News Summary
The Trump administration’s proposed rule could lower Medicare rates for drugs at hospital-operated clinics, resulting in a projected $40 million loss for New York hospitals. Advocates express concern over financial strains as hospitals face challenges in treating high-acuity patients. The rule seeks to align drug pricing with physician practices, altering previous policies that allowed higher charges. Further state legislation is also being discussed to implement site-neutral payments, potentially saving New Yorkers $1 billion annually. The implications of these changes could reshape the healthcare funding landscape in New York.
New York City – The Trump Administration has proposed a rule that aims to lower Medicare rates for drugs administered at hospital-operated clinics, potentially leading to significant financial strains on healthcare providers in New York. If enacted, this new regulation is projected to result in a $40 million loss for hospitals across the state in the upcoming year.
The proposed rule seeks to align the drug pricing at off-site clinics operated by hospitals with the rates charged by traditional physician practices for the same medications. This change comes from the Centers for Medicare and Medicaid Services (CMS) and marks a notable shift from an Obama-era policy that allowed hospitals to charge higher prices for drugs used in treatments at offsite facilities such as chemotherapy clinics.
The Greater New York Hospital Association (GNYHA), which represents the interests of New York’s health systems, expressed strong concerns regarding the proposal in a letter sent to hospital CEOs. As a significant advocate for the state’s hospitals, GNYHA emphasized that the higher fees hospitals currently receive are crucial for covering their overhead costs. They argue that off-site clinics typically cater to a higher acuity of patients, which necessitates additional resources and financing.
According to CMS’s estimates, the implementation of this new rule could lead to total savings of around $280 million, which includes $210 million in lower Medicare spending and an additional $70 million affecting patient expenses. However, these financial benefits come at the potential cost to hospitals within the state, which have already faced ongoing financial challenges.
The repercussions of such cuts echo previous attempts by GNYHA to prevent reductions in Medicaid funding as part of a reconciliation package signed by President Trump earlier this year. Healthcare administrators are concerned that the proposed cuts would further exacerbate the financial difficulties many hospitals already face.
Healthcare leaders argue that the ability to charge higher rates for drugs is necessary for their operational stability. They point to the complexities and demands of treating sicker patients and maintaining the facilities necessary for outpatient services. Furthermore, there is an ongoing concern that current pricing incentivizes hospitals to invest in outpatient facilities excessively, rather than focusing on the critical clinical needs of their patient population.
Alongside this federal proposal, state-level legislation in Albany is being considered that would implement site-neutral payments. This legislation could save New Yorkers approximately $1 billion annually, highlighting the interconnectedness of healthcare funding discussions at both state and federal levels. Additionally, CMS is inviting public feedback on the possibility of expanding site-neutral payment policies to include on-campus clinics, further stirring debate among hospital administrators and policymakers.
The potential financial implications for New York hospitals have been underscored by GNYHA President Kenneth Raske’s assertion that further cuts could lead to serious consequences for healthcare providers unable to absorb any additional losses.
This proposed rule by the Trump administration represents part of a broader strategy intended to manage spiraling healthcare costs, a concern that has drawn criticism from various stakeholders within the industry. As discussions continue, the healthcare landscape in New York could experience notable changes depending on the outcomes of both federal and state-level initiatives aimed at reshaping drug pricing and healthcare funding mechanisms.
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Additional Resources
- The New York Times: Health Insurance Prescription Claim Denials
- Wikipedia: Medicare
- CNBC: Trump Previews Next Medicare Drug Price Negotiations
- Google Search: Medicare drug prices
- Newsweek: Trump Vows to Reduce Prescription Drug Costs by 80 Percent
- Google Scholar: Trump prescription drug pricing
- The New York Times: Trump Executive Order on Prescription Drug Pricing
- Encyclopedia Britannica: Prescription Drug
Author: STAFF HERE NEW YORK WRITER
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
