The Fray: Schumer, NY House members protest potential Medicare cuts to NY hospitals

Jul. 7--Sen. Charles Schumer and New York representatives from both parties are opposing a Trump administration proposal to cut Medicare payments to hospitals in expensive states like New York and divert the funds to those in areas with the lowest incomes.

The Senate's Democratic minority announced Monday with two congressmen -- Lee Zeldin, a Long Island Republican, and Brian Higgins, a Buffalo-area Democrat -- that they were leading opposition by New York's entire congressional delegation to the proposed change in what is known as Medicare's area wage index. The Center for Medicare and Medicaid Services wants to cut funding for hospitals in the top quarter of wages and divert it those in the lowest quarter, effectively transferring federal money to rural states.

New York's hospitals stand to lose $53 million a year, they said.

Schumer noted in a statement that New York hospitals often operate "on a razor-thin budget margin" and need adequate funding to attract doctors to a high-cost state.

"The struggles faced by New York's hospitals are no different from the struggles faced by the countless others across the nation," Shumer said. "They must not be allowed to suffer as a result of their zip code."

Zeldin called CMS's proposal "short-sighted" and urged it to "reverse course and take action that helps our communities' hospitals instead of crippling them."

Schumer, Sen. Kirsten Gillibrand and all 27 House members from New York signed a letter to Seema Verma, the CMS administrator, opposing the proposed funding shift.

"CMS argues that its proposed changes to AWI seek to help rural hospitals, yet, not one of New York's rural hospitals -- who face the same fiscal challenges as rural hospitals across the nation -- would see a benefit from the policy," the letter reads. "Rather, states like New York with many hospitals that have legitimately high wages commensurate with market competition will be forced to transfer hundreds of millions in Medicare funding to a small handful of states."

Critics cast the proposal as a deliberate slight against New York, much as the capping of the state and local tax deduction in 2017 was rebuked as a snub against New York and other Democratic-leaning states.

"The area wage index proposal is a direct attack on New York that seeks to redistribute precious Medicare resources from New York to other states," Bea Grause, president of the Healthcare Association of New York State, said in the statement released by Schumer's office.

Bill tightens oversight of pharmacy benefit managers

A bill passed by state lawmakers in Albany in the final days of the legislative session last month echoed the findings of an investigation by a committee led by Sen. James Skoufis into the opaque practices of pharmacy benefit managers, the middlemen in the prescription-drug industry.

A couple weeks before the Senate and Assembly passed the bill, the Senate Investigations and Government Operations Committee released a 67-page report declaring too little state oversight of pharmacy benefit managers and too little transparency about how they operate, including their use of "spread pricing" -- the gap between what they charge health insurers and what they pay pharmacies for drugs -- to run up their profits.

"Every single day in this state, someone is forced to choose between buying medication that they need and buying groceries for the week," Skoufis, a Woodbury Democrat and chairman of the committee, said in a statement then. "This is an atrocity and a failure of government oversight. Price hiking has plagued consumers for decades and we are currently at a point where it has gotten out of control."

The ensuing legislation was passed by the Senate by 49-13 on June 17 and by the Assembly by 147-0 on June 20. Among other things, the bill -- if signed by Gov. Andrew Cuomo -- will require pharmacy benefit managers to register with the state and disclose their "spread pricing" and any rebates or other savings they receive, which must be passed on to the health plans.

The Pharmacists Society of the State of New York praised the legislation, calling it "the toughest bill passed to date in the U.S. regulating PBMs."

The report by the Senate investigations committee last month was its first since Skoufis took office and became its chairman in January, promising a more aggressive watchdog role for what had been a toothless panel.

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