Federal cuts to cost LI hospitals $170M, Schumer says

Sen. Chuck Schumer and Long Island hospital executives said Thursday that a reimbursement cut for discount prescription drugs would cost Long Island hospitals $170 million over 10 years, as Democrats campaigned on health care protections just days before the midterm elections.

Schumer, at a news conference at Long Island Jewish Medical Center in New Hyde Park, called on the Centers for Medicaid and Medicare to restore the 28.5 percent cuts that were implemented on Jan. 1 under what is known as the 340B program.

"There's an under-the-radar federal funding cut that's going to hurt the ability to deliver health care that these institutions have done so well," Schumer said. "This federal program helps lessen the burden of costly drugs that patients can’t always afford, but hospitals must always provide.”

The program allows hospitals to purchase drugs for the poor at a 20 to 50 percent discount, but still get reimbursed the full price for those drugs by the federal government. In an example used by Schumer, if a drug cost $100, the hospital would pay the pharmaceutical company $60, but would be reimbursed the full $100.

Health and Human Services Secretary Alex Azar this summer said the price gap between what entities paid and compensation they received "had grown too wide."

"The new payment level is still above the average price actually paid by 340B entities, but it is closer to reality. Importantly, it will help many seniors pay less for their drugs, avoiding situations where they may have owed more in cost-sharing than the provider paid for a drug," Azar said in a July speech to health care groups, which a Centers for Medicare and Medicaid Services spokesman pointed to.

Pharmacy groups also supported the reimbursement change.

"The program has strayed from its original intent of ensuring needy patients have access to affordable medicines, instead driving distortions in the health care marketplace that are increasing patient costs," said Nicole S. Longo, director of public affairs for the Washington, D.C.-based trade group Pharmaceutical Research and Manufacturers of America.

But health care executives on Thursday said the cut would hurt their ability to provide services.

Michael Dowling, president and CEO of Northwell Health, said in a statement: "As a not-for-profit health system dedicated to helping those in need — regardless of their financial or health status — any cut to the life-saving 340B Drug Pricing Program is a painful one."

The cut to Northwell's Long Island Jewish Medical Center over 10 years would be $127 million.

Northwell said its annual revenue would be nearly $12 billion in 2018. But as a nonprofit, the health care system said, it reinvests nearly all its revenue into operations, including the communities it serves.

"We spend about $1 billion per year on community benefit and every revenue stream matters," said Onisis Stefas, Northwell's chief pharmacy officer. "We do a lot of outreach to help people who are uninsured or under insured." 

 Northwell has been in aggressive expansion mode. In the last two years, it's taken over regional hospitals such as Peconic Bay Medical Center in Riverhead and John T. Mather Memorial Hospital in Port Jefferson. It has also expanded its physicians group on Long Island, and opened a $46.5 million cancer center in Bay Shore. Northwell is the largest private employer in New York, with 66,000 employees. 

Outside of Northwell, other Long Island hospitals would be affected. Stony Brook University Hospital would see a $42.8 million cut over 10 years. Nassau University Medical Center in East Meadow will see a $725,000 cut. 

Also on Thursday, New York's other Democratic senator, Kirsten Gillibrand, was in Amityville announcing legislation that would allow New York State to expand access to state health care coverage. The bill would expand access to the Basic Health Program from those earning up to $24,280 a year to those making $48,560.

Democrats in midterm races have highlighted health care as a top issue and what they call Republican efforts to roll back protections for things like pre-existing condition coverages. Republicans have said that their plans would keep most of those protections in place.

With David Reich-Hale

By David M. Schwartz

dschwar1@newsday.comschwartznewsNY

David Schwartz covers environmental issues. A native Long Islander, he's worked at Newsday since 2013.