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State releases partial DSH payments to NYC H+H, though gaps remain

State said it had decided what each hospital would receive based on need, but many public hospitals will get less than they asked for.

Beth Jones Sanborn, Managing Editor

Queens Hospital Center-part of NYC Health + Hospital system. Photo via <a href=""> Wikipedia </a>Queens Hospital Center-part of NYC Health + Hospital system. Photo via Wikipedia

Public health hospitals in New York whose survivability had been threatened when state government temporarily withheld much-needed disproportionate share hospitals payment are breathing a little easier after state Medicare Director Jason Helgerson sent letters to each affected hospital's CEO letting them know funds would be released.

However, some of them are still facing major gaps in what was requested and expected versus how much they'll actually get.

New York City Health+Hospitals, who had threatened to file a lawsuit against the state over $387 million dollars in DSH payments that were expected by the end of September, will be getting $360 million in DSH payments, leaving a $27 million gap between what they were expecting and what's coming, according to the letter sent by Helgerson.

[Also: NYC Health+Hospitals demands $380 million in DSH payments as cash reserves empty]

However, according to that letter, NYC H+H had also requested a $119 million advanced payment based on spending projections for the coming year. The letter gave no clear indication of whether that request would be honored, or what kind of time frame the system would be looking at before the decision is made.

"The $119 million payment will be addressed when we have certainty as to the availability of future DSH funds," Helgerson wrote. He also acknowledged that the system's already onerous budget gap of $1.1 billion in 2017 will grow to $1.8 billion in 2018 "which is New York City and H+H's ongoing critical issue."

[Also: NYC Health + Hospitals sees operating loss double to $673 million, eyes initiatives to close budget gap]

The state had argued that there was never a set payment schedule for the disbursement of DSH funds, and that they were released on a rolling basis. Once the DSH federal cuts hit following the passing of the Oct. 1 deadline for Congress to act on them, the state said they needed to be cautious in allocating payments because of the ramifications of the cuts moving forward. 

In announcing the release of the funds, the state said it had completed a preliminary financial analysis of the DSH program and decided what each hospital would receive based on need.

[Also: NYC Health + Hospitals adds $289 million revenue cycle system to Epic EHR]

"Funding under DSH is complex. Upon the implementation of the federal cuts, it was necessary to justify each hospital's fair allocation, regardless of the timing of the invoices they had submitted to date. We have determined the annualized payment to each hospital and seek to fund each hospital to their full annualized allocation by December 31.  Our priorities are fair allocations to all hospitals involved in the program, stability of the workforce and preservation of the highest levels of patient care," the state said.

Other state public hospitals will now face DSH gaps of their own.  SUNY, based in Albany with three hospitals in Syracuse, Brooklyn and Stony Brook, had requested $332 million in DSH payments. They'll be receiving $158 million, leaving a $174 million gap. 

WeCountyter Medical Center, which is located north of New York City in Westchester county, requested $110 million. They'll be getting $36 million, which leaves the facility with a $74 million gap.

Nassau University Medical Center, located on Long Island, expected $84 million. After their analysis, the state will be releasing $28 million to the hospital, creating a deficit of $56 million.

Erie County Medical Center, which is in western upstate New York, had requested $44 million in DSH payments. The state said they will be releasing $15 million, leaving a $29 million hole, according to the letter sent by Helgerson.

Public hospitals often operate with razor thin margins and little cash on hand. When NYC H+H first announced they were going to sue the state, they were finishing a week with only another 13 days cash on hand. The system had announcing hiring cuts, saying they would only fill about a quarter of open positions and that it was likely some of the positions that would left vacant were physician and clinical staff openings, thus begging the question whether the withholding of funds would eventually impact patient care. 

A third of their patients are uninsured, and many more are on Medicaid which does not reimburse fully for services rendered, thus the needs for the DSH payments. This type of scenario is a common theme throughout the public health systems. And though they now face smaller gaps than when the reality of no DSH payments loomed, these systems often face substantial budget gaps every year, so adding millions more to the mix could still create serious complications.

Twitter: @BethJSanborn
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