BY JON HARRIS
May 25, 2023
WNY hospitals eye millions in federal funding
Financially pinched hospitals across Western New York could be in for a $170 million annual boost under a proposed change to Medicare wage payments that U.S. Senate Majority Leader Charles E. Schumer is pushing to finalize.
According to Schumer's office, the Centers for Medicare and Medicaid Services' recent proposed change to the Medicare wage index rate would mean an additional $967 million a year in federal funding for hospitals across upstate New York.
The Medicare wage index rate is used to determine how much money the U.S. government pays hospitals for labor costs when they treat Medicare patients, with each metro area assigned a rate that indicates whether they receive more or less than the national average.
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Oishei Children's Hospital and Buffalo General Hospital on the Buffalo Niagara Medical Campus. The two hospitals are part of Kaleida Health, which could get more than $66 million in additional federal funding if a proposed rule change to the Medicare wage index becomes finalized.
Often, upstate hospitals received less than the national figure. For example, Schumer's office noted that Albany-area hospitals, since the 1980s, have received only 86% of what the average hospital receives. Under the proposed changes, Capital Region hospitals would see that increase to 122% of what the average hospital receives.
"For far too long, upstate New York hospitals have faced unfairly low Medicare payments that fell terribly short of wage demands leaving hospitals struggling to compete to bring the best doctors and nurses to upstate New York," Schumer said in a statement. "After years of fighting though, the feds have finally shifted course, and proposed a new rule that can help finally rectify the unfair payment system, and give upstate New York the shot in the arm it has long needed."
Schumer is pushing to get the proposal finalized by CMS, but it must go through a period of review, public input and final approval.
Western New York hospital officials have their fingers crossed.
Kaleida Health
Western New York's largest health system called the proposed adjustment "welcomed news."
"The CMS Medicare Wage Index rule change could rectify a structural reimbursement issue for health systems like Kaleida Health," said Mike Hughes, a system senior vice president and its chief administrative officer.
"You have to remember that this yearslong inequity is on top of the financial damage that has been done to hospitals and health systems over the past three years because of the pandemic," Hughes said.
Kaleida finished 2022 with an operating loss of $80.6 million on revenue of $2.05 billion.
The numbers look a little bit better so far this year, with volumes coming in higher in January and February at Kaleida, compared to the prior two years as the system dealt with pandemic-induced surgical moratoriums.
Kaleida finished the first quarter with an operating loss of $15.9 million on revenue of $552 million.
According to Schumer's office, the proposed rule change would mean an additional $66.4 million annually for Kaleida Health and roughly $20.4 million more for Olean General Hospital, part of the Kaleida-affiliated Upper Allegheny Health System.
Catholic Health
The region's second-largest health system also had a rough 2022.
Catholic Health reported an operating loss of about $175 million on revenue of $1.225 billion last year. Catholic Health originally budgeted for a roughly $65 million loss in 2022, according to a required disclosure to investors after a bond issuance last year.
According to Schumer's office, the CMS proposed rule change would provide an almost $40 million annual funding boost to Catholic Health's hospitals: About $17 million for Mercy Hospital of Buffalo; nearly $9.9 million for Sisters of Charity Hospital in Buffalo; roughly $7.8 million for Kenmore Mercy Hospital; and about $4.5 million for Mount St. Mary's Hospital in Lewiston.
"The CMS proposed rule change would have a tremendous positive impact on Catholic Health," Catholic Health President and CEO Mark Sullivan said in a statement. "The Majority Leader has been an unmatched champion for hospitals as we continue to recover from the pandemic and subsequent workforce shortages."
Erie County Medical Center
Erie County Medical Center logged an operating loss of about $71 million on revenue of nearly $661 million last year, according to its annual report.
Feeding into those results was operating revenue that declined more than $28 million from 2021, while operating expenses increased almost $53 million.
So an extra $17.5 million from the CMS proposed rule change, as projected by Schumer's office, would provide a boost.
"We greatly appreciate Sen. Schumer's advocacy for this CMS Medicare Wage Index rule change, which will correct a longstanding inequitable Medicare reimbursement for ECMC," spokesperson Peter Cutler said, adding that more work needs to be done to stabilize safety-net hospitals across the country.
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