During testimony on the state budget last week, a hospital industry official made an attention-grabbing but misleading claim – that New York’s Medicaid payments to providers are “the worst in the United States.”

“A professor from Cornell came up with that observation, that looking at all 51 jurisdictions, that New York was the lowest,” Kenneth Raske of the Greater New York Hospital Association (GNYHA) told lawmakers

It turns out, however, that the statistic in question originally came from a report published 22 years ago, in June 2001. The report’s analysis focused on Medicaid fees for physicians and dentists, not the hospitals which Raske represents. And it was produced by a consulting firm on behalf of a California-based foundation, with no connection to Cornell.

In other words, the statistic had nothing to do with New York’s current Medicaid program or its payments to hospitals – which by some measures are higher than average. Raske did not mention these caveats during his testimony.

When asked by Queens Assemblyman David Weprin for the basis of his “worst in the United States” claim, Raske said he had learned it during a Feb. 24 webinar organized by City & State magazine. 

The webinar, titled “Closing the Medicaid Coverage Gap,” was sponsored by GNYHA, the health-care workers union 1199 SEIU and the Healthcare Education Project, an advocacy group jointly funded by the hospital association and the union. Raske and GNYHA’s executive vice president, David Rich, served as co-hosts and moderators.

One of the featured speakers at the event was Jamila Michener, associate professor of government at Cornell University and co-director of its Center for Health Equity. Michener’s presentation highlighted the fact that Medicaid – a safety-net health plan for the low-income and disabled – generally pays lower fees than other forms of insurance.

One of her tables showed that New York had a “state reimbursement ranking” of 51, meaning its Medicaid fees were the lowest among the 50 states and the District of Columbia. She did not cite a source for this statistic during the webinar.

However, the same reimbursement rankings were cited in a 2022 blog post which Michener co-authored for the Commonwealth Fund. That post attributed the rankings to a 2001 study prepared by the Lewin Group, a consulting firm, under commission from the California Health Care Foundation‘s Medi-Cal Policy Institute, which studies that state’s version of Medicaid.

As made clear by its title, “Comparing Physician and Dentist Fees Among Medicaid Programs,” the report focused on reimbursements for doctors and dentists, which California had hiked the year before. It included no analysis of fees for hospitals or other institutional providers – and therefore shed no light on the adequacy of New York’s hospital payments at the time, much less two decades years later.

Still, Raske emphasized this out-of-date and out-of-context ranking in both his oral testimony and a slide deck he submitted to the Legislature. On a page about hospital reimbursement, the deck said “NY ranks 51st in US in Medicaid payment adequacy,” and footnoted the claim to Michener and the City & State webinar.

More recent and relevant information tells a different story.

A 2017 study from the federal Medicaid and CHIP Payment and Access Commission – based on data from 2010 – found that New York’s hospital inpatient fees were slightly higher than the national average. 

A review of hospital financial reports for 2021 shows that New York’s Medicaid program paid an average of 64 percent of hospitals’ declared costs – the second-lowest ratio of any state, just ahead of Vermont. However, this appears to be driven by unusually high costs rather than low payments.

Another basis for comparison is Medicaid hospital spending per enrollee, which the Empire Center calculated using National Health Expenditure data and enrollment figures from the Centers for Medicare & Medicaid Services. In 2020, New York’s Medicaid program spent almost $3,800 per enrollee on hospital care – the 11th highest amount in the U.S. and 16 percent above the national average.

By contrast, New York’s per-enrollee spending on physician and clinical services was 30th highest in the U.S., and its per-enrollee spending on dental services ranked 45th.

Overall, New York’s Medicaid program spent almost $3,700 per capita in federal fiscal year 2021, the highest of any state, excluding the District of Columbia. The state’s per capita hospital spending from all sources in 2020 (including Medicaid, Medicare and commercial insurance) was fourth-highest in the U.S. at $5,500.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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