Sets reimbursement rates for essential safety net hospitals at no less than regional average commercial rates for health care services provided by all hospitals in the same geographic region.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6785
SPONSOR: Walker TITLE OF BILL:
An act to amend the public health law, in relation to setting reimburse-
ment rates for essential safety net hospitals
PURPOSE:
To provide new financial opportunities to support safety net hospitals
throughout the state serving underserved communities.
SUMMARY OF PROVISIONS:
Section 1 establishes the legislative intent of the bill.
Section 2 adds a new subdivision 34-a to section 2807-c of the public
health law by establishing the "Health Equity Stabilization and Trans-
formation Act" which will establish reimbursement rates and provide
funding for safety net hospitals. The bill defines "essential safety net
hospitals" that would be eligible for enhanced reimbursement rates.
The bill would require the Commissioner of Health (COH) to seek federal
approval to allow for these safety net hospitals to be reimbursed at the
regional average commercial rate or at the closest rate possible. Such
funding would be distributed through a directed payment template which
will authorize the State to make payments directly to providers outside
of the traditional managed care model. By utilizing this funding mech-
anism the State would be able to leverage additional federal funding
beyond what is traditionally provided through Medicaid. The bill would
require hospitals which qualify for such enhanced reimbursement to annu-
ally report to the Department of Health (DOH) on their patient metrics
and how the funding has been utilized to improve access and quality of
services. DOH would be directed to make this information publicly avail-
able.
Section 2 provides for the effective date of April 1, 2023
JUSTIFICATION:
Safety net hospitals provide critical health services to underserved
communities across the state with large portions of their patient mix
being made of Medicaid and uninsured individuals. This can place addi-
tional financial strains on these facilities as reimbursement frequently
doesn't meet the actual cost of services being delivered.
In the past the State has sought to provide financial assistance to
these essential providers through various means. Unfortunately, most of
these attempts have revolved around temporary funding mechanisms. Since
the State hasn't meaningfully increased Medicaid reimbursement rates
since 2008, safety net hospitals are forced to run deep negative operat-
ing margins and lack the resources necessary to keep up with rising
costs and respond to their community's health needs. Fundamental changes
must be made to how the State finances safety net hospitals to eliminate
this two-tiered system of care. This legislation seeks to create a more
permanent solution to provide continual funding in the out-years.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on April 1, 2023
STATE OF NEW YORK
________________________________________________________________________
6785
2023-2024 Regular Sessions
IN ASSEMBLY
May 8, 2023
___________
Introduced by M. of A. WALKER -- read once and referred to the Committee
on Health
AN ACT to amend the public health law, in relation to setting reimburse-
ment rates for essential safety net hospitals
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative intent. Essential safety net hospitals predomi-
2 nately serve historically marginalized neighborhoods and communities of
3 color, with Medicaid and uninsured patients comprising 36 percent or
4 more of their patient population. Years of disinvestment and the current
5 financing system impedes the ability of these facilities to provide
6 equitable care in the communities they serve. The perpetual cycle of
7 underfunding of these hospitals prevents critical investment in services
8 and requires annual supplemental state support to simply remain open to
9 provide care. The legislature seeks to implement a permanent solution to
10 address decades-long inequities faced by communities served by essential
11 safety net hospitals. It is the intent of the legislature to provide
12 enhanced rates to essential safety net hospitals to support investments
13 to stabilize the safety net workforce, allow for investment in critical
14 hospital infrastructure, and provide expanded and equitable programs and
15 services to underserved communities. This legislation will promote
16 access to care by ensuring that essential safety net hospitals in New
17 York's most marginalized communities remain open and are better posi-
18 tioned to successfully meet community needs. It is recognized that this
19 legislation may require eligible hospitals to waive the receipt of Medi-
20 caid Disproportionate Share Hospital allotments as a condition of
21 receiving enhanced reimbursement rates as a result of this legislation.
22 It is further recognized that an eligible essential safety net hospital
23 may decline to participate in the reimbursement structure created by
24 this legislation.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10306-01-3
A. 6785 2
1 § 2. Section 2807-c of the public health law is amended by adding a
2 new subdivision 34-a to read as follows:
3 34-a. Health equity stabilization and transformation act. (a) For the
4 purposes of this subdivision, "essential safety net hospital" shall
5 mean:
6 (i) Any hospital eligible for participation in the directed payment
7 template (DPT) preprint submitted by the state to the Centers for Medi-
8 caid and Medicare Services for fiscal year two thousand twenty-three;
9 (ii) Any non-state public hospital operated by a county, municipality
10 or public benefit corporation; or
11 (iii) Any voluntary hospital certified under this article that is a
12 general hospital, which, in any of the previous three calendar years,
13 has met the following criteria:
14 (A) at least thirty-six percent of inpatient volumes are associated
15 with Medicaid and uninsured individuals;
16 (B) at least thirty-six percent of outpatient volumes are associated
17 with Medicaid and uninsured individuals;
18 (C) no more than twenty percent of inpatient volumes are associated
19 with commercially insured individuals; and
20 (D) the hospital is not part of a private health system with ten
21 billion dollars or more in annual total patient revenue.
22 (b) For purposes of this subdivision, "essential safety net hospital"
23 shall not include hospitals that are (i) public hospitals operated by
24 the state; (ii) federally designated as a critical access hospital;
25 (iii) federally designated as a sole community hospital; (iv) specialty
26 hospitals; or (v) children's hospitals.
27 (c) For purposes of this subdivision, "health care services" shall
28 include, but is not limited to, acute inpatient discharges, inpatient
29 psychiatric days, ambulatory surgery visits, emergency room visits, and
30 outpatient clinic services.
31 (d) For essential safety net hospitals that qualify pursuant to para-
32 graph (a) of this subdivision, the commissioner shall, subject to feder-
33 al approval, require inpatient hospitals rates and hospital outpatient
34 rates paid by the medical assistance program for services provided to
35 patients enrolled in Medicaid managed care to reimburse the entire class
36 of essential safety net hospitals in each geographic region at no less
37 than regional average commercial rates for health care services provided
38 by all hospitals in the same geographic region, as reported in a bench-
39 marking database maintained by a nonprofit organization specified by the
40 commissioner. Such nonprofit organization shall not be affiliated with
41 an insurer, a corporation subject to article forty-three of the insur-
42 ance law, a municipal cooperative health benefit plan certified pursuant
43 to article forty-seven of the insurance law, a health maintenance organ-
44 ization certified pursuant to article forty-four of this chapter, or a
45 provider licensed under this chapter. For purposes of this paragraph:
46 (i) The commissioner shall establish two geographic regions within the
47 state for establishing the regional average commercial rate. The first
48 region shall consist of the average commercial rate for services
49 provided in the following counties: Bronx, Kings, New York, Queens, and
50 Richmond. The second region shall consist of the average commercial
51 rate for services provided in all of the remaining counties.
52 (ii) The regional average commercial rate for health care services
53 shall reflect the most recent twelve-month period in which data on
54 commercial rates is available, and shall be updated no less frequently
55 than every three years, provided that the average commercial rate shall
A. 6785 3
1 be trended forward to adjust for inflation on an annual basis between
2 such updates.
3 (iii) The commissioner shall ensure that all essential safety net
4 hospitals shall receive the rates defined in this paragraph. The commis-
5 sioner shall not exclude any qualifying essential safety net hospitals,
6 including public hospitals.
7 (e) In the event it is determined by the commissioner that the state
8 will be unable to secure all necessary federal approvals for the
9 purposes of implementation of this subdivision, the commissioner shall
10 seek approval for reimbursement rates that are as close to the average
11 commercial rate as possible in order to obtain all necessary federal
12 approvals.
13 (f) Managed care organizations shall provide written certification to
14 the commissioner on a quarterly basis that all payments to essential
15 safety net hospitals are made in compliance with this subdivision and in
16 accordance with section three thousand two hundred twenty-four-a of the
17 insurance law. Managed care organizations shall also report to the
18 commissioner claim denial information for claims submitted by essential
19 safety net hospitals, in a manner specified by the commissioner, to be
20 made publicly available.
21 (g) Any hospital qualifying under this subdivision shall annually
22 report to the department demonstrating that it meets the criteria as an
23 essential safety net hospital. The report shall also include information
24 to demonstrate how increased reimbursement has been utilized to improve
25 patient access, patient quality and patient experience.
26 (h) The commissioner shall make any quality data reported by essential
27 safety net hospitals pursuant to paragraph (g) of this subdivision
28 publicly available in a manner that is useful for patients to make qual-
29 ity determinations.
30 (i) No later than September first, two thousand twenty-three, the
31 commissioner shall provide the governor, the temporary president of the
32 senate and the speaker of the assembly with a report on the feasibility
33 of obtaining a state plan amendment to modify the Medicaid fee-for-ser-
34 vice rates for health care services in the manner prescribed in this
35 subdivision.
36 § 3. This act shall take effect April 1, 2023. Effective immediately
37 the commissioner of health or their designees shall make such rules and
38 regulations, and seek any federal approvals necessary for the implemen-
39 tation of this act on its effective date.
