New York Assembly Democrats last week offered an alternative to Republican Gov. George Pataki's hospital deregulation plan, one that hospitals find far more palatable.
But insurers say it serves as a crutch for hospitals that won't negotiate competitive rates.
The plan unveiled by Assembly Speaker Sheldon Silver (D-Manhattan) preserves existing charity-care funding levels and maintains 85% of current graduate medical education subsidies. It would generate $760 million in subsidies to hospitals that care for the uninsured, compared with $500 million under the governor's proposal. It also would guarantee $1.7 billion in GME funding, compared with $295 million under Pataki's plan.
The dueling payment plans are vying to replace the state's current hospital inpatient rate-setting system, which expires June 30.
Under the Assembly plan, all payers would be allowed to negotiate rates with hospitals if they agreed to make payments to a statewide pool. The pool would subsidize work in the public interest, such as care for the uninsured, medical education and primary-care development.
Payers that refuse to contribute to the statewide pool would not be allowed to negotiate rates freely. They would pay a state-established rate, which presumably would be higher than what payers could negotiate on their own.
"We are very pleased about the financing vehicle that (the Assembly) has selected," said Kenneth E. Raske, president of the Greater New York Hospital Association. The hospital group opposes Pataki's plan to fund such public goods through a 9% tax on non-Medicare payers. Raske also commended the assembly for proposing to fund public goods at levels that are "significantly superior" to the governor's proposal.
But payers see a loophole in the Assembly plan. Hospitals that decline to negotiate rates would presumably receive the state-established rate.
"We're pleased that the proposal endorses negotiated rates....but we're not in favor of the continuation of (the current rate-setting law) as a backup system," said Geoffrey Taylor, director of public policy and communications for the New York State Conference of Blue Cross and Blue Shield Plans.
New York Health Commissioner Barbara A. DeBuono, M.D., said the Assembly plan "gives only lip service to reforming the system by moving to negotiated rates." She said most payers will not choose to negotiate rates without knowing how big a tax will have to be paid.
Daniel Sisto, president of the Hospital Association of New York State, said he doesn't believe hospitals would refuse to negotiate. "That's the option not to have patients," he said.