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Medicaid reform must protect vulnerable hospitals

Gov. Andrew M. Cuomo's Medicaid redesign team has been given a March 1 deadline to submit initial findings and recommendations for genuine reforms that improve care while lowering Medicaid costs.

One of its first objectives is to hear the concerns and recommendations of Medicaid stakeholders -- including patients, providers, local governments and taxpayers. The team is holding seven public hearings across the state. The first took place Jan. 19 in Buffalo.

The Buffalo hearing gave Niagara Falls Memorial Medical Center an opportunity to publicly state our readiness to assist Cuomo and his hand-picked redesign team in this important work.

However, we also made it clear that another round of "one-size-fits-all" across-the-board Medicaid cuts would sound the death knell for many of the state's most vulnerable hospitals.

Essential safety net hospitals such as Niagara Falls Memorial must be identified and preserved despite the state's budget crisis. Like other hospitals in New York, Niagara Falls Memorial has endured nine consecutive rounds of state budget cuts. But since such a large share of Memorial's revenues derives from serving at-risk Medicaid patients, Medicaid cuts have hit us harder than most hospitals.

In addition, the new Medicaid rate-setting method, or rebasing, implemented in December 2009 hit Memorial and seven other urban and rural hospitals in the state exceptionally hard, cutting our Medicaid revenues by $2.35 million or 54 percent annually.

To put that in perspective, the average loss for all New York hospitals was a 7.8 percent reduction in Medicaid revenue. Although transition funding has helped ease the pain, that funding will be phased out in 2013.

We believe the state should stabilize the most at-risk essential hospitals -- those that serve the highest proportion of economically distressed, vulnerable patients -- through across-the-board or service-specific funding restorations. Consideration also should be given to:

* Granting unallocated Healthcare Efficiency and Affordability Law (HEAL-NY) funding to essential community providers.

* Providing workers' compensation and private pay rate add-ons to essential community hospitals.

* Maintaining transition funding at 2010 payment levels for those hospitals most adversely impacted by rebasing.

Niagara Falls Memorial is not asking to be exempt from measures that truly reform how we deliver Medicaid services. Memorial is voluntarily implementing innovative, quantifiable measures to reduce inappropriate readmissions and emergency room use.

The state can significantly reduce Medicaid spending by incentivizing hospitals to find meaningful alternatives to readmission. These are the kinds of real reforms that are sustainable and can save the health care systems millions of dollars per year.

Joseph A. Ruffolo is president and chief executive officer of Niagara Falls Memorial Medical Center.

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