Fed Dollars for NY Hospitals Occasionally Go to Wrong Hospitals: Study

New York’s hospitals gets hundreds of millions of dollars from the federal government to pay for health care for the uninsured and under-insured — but a new study that suggests much of that money doesn’t go to the right hospitals, with the most non-paying customers.

The $395 million in so-called "Charity Care" New York gets from Washington, D.C., helps off-set deep financial losses hospitals suffer when they provide medical services for which they otherwise wouldn’t get paid.

But professor Alan Sager, from Boston University’s School of Public Health, said a complicated state formula directs a large share of that money to hospitals that don’t provide all that much free service to the uninsured.

“If one hospital provides four times as much charity care as another hospital, it may need more than four times as much money, because if a hospital provides just a little charity care, it may not need to hire additional nurses and doctors and other care-givers,” said Sager, who did the study for the Commission for the Public’s Health Service, or CPHS, a watchdog group.

He said a more just and effective way to distribute money from the Hospital Charity Care Pool would be to make the formula more closely follow individual patients.

The Greater New York Hospital Association, or GNYHA, said the current formula works better than what Sager proposes because it offers a greater allowance for under-insured patients — people who have insurance, but also have high out-of-pocket expenses they can’t pay – in addition to the uninsured.

“In light of the growing high-deductible plans and consumer-directed plans that tend to shift the cost of care to the consumers, many individuals cannot afford to pay their co-pays and deductibles,” said Elisabeth Wynn, a GNYHA official. “So, we think from a policy perspective that the [Charity Care] Pool recognizes that — especially for low-income individuals.”

But Judy Wessler, from CPHS, said that approach doesn't take into account the changing reality in Washington: the Affordable Care Act focuses on the uninsured, not the under-insured.

If New York doesn't alter its current formula, she said, it could risk losing a crucial stream of money for struggling hospitals.