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SCHUMER, HIGGINS, AND ZELDIN LEAD NEW YORK DELEGATION LETTER OPPOSING LOOMING HOSPITAL CUTS THAT WOULD DEVASTATE RURAL & URBAN HOSPITALS ACROSS NY

Jul 1, 2019
Press Release

Feds Recently Proposed Cutting Payment Rates For New York Hospitals In High-Wage Areas; Adjustments Would Cripple Upstate Urban & Rural Hospitals

NY Congressional Delegation Reveals That Proposed Changes Would Cost New York Hospitals An Estimated $53 Million Per Year, Creating Budgetary Restrictions, Risk Of Lay-Offs & Reduced Services

Representatives To CMS: Medicare Area Wage Index Changes Disproportionately Harm New York And Must Not Stand

 

Led by Senate Minority Leader Charles E. Schumer and U.S. Representatives Lee Zeldin (NY-1) and Brian Higgins (NY-26), the entire New York Congressional delegation today expressed their serious concerns over recent Centers for Medicare and Medicaid Services (CMS) proposed changes to the Medicare area wage index (AWI), arguing that it would disproportionately harm hospitals across New York State. The Medicare Wage Index aims to ensure that Medicare payments adjust for markets with the highest costs of living, in which hospitals must pay employees more than they would in lower-wage areas. CMS proposed a change that would significantly reduce wage index payments for hospitals in the top quarter of the most expensive hospital markets in the country, while sending the money to hospitals in the lowest quarter. While numerous New York hospitals – including those in urban, suburban and Upstate areas – stand to lose funding, not a single one of New York’s rural hospitals stands to gain funding.

 

“New York hospitals never cease to provide innovative, world-class treatment to our communities, but they are often forced to do so on a razor-thin budget margin. New York can be an expensive place to live and do business, and so we need to ensure that hospitals have the funding they need to attract world-class doctors and health care providers,” said Senator Schumer. “That’s why I, along with the entirety of New York’s Congressional delegation, am urging CMS to reverse course on this deeply misguided rule. The struggles faced by New York’s hospitals are no different from the struggles faced by the countless others across the nation, they must not be allowed to suffer as a result of their zip code.”

 

“While New York has long been home to some of the world’s best hospitals, our communities face unique challenges not experienced in most other parts of our country, which have drastically increased costs," said Congressman Zeldin. "As stated in our letter from the entire New York Congressional delegation, CMS’ shortsighted rule does not help, because it fails to take into account cost of living when considering wages. CMS must immediately reverse course and take action that helps our communities’ hospitals instead of crippling them.” 

 

"This proposal will harm hospitals all across New York State. It will punish hospitals that are located in areas with higher wages – including many in Western New York and across upstate – and will negatively impact the ability to attract the best talent,” said Congressman Higgins. “I stand firm alongside the entire New York Congressional delegation in urging CMS not to implement this rule."

 

“The area wage index proposal is a direct attack on New York that seeks to redistribute precious Medicare resources from New York to other states,” said HANYS President Bea Grause, RN, JD.  “HANYS applauds Sen. Schumer (D-NY) and Reps. Zeldin (R-NY) and Higgins (D-NY) for leading the bipartisan New York delegation in the effort to stop this proposal in its tracks.  HANYS thanks the entire Congressional delegation for standing together to protect New York’s hospitals and the patients they serve.”

 

“This misguided proposal fails to address its stated goal and will cause harm to urban safety net hospitals by arbitrarily reducing their payments. Greater New York Hospital Association supports the goal of increasing payments to rural hospitals, but not at the expense of other providers. I thank Senate Minority Leader Schumer and Representatives Brian Higgins and Lee Zeldin for circulating this vital letter, supported by the entire New York Congressional delegation, on the Centers for Medicare & Medicaid Services’ harmful proposed changes to the area wage index,” said Kenneth E. Raske, President of Greater New York Hospital Association.

 

The Medicare AWI is a crucial adjustment applied to the reimbursement of hospitals that raises or lowers Medicare payments to account for geographic differences in labor costs. The representatives argued that the proposed changes from CMS would ignore the core intent of AWI: to account for real differences in wages in each labor market. Instead, the representatives stated, CMS’ proposal would arbitrarily reweight AWI and unfairly redistribute funds across states without a sound policy rationale.

 

While CMS argues the proposed changes to the Medicare AWI would seek to help rural hospitals, the representatives pointed out that not a single one of New York’s rural hospitals, who face the exact same challenges as other rural hospitals across the country, would see a benefit from the policy. In fact, it is estimated that the proposed policy would reduce Medicare inpatient and outpatient funding to New York’s hospitals, both rural and urban, which would stand to lose roughly $53 million each year because of the changes. When factoring in Medicare payments for patients with private Medicare Advantage coverage, the potential losses jump to an estimated $83 million annually.

 

A copy of the representatives’ letter appears below.

 

Dear Administrator Verma:

 

Re: CMS-1716-P, Medicare Program; Inpatient Prospective Payment System for Acute Care Hospitals, Proposed Policy Changes and Fiscal Year 2020 Rates; Proposed Rule

 

We are writing to you regarding the Centers for Medicare and Medicaid Services (CMS) proposed changes to the Medicare area wage index (AWI). Specifically, we urge CMS not to finalize its proposal to artificially increase the AWI for hospitals that fall in the lowest 25th percentile of wage areas at the expense of hospitals that are above the top 75th percentile of wages across the nation.  This misguided policy is disproportionately harmful to the State of New York.

 

As you know, the Medicare AWI is a crucial adjustment applied to the reimbursement of hospitals that raises or lowers Medicare payments to account for geographic differences in labor costs. While there are some shortcomings in the current system, the changes put forth in the FY 2020 IPPS proposed rule ignore the core intent of AWI: to account for real differences in wages in each labor market. Instead, CMS’ proposal would arbitrarily reweight AWI and unfairly redistribute funds across states without a sound policy rationale.

 

CMS argues that its proposed changes to AWI seek to help rural hospitals, yet, not one of New York’s rural hospitals – who face the same fiscal challenges as rural hospitals across the nation -  would see a benefit from the policy.  Rather, states like New York with many hospitals that have legitimately high wages commensurate with market competition will be forced to transfer hundreds of millions in Medicare funding to a small handful of states.

 

This proposed policy is estimated to reduce Medicare inpatient and outpatient funding to New York’s hospitals in both rural and urban communities across the state by $53 million each year. Factoring in Medicare payments for patients with private Medicare Advantage coverage, the potential negative impact expands to nearly $83 million annually.

 

If finalized, this proposal would threaten the financial viability of hospitals in New York, while doing nothing to address fundamental problems with the current AWI system. We therefore ask that CMS not finalize these changes, and instead use its existing authority to find a practicable solution to issues in the current AWI system, rather than a proposal that harms hospitals in our communities and the patients they serve.

 

Thank you for your thoughtful consideration of our concerns.

 

Sincerely,

 

Charles E. Schumer

United States Senator

 

Lee Zeldin

Member of Congress

 

Kirsten Gillibrand

United States Senator

 

Brian Higgins

Member of Congress

 

Peter T. King

Member of Congress

 

Thomas R. Suozzi

Member of Congress

 

Kathleen M. Rice

Member of Congress

 

Gregory W. Meeks

Member of Congress

 

Grace Meng

Member of Congress

 

Nydia Velázquez

Member of Congress

 

Hakeem Jeffries

Member of Congress

 

Yvette D. Clarke

Member of Congress

 

Jerrold Nadler

Member of Congress

 

Max Rose

Member of Congress

 

Carolyn B. Maloney

Member of Congress

 

Adriano Espaillat

Member of Congress

 

Alexandria Ocasio-Cortez

Member of Congress

 

José E. Serrano

Member of Congress

 

Eliot L. Engel

Member of Congress

 

Nita M. Lowey

Member of Congress

 

Sean Patrick Maloney

Member of Congress

 

Antonio Delgado

Member of Congress

 

Paul Tonko

Member of Congress

 

Elise M. Stefanik

Member of Congress

 

Anthony Brindisi

Member of Congress

 

Tom Reed

Member of Congress

 

John Katko

Member of Congress

 

Joseph D. Morelle

Member of Congress

 

Chris Collins

Member of Congress

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