City Hospitals Fight To Block 'Devastating' Medicaid Changes

New York City's public and private hospitals stand to lose more than $1 billion in funding under proposed changes to federal Medicaid regulations, according to a report by the city's Independent Budget Office.

Under the new rules, the city's private hospitals would lose $790 million in federal and state Medicaid funding, according to the report published yesterday, and the city's public hospital system, the Health and Hospitals Corp., would lose $390 million, or about 7.5% of the system's annual budget.

According to the report, the cuts stem from the elimination of funding for graduate medical education. Observers said the change would have a disproportionate impact on New York hospitals because of the large number of teaching hospitals in the city. Of 107,000 medical residents nationwide, 16,500 are in New York.

According to the report, individual hospitals would fare worse, depending on how much funding they receive for graduate medical education. In 2006, Lincoln Memorial Hospital in the Bronx received $52.1 million in funding, representing 14.8% of the hospital's annual revenue.

"An abrupt termination of Medicaid GME payments could cause severe disruptions to the finances of both public and voluntary hospitals, to patient care, and to the city's economy," the report said.

Hospital officials also predicted that the changes, which could go into effect May 25, would have a profound impact on the way hospitals are run. "There is no way you can cope with those kinds of revenue losses without shutting down, dismantling major pieces of your operation," the president of the Greater New York Hospital Association, Kenneth Raske, said. "We are working desperately to stop it."

In a statement, the president of HHC, Alan Aviles, said that last year, HHC relied on the funding to train 2,500 medical residents and to treat 400,000 uninsured patients. "If these regulations are allowed to go into effect, the damage to both aspects of our mission would be devastating," he said.

Last month, the House passed a bill to extend a moratorium on the proposed changes, but President Bush said he would veto the legislation. In testimony last week before the House Oversight and Government Reform Committee, Mr. Bush's health and human services secretary, Michael Leavitt, said the new Medicaid rules are needed "to restore greater accountability to the Medicaid program."