Editorial — A win for health care: Schumer helps change reimbursement formula for hospitals

“This is some of the greatest news for upstate New York hospitals,” Schumer said, according to a story published May 5 by the Watertown Daily Times. “We have been able to readjust the so-called Medicare formula.”

This readjustment will result in hospitals being reimbursed for costs they incur today rather than a few decades ago. It will add millions of dollars to their revenue streams.

“The federal program uses the Medicare Wage Index — ‘how much it costs to hire somebody’ — for each metro area to calculate what percentage of the national average health care labor costs a hospital will get back from [the Centers for Medicare and Medicaid Services] of the amount of money paid to personnel treating Medicare patients. But the formula used to determine the index did not, according to Mr. Schumer, give an accurate picture of those hiring costs for upstate medical facilities,” the article reported. “Using the Albany area as an example, Mr. Schumer said hospitals there have been receiving 86% of the national average every year since the 1980s, ‘which is not reflective of the true wages and labor market in Albany.’ Using the new formula, wage reimbursements for Albany-area hospitals will instead be based on 122% of the national average beginning in fiscal year 2024. Statewide, Mr. Schumer said the change is expected to increase reimbursements by about $967 million annually for upstate hospitals including about $41.7 million for those in the north country region. Four hospitals in the tri-county area are among those that will benefit: Samaritan Medical Center, $7.5 million; Claxton-Hepburn Medical Center, $7.2 million; Canton-Potsdam Hospital, $5.5 million; and Massena Hospital, $1.5 million. The University of Vermont Health Network’s Champlain Valley Physicians Hospital in Plattsburgh and Alice Hyde Medical Center in Malone are expected to receive about $10.8 million and $4.3 million more, respectively, while a roughly $4.9 million increase in annual reimbursements has been calculated for Adirondack Medical Center in Saranac Lake.”

Hospitals in rural areas have confronted strained budgets for years. This change will be welcome news to local facilities.

“[Schumer] said Medicare released the tentative formula last month and although there may be some small changes, ‘the odds are overwhelmingly positive that it will be adopted in August’ after the review process is complete,” according to the story. “Because this is an internal rule change for CMS, no congressional action is needed. The formula change does not impact all hospitals in the area or state, just those that have been under-reimbursed because of the index calculations.”

This is a real plus for the local hospitals that were not adequately reimbursed under the formula that’s been used for decades. The additional funds will mitigate some of the financial losses they experienced due to other problems.

Schumer has once again stepped up to advocate for the concerns of upstate residents and organizations. We commend him for persisting with this issue for years and seeing it through to a successful completion.