Examining How Indigent Care Pool Payments Are Allocated in New York

Grantee Name

Research Foundation of the City University of New York

Funding Area

Primary Care

Publication Date

May 2018

Grant Amount

$22,000

Grant Date:

November 2015 – December 2017

Print

With federal uncertainty hanging over both the Medicaid program and support for hospitals, the future of New York State’s safety-net institutions is at risk.

New York State and federal funds provide significant support for hospitals to deliver charity care. New York hospitals that provide care to patients who are unable to pay are compensated by supplemental payments through an indigent care pool (ICP). ICP payments cover hospital losses incurred from free care provided to uninsured patients, as well as from insufficient Medicaid rates. Supplemental payments constitute a major source of stability for safety-net hospitals, which serve a high proportion of low-income patients; however, ICP funds are not consistently allocated based on need or indigent patient volume.

In 2015, NYHealth awarded the Research Foundation of the City University of New York (CUNY) a grant to conduct a study of New York City hospital ICP allocations in relation to the care provided to uninsured and Medicaid recipients. The resulting report would document the extent to which charity care dollars are going to hospitals providing charity care and recommended ways to revise the ICP allocation methodology to strengthen and support safety-net hospitals in New York City.

Outcomes and Lessons Learned

Produced the report “Funding Charity Care in New York: An Examination of Indigent Care Pool Allocations,” which drew from never-before-public data (obtained through a Freedom of Information Act request to the State), as well as first-hand interviews with key informants; and
Documented the allocation of funds to individual hospitals, specific hospitals’ provision of care to the uninsured, and the negative effects of a New York State revision to the allocation formula in 2012.

The study found that changes to the ICP allocation since 2012 have resulted in a payment system that does not match ICP dollars to hospitals according to levels of care provided to uninsured (indigent) patients. It also examined which hospitals in New York City provide the highest volume of uncompensated care and are therefore in greatest need of supplemental payments, including ICP payments. The data reveal a misalignment between the distribution of ICP dollars and those hospitals that provide the most indigent care in New York City.

The report was shared with State and City policymakers to help inform them of better ways to allocate ICP funding to the safety-net hospitals that serve the bulk of low-income patients. The report received extensive media attention, including a detailed article in Modern Healthcare and two Politico articles.

In January 2018, NYHealth issued a companion report by the Community Service Society of New York that also focused attention on the ICP funding formula and potential fixes. At the end of March 2018, the State passed a budget that put off changes to the ICP funding formula for another year. This was viewed as better than enabling three more years of a transition period, as was done in 2012 and 2015. The State proposed a workgroup of consumer and hospital representatives to consider fixes to New York’s distribution of disproportionate share hospital funds and the ICP funds.

Through a separate NYHealth grant, Health Care for All New York (HCFANY) testified at a New York State Assembly public hearing on the State’s Health/Medicaid 2018–19 budget regarding the funding allocation formula through which New York State hospitals receive ICP funds. HCFANY made recommendations on how the current ICP funding methodology should be recalibrated to more equitably support safety-net hospitals that treat the neediest patients.

In response to HCFANY’s testimony regarding ICP hospital compensation, the final State 2018–19 budget established a workgroup to review the ICP funds distribution. The 22-member workgroup, made up of representatives from hospitals, unions, insurers, and consumer advocacy organizations, met four times before submitting its findings in December 2018. Although the workgroup did not reach consensus on an exact distribution methodology, it advocated that any changes must consider the interest of patients and their access to health care services.

In February 2019, Governor Cuomo set a cap on how much charity-care funding profitable downstate hospitals can receive. Facilities in New York City, Long Island, and Westchester that earn—or are part of a system that earns—at least $68 million in operating income or have an operating margin of at least 2.98% would be capped at $10,000 in indigent care payments.

Co-Funding and Additional Funds Leveraged: N/A

Back to Grant Outcomes