NEW YORK HOSPITALS WILL LOSE MILLIONS IN FEDERAL AID WITH CHANGE IN FORMULA, SAYS A UNITED NY DELEGATION

Jul 12, 2004
Press Release
WASHINGTON, DC - Eighty New York hospitals stand to lose approximately $65 million in FY05 and $700 million over the next 10 years in Medicare reimbursements because three New Jersey counties with much lower average hourly wages have been unnecessarily added onto the current New York metropolitan statistical area (MSA), say a united group of New York Members of Congress. In a letter to the Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan, Reps. Charles Rangel (Harlem), Peter King (Seaford), Carolyn Maloney (Manhattan and Queens) and the entire New York delegation urge McClellan to reverse his decision to expand the New York MSA and instead maintain the current boundaries for the purposes of the Medicare program (PDF of letter).

The three New Jersey counties in question have an average hourly wage that is 14% less than that of the eight counties currently within the New York MSA. The Department of Health and Human Service bases Medicare reimbursement payments to hospitals in part on the average hourly wage of a particular area, and the net reduction to the average hourly wage would drastically lower the New York area’s reimbursement.

“The purpose of the area wage adjustment is reflect the labor costs of a community,” said Rangel. “By this act CMS is distorting that reflection of the labor costs in New York City. It is especially upsetting because it will cost New York City hospitals at a time when it is becoming harder and harder for them to provide care to all including the needy."

“This proposal would be harmful to New York City hospitals, rehabilitation facilities, skilled nursing facilities, home health agencies and hospices,” said King. “By maintaining the current MSA, we can ensure that New Yorkers have access to first-rate care. I am pleased to have the support of the New York Congressional delegation in this effort.”

“This one technical change would cost our hospitals on the order of millions of dollars each year,” said Maloney. “Any New Yorker could tell you that the last thing we need is less health care. By lumping areas in New Jersey where the standard of living is light years different with us here in New York, our hospitals and our Medicare recipients will suffer enormously. I hope Administrator McClellan will come to understand that logic.”

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