October Ml-111

Twenty-Nine
2009

TO: Chief Executive Officers (New York State)

FROM: Kenneth E. Raske, President

RE: Key Senators Oppose Health Care Cuts; More Member Advocacy Needed

Three key New York State Senators—Democratic Conference Leader John Sampson (D-
Brooklyn), Senate Health Committee Chairman Tom Duane (D-Manhattan), and Senate Finance
Committee Chairman Carl Kruger (D-Brooklyn)—have now publicly opposed enacting
Governor David Paterson’s proposed mid-year health care cuts, which include 10% Medicaid
reimbursement rate cuts beginning on November 15. Attached is a press release GNYHA and
1199 SEIU released last night in response to Senator Kruger’s statement yesterday, in which he
said, “The Governor’s Medicaid and health care cuts place disproportionate pain on hospitals and
nursing homes given they have weathered a number of cuts already. We have to do better and
those who do not recognize that responsibility lack the imagination or inclination to come up
with new answers to old problems." As we have reported to you in the past, Senator Sampson
has stated in public leaders meetings that he and his conference oppose the health care cuts, and
Senator Duane as early as August sent a letter to the Governor and the legislative leaders saying
he would oppose new health care reductions. We are extremely grateful for the strong support of
these three influential senators.

Despite this, we are still in deep trouble. Many legislators have not made the commitments these
senators have. Many of you have reported back to us that your legislators have spoken about the
cuts as if they were inevitable. Some legislators have said that they believe the State will run out
of cash in December—potentially threatening the ability of the State to disburse funds—and
have asked you if you would prefer the cuts to no Medicaid check at all.

I believe this is a false choice. First, we have no real way of knowing if the State’s cash flow
position is as dire as advertised. Second, if it is, it is incumbent upon the State—before even
considering cutting or taxing you for the seventh time since April 2007—to closely analyze and
scrub every single account—both on-budget and off—to identify excess funding to either
“sweep” or borrow against. I have told the Governor and the legislative leaders that GNYHA is
ready to help with this analysis, even going so far as to retain outside budget experts. It is
unconscionable to cut or tax our financially fragile health care providers yet again, particularly
when reforms that will reduce Medicaid inpatient payments for the vast majority of hospitals will
begin on December 1.
It is extremely important that you continue to meet with your legislators, including your
Assembly members. Ask them to stand with Senators Sampson, Duane, and Kruger against
the health care cuts. Ask them to immediately contact their legislative leaders to express
opposition. If they say no, ask them “Why not? Particularly when these Senators have done so?”

I have attached for your use the slides I used in my testimony on Monday before Senator Kruger
and the rest of the Senate Finance Committee. The slides outline the following points:

• The Governor’s Medicaid fee-for-service cuts to health care providers are not $287
million, but actually $746 million with the loss of Federal funds. Due to the Federal
stimulus bill, New York now receives $1.60 for every Medicaid dollar it spends—and
loses $1.60 for every Medicaid dollar it cuts. This is by far the largest cut asked of any
sector.
• Health care providers have been cut or taxed six times since April 2007. The recurring
annual loss is $2.2 billion. We cannot possibly sustain further cuts.
• Myriad Medicaid reimbursement rate reforms are scheduled to take effect in the next six
months, including Medicaid inpatient reform on December 1. These reforms alone will
mean major payment reductions for many providers, even without new cuts. New cuts on
top of these reforms will mean more layoffs, service reductions, and even closures.
• What is needed to help hospitals cope with the loss of revenue from the past cuts, let
alone new ones, is medical malpractice reform. Medical malpractice reform, particularly
when it comes to obstetrics, is a true Medicaid issue, given that Medicaid covers 50% of
all deliveries in the State, 60% in New York City, and over 70% in the Bronx and
Brooklyn.
• We need each legislator to oppose the cuts, like Senators Sampson, Duane, and Kruger;
we need identification of funding both in the budget and off budget that can be used to
stave off the State’s potential cash flow crisis; and we need to postpone the nursing home
regional pricing system, scheduled to take effect on April 1, 2010, which will devastate
not-for-profit and public homes.

I have also attached an analysis of the impact of the six rounds of cuts, taxes, and reforms on
each hospital in the State.

If you have any questions, please call David Rich, Lloyd Bishop, or Bridgette Roberts at
GNYHA.

Attachments

cc: Government Affairs Representatives

Chief Financial Officers
 GNYHA/1199 SEIU Healthcare Education Project
Statement on Senator Carl Kruger’s Call to Protect Health Care

Kenneth E. Raske, President, Greater New York Hospital Association

George Gresham, President, 1199 SEIU United Healthcare Workers East

October 28, 2009

Today, Senate Finance Committee Chairman Carl Kruger said in a statement:

“…the Governor’s Medicaid and healthcare cuts place disproportionate pain on

hospitals and nursing homes given they have weathered a number of cuts already. We
have to do better and those who do not recognize that responsibility lack the imagination
or inclination to come up with new answers to old problems."

GNYHA and 1199 SEIU applaud Senator Kruger for strongly opposing highly
inequitable health care cuts that will lead to layoffs, elimination of services and
departments, and closures of entire facilities.

Like Senate Democratic Conference Leader John Sampson and Senate Health Committee
Chairman Thomas Duane, who have already expressed deep concern about additional
Medicaid cuts after six rounds of cuts and taxes since April 2007, Senator Kruger
recognizes that Albany has trained its budget scalpel on health care providers once too
often.
 Full Impact of Governor’s
Drp Cuts to Healthcare Providers
Enhanced Federal Medicaid Match
Means Cuts are 2.6 Times Larger

$1 CUT
IN STATE FUNDING

TOTAL IMPACT WITH

LOSS OF ENHANCED
FEDERAL MEDICAID MATCH

Proposed Cuts State Share Full Impact

Hospitals $89 million $232 million
Nursing Homes $95 million $247 million
Home Care $53 million $137 million
Other Provider Cuts $50 million $130 million
TOTAL $287 million $746 million
Health Care Cuts = $287M
With Federal Medicaid match
$1 State = $1.60 Federal

So . . .
actual cuts = 2.6 x proposed cuts
or
= $746M
Health care cut 6 times in 3 years;
Total net recurring loss of $2.2 Billion
Annual Value of Recurring Cuts Based on Date of Enactment
$-

$(200) $(85)
$(233) $(190)
$(400)
$ in Millions

$(376) $(359)
$(600)

$(800)

$(1,000) $(932)
$(1,200)
April April August Feburary April May
2007 2008 2008 2009 2009 2009
Hospitals = ($1B) Nursing Homes = ($1B) Home Care = ($200M) Total

Source: GNYHA and Continuing Care Leadership Coalition (CCLC) analysis of fiscal impact data from the New York State Department of Health (DOH) and
Division of the Budget (DOB).
Malpractice costs are a Medicaid issue
Medicaid Covers:

50 % of all deliveries in the State

60 % of all deliveries in NYC

Over 70% of all deliveries in

Brooklyn and the Bronx
 Payment reforms taking effect
in the next 6 months . . .
New acute care payment New burn, epilepsy, & HIV New inpatient psychiatry New detox payment
methodology payment methodology payment methodology methodology

Rebased medical Rebased alcohol & drug Rebased critical access Elimination of R&R, 2007
rehab rates rehab rates hospital rates pools, & “GME enhancements”

State P4P for adverse New payment methods

Compliance with transition Compliance with medical
events, complications, for emergency services,
funding criteria home funding criteria
& readmissions ambulatory, surgery, & clinics

Compliance with grant New bad debt and charity New BDCC pools for teaching
Elimination of GME Pool requirements for major care formula based on hospitals, high-Medicaid
academic centers of excellence unisured service units hospitals

New nursing home case-mix Home care payment reform

and pricing methods

. . . We can’t take more funding changes!

What is Needed
Opposition to the cuts

Offset with other sources of revenue

External to the current budget

Internal to the current budget

Relief on medical malpractice costs to

cushion the blow of past cuts

Postpone an already-legislated Medicaid

reimbursement reform
Nursing home regional pricing
(scheduled for April 1, 2010)