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Memorandum of Support

Empire Justice Memo of Support: Support Transparency and Accountability in Charity Care Funding

A.2844 (Gottfried)

Since 1983, New York State has had a pool of funds available to pay for hospital care for the uninsured.  This funding, often referred to as the charity care funding, includes federal Disproportionate Share Hospital (DSH) dollars that New York receives as a match for state dollars and has been a critical source of support for safety net hospitals providing care to low income, uninsured New Yorkers. 

However, the allocation method for the pool is very complex and does not depend on hospitals showing they actually provided care for an uninsured patient.  Efforts have been made over a period of years to make the use of charity care funding more accountable.  This year, if the charity care allocation methodology does not change, New York could lose hundreds of millions in federal DSH funding.  The Affordable Care Act (Obama Care) requires that DSH dollars be used to pay for the care of the uninsured and be targeted to high Medicaid population hospitals.  The law is clear in saying the funds cannot be used to pay for Bad Debt, which is, in part, what New York State has been funding.

New York must change the way it funds hospitals for care of the uninsured.  The Governor has proposed a new allocation formula which follows the new federal requirement by focusing funding on the uninsured and targeting additional dollars to hospitals with high Medicaid populations.  A.2844 strengthens the Governor’s legislative language in several important ways.  This bill:

  • Strikes a balance between the need for a transition to the new funding and the need to ensure compliance with federal law by providing a two-year transition to the new allocation methodology;
  • Ensures transparency by requiring annual reports on the impact of the new payment allocation method on safety net providers (including rural and public hospitals) and access to care.

Empire Justice Center strongly supports A. 2844, which has been incorporated into the Assembly’s Article VII bill at Part C, Section 1.