from 1981 and adjusts them for inflation so the price is reflective of 2009 dollars. But according to Joe Quagliata, president and CEO of South Nassau Communities Hospital, Medicaid payments often don’t cover the hospital’s actual costs.
“Different hospitals have different costs,” Quagliata said. He explained the actual cost of services might be higher at one hospital and lower at another — but both hospitals would receive the same Medicaid reimbursement.
The governor's plan will scrap the 1981 adjusted prices and Medicaid will now pay closer to the actual cost of procedures. For some hospitals, like SNCH, this means collecting more money from Medicaid.
“South Nassau is a much different place now than it was in 1981,” Quagliata said. According to Quagliata, SNCH's costs have been higher than what Medicaid pays for services, so it has been losing more money for the Medicaid patients it treats than other area hospitals. But the new plan isn’t going to balance SNCH’s budget, Quagliata said SNCH will just lose less money on treatments for Medicaid patients. For instance, the average emergency room visit to SNCH costs $500, according to Quagliata, and under the new plan SNCH will be paid 66 percent of the cost by Medicaid and would absorb the rest of the cost, about $170. Under the old plan the emergency room visit would be reimbursed by Medicaid at 22 percent and the hospital would absorb the rest of the cost at about $390.
And while SNCH benefits from the governor's plan, healthcare officials said that the plan will hurt their bottom line because while the state overpaid on some inpatient services, it underpaid on other primary care (outpatient) services.
Quagliata explained the governor's plan more simply: “The fallacy with the argument, from my point of view, is that if I’m overpaying you $10 in one area and underpaying you $11 in another area, and I say to you that I’m going to take the $10 away, I’m then underpaying you by $11,” he said. “The reality of it is, what he’s done is a sleight-of-hand trick, I think.”
The “sleight-of-hand” comes from part of the governor's plan that calls for reducing spending on inpatient services, but increasing spending on outpatient services. However, all the money saved from cutting inpatient services in hospitals is not going to hospital outpatient services.
“What we’re trying to do is shift reimbursement to focus it more on primary and preventative care and provide greater reimbursement for primary and preventative care and shift it away from providing more incentives for inpatient care, which is more expensive,” said Jeffrey Gordon, a spokesman for the New York State Budget Office.
Healthcare officials said they would have welcomed the shift if the money had gone back to hospitals instead of being spread around to other facilities.
“[Paterson] didn’t take that money and put it only into hospitals to make us whole for those underpayments, he also put into other primary care providers and the state took a piece of it,” Quagliata said. “So when all is said and done, enterprise-wide, you’re losing money.”
Many hospitals on Long Island, like Nassau University Medical Center, treat patients who are insured by Medicaid, and those hospitals stand to lose a lot of money.
“There are some hospitals with a very high Medicaid volume on Long Island, and they are desperately getting knocked at the knees with this budget,” Logan said. “It’s almost like you’re being penalized for taking care of the poor.”
And when cuts start, the outpatient services, the services that Paterson wants to expand, will be the first things to be cut. According to Logan, hospitals can't make cuts to things like their Intensive Care Unit or Emergency Room, but they can cut things like a mammography diagnostic program or a dialysis center.
“Thousands of Long Islanders will lose access to care — such as outpatient dialysis services, family health, and outpatient radiology services — as a result of this budget,” said Kevin Dahill, the president and CEO of the Nassau-Suffolk Hospital Council, in a press release.
“It’s the very same budget with which the governor seeks to preserve and enhance outpatient-based services.”
Quagliata was quick to point out that, under the governor's plan, SNCH is the exception, not the rule, in that the payment changes will absorb more of the cost than it had previously.
“When you take money out of a hospital, I can’t fire my Medicaid nurse,” Quagliata said. “The nurse treats every patient the same way and is blind to who’s paying the bill. So if you pull $40 million out of Long Island hospitals, do we find out where the Medicaid nurses are and fire them? It’s the most ridiculous thing.
“Everybody suffers here,” Quagliata added. “And hospitals are losing their shirts to begin with.”
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