WASHINGTON – Federal bureaucrats tinkering with the geographic boundaries of Medicare reimbursement areas could cost New York City hospitals tens of millions of dollars beginning next year, according to city hospitals and members of Congress.

Eighty New York hospitals stand to lose about $65 million next year and $700 million over the next 10 years under a proposal that would change the way the city’s Medicare reimbursements are calculated.

Medicare reimbursements account for more than a third of hospital revenues on average, and the financial losses are likely to affect all patient care, according to the Greater New York Hospital Association.

All 29 New York representatives from both parties argued that the proposed changes “would have an extraordinary adverse impact” on New York hospitals, according to their letter to Mark McLellan, the administrator of the Centers for Medicare and Medicaid Services (CMS), which has proposed the change.

The changed formula will also affect hospital outpatient care, rehabilitation, nursing, hospices, and home care, they say.

The proposal would add three northern New Jersey counties to the geographic area used to calculate average hospital wage costs that determine federal reimbursement rates. Because the New Jersey counties’ wage costs are 14% lower than those in New York, the move would reduce the average reimbursement rate for the city.

“By lumping areas in New Jersey where the standard of living is light years different with us here in New York, our hospitals and our Medicare recipients will suffer enormously. I hope Administrator McClellan will come to understand that logic,” said Rep. Carolyn Maloney, a New York Democrat.

The proposal will “distort” the costs of health care labor in New York City, said Rep. Charles Rangel, also a Democrat of New York.

“It is especially upsetting because it will cost New York City hospitals at a time when it is becoming harder and harder for them to provide care to all, including the needy,” Mr. Rangel said.

Governor Pataki and Senators Schumer and Clinton have also written to the administration expressing their concern, as has the Partnership for New York City, which represents more than 40 Fortune 500 corporations, and the Association for a Better New York.

The agency, which is part of the Department of Health and Human Services, is expected to review the comments and may consider revising the rule. It will publish its final proposal in August, and it could take effect in October.

A spokeswoman said she could not comment publicly on letters from members of Congress.

The proposal grew out of a decision by the Office of Management and Budget to redraw so-called Metropolitan Statistical Areas after the 2000 census.

For the past 20 years, the city has been grouped together with Westchester, Rockland, and Putnam counties in one such statistical area, which was then used for the purpose of setting a common hospital wage level and Medicare reimbursement rate.

The OMB’s reasons for grouping northern New Jersey together with New York were not specifically related to health care costs. The OMB did not return calls for further explanation of the reasons for the change.

The congressional letter points out that the General Accounting Office has recommended that federal agencies carefully consider whether the geographical regions make sense for their particular programs, and to amend them if they do not.

“I don’t think when they put this out, they were necessarily looking at our area and trying to do anything specific on New York, but this happens to be the impact it has on us. We hope that now we have pointed it out, they will change it,” said the Greater New York Hospital Association’s vice president for governmental affairs, David Rich.

He said the changes would lead to job losses and cutbacks to care.

“There is no such thing as a Medicare nurse or doctor. It will have a negative impact on hospital care in general,” he said.

According to the association, wage costs in New York City hospitals are 36% above the national average. In the three counties, they are 17% above the average. Combining the two would make the average for the new region 33% above the national average.

A spokesperson for the New Jersey Hospitals Association could not be reached for immediate comment yesterday.

The Greater New York Hospital Association has urged the CMS to completely overhaul its nationwide system for setting reimbursement rates. An improved system would reflect gradually decreasing costs as hospitals move further away from large urban centers, rather than creating steep “cliffs” of discrepancy, such the one that exists between New York and northern New Jersey, Mr. Rich said.

“We are not trying to hurt the New Jersey hospitals in any way,” he said.