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HOSPITALS WARN OF CUTS IF REIMBURSEMENT LAW EXPIRES

Western New York hospitals, among the state's most financially ailing, are facing further cutbacks in patient care if Albany does not come up with new ways to help them treat uninsured patients, a coalition of health-care groups says.

The coalition, in a news conference scheduled for today in Buffalo, is calling on Gov. Pataki and lawmakers to quickly resolve what is to become of a highly complex state law set to expire Dec. 31 that determines how hospitals and other health facilities are reimbursed by insurers for the care they deliver.

Besides affecting hospital bottom lines, the debate will have an impact on how much tens of thousands of businesses, and their employees, pay for health insurance.

For patients, the issue will, in the end, affect them most, whether it's how long they will stay in the hospital for certain procedures or how far they will have to travel for their specialized care.

"We are in a very challenged position right now and we need the State Legislature to come forward and deal responsibly with this important piece of legislation and not leave us hanging," said Carrie Frank, executive vice president of Kaleida Health, the region's biggest health-care system that runs Buffalo General, Millard Fillmore and other hospitals.

The nearly 36 hospitals in the eight-county region, according to their own figures, ran a combined total shortfall of $85.6 million last year, and the situation is looking even bleaker in the future as another round of major federal Medicare cutbacks kicks in this week.

Kaleida, for instance, expects to lose in excess of $6 million this year and is preparing to cut expenses by about 10 percent to make up for the loss -- which could be felt by some of its 12,000 employees. Officials say hospitals in the region are under particular pressure compared to other areas because of generally lower insurance premiums, which means lower payments for hospitals, and a greater percentage of patients in Medicaid managed-care programs.

The law, known as the Health Care Reform Act, was enacted in 1996 and dramatically changed the way in which hospitals are paid for their services from a regulated system to more open competition that allows insurers to negotiate what they would pay for hospital care.

The law also set aside a pool, financed indirectly by insurance premiums, to pay for the care hospitals give to poor and uninsured people. Another pool helps hospitals pay for programs for training future doctors.

But businesses, concerned about rising insurance premiums on the plans they fund for employees, have launched a lobbying battle in Albany to reduce the amount, in particular, given to train medical students.

They argue that thousands of these students are trained in New York, with the financial aid of the state and private industry, and then leave the state when their education is complete.

Hospital officials, however, say such funding for medical education is critical, and maybe even more so in Western New York. "If Western New York is to have an economic resurgence, a big part of that has got to be and will be in the health-care industries," said William Pike, president of the Western New York Healthcare Association, a trade group of hospitals.

That won't happen, Pike said, unless the state encourages local hospitals to train future doctors, which helps bring in research dollars, which, in turn, can spur new medical business company openings.

Also to be debated is whether to change the formula for how hospitals are paid for treating uninsured and bad debt cases. Currently, insurers pay about 8.2 percent of what they spend on hospital costs into a pool that pays hospitals for treating poor and uninsured patients.

Hospitals, however, say the formula has unfairly created a loophole for insurers to steer patients away from hospital treatments, particularly outpatient services. Businesses, in the meantime, say the 8.2 percent figure is too high.

A major trump card in the negotiations will be the dollars flowing Albany's way from last year's tobacco industry settlement. Over 25 years, $25 billion will be coming to the state and local governments, and a feeding frenzy is already under way over how to spend the dollars.

Health groups, not surprisingly, want a big chunk targeted for health care for the uninsured, which, in turn, would help hospital bottom lines.

"We're urging that those dollars not be used in building roads and bridges, but to invest in health care," Pike said.

Depending on how much Pataki and legislative leaders direct from the tobacco award to health care will determine how nasty the fight over the expiring health law will be this fall.

What has hospitals particularly anxious is Albany's lack of movement on the issue. If talks are going on in Albany, they are being done so in secret and without the direct participation of Pataki and the legislative leaders.

The Legislature isn't due back until December to take up the matter, a time frame that has hospitals increasingly nervous if they are to cope with any major changes in the system come Dec. 31.

And nowadays, after this year's bruising legislative session, there is talk that the whole issue will simply be punted until next year by, as Albany routinely manages to do, simply extending the current law.

That has some hospital officials worried, particularly as federal budget cutbacks are reducing Medicare payments. "There are some major things that need attention now," Frank said.

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