Existing Medicaid Rates Do Not Cover The Cost Of Care For Marginalized Communities

Because safety net hospitals are chronically underfunded, they are forced to make tough choices about services and capacity for the low-income neighborhoods and communities of color they serve because of the low Medicaid reimbursement rates..

In New York, Medicaid covers only 61 cents for each dollar of care provided by hospitals for most services, and rates in Medicaid fall well below those in Medicare fee-for-service, which already do not cover the cost of care. Medicaid rates have not increased in 15 years, meaning they have persisted for nearly two decades despite being far outpaced by rising medical costs and inflation.

While other facilities can cross-subsidize low rates in Medicaid with commercial business, safety net hospitals see relatively few commercially-insured patients – typically less than 20 percent of the patient mix – and receive comparably lower rates due to our poor negotiating power with commercial payers.

The average commercial rates in the City as a whole are up to seven times higher than the average commercial and Medicaid managed care rates received by safety net hospitals.

This two-tier system has exacerbated longstanding disparities. Over time, this flawed system of reimbursement has somehow become “normal” or “acceptable” for these communities.