The Healthcare Association of New York State (HANYS) released its Medicare Reimbursement Gap Analysis that shows how Medicare rates have failed to keep pace with the cost of providing care since Congress enacted the Balanced Budget Act (BBA) of 1997.

HANYS' analysis found that Medicare payment rates to New York hospitals grew by only 7.6 percent since the BBA was passed, while the costs of providing care rose 22.4 percent. That breaks down to an annual hospital payment increase of just 1.2 percent while costs rose at a rate nearly triple that. The average shortfall in Medicare inpatient payments represents $140 million per year.

"The impact of this gap is being felt across New York," said HANYS President Daniel Sisto. "In just the first four months of this year, five hospitals have closed or announced they soon will because they cannot afford to remain open," he noted. "Others have scaled back other services just to survive. Inadequate Medicare payments are largely to blame for this reduction in access to health care services," he said.

To develop its Medicare Reimbursement Gap Analysis, HANYS compared the current Medicare payment rates for four common Diagnosis Related Groups (DRGs) to the payment rate for the same DRGs before the BBA took effect. In fact, some Medicare payment rates for certain DRGs at certain hospitals are actually lower today than in 1997, despite the increasing cost of providing care. Overall, the BBA slashed Medicare payment rates to New York providers by almost $5 billion, including by $230 million in the current federal fiscal year.

HANYS member hospitals are sharing their facility-specific information with their congressional representatives to illustrate the financial challenges they have struggled with to maintain their very existence. Eleven other states asked HANYS to analyze their data. HANYS represents more than 550 non-profit and public hospitals, nursing homes, home care agencies, and other health care organizations throughout New York state.

For hospital-specific reports, contact Monica Mahaffey at (518) 431-7741, or at mmahaffe@hanys.org.