Cuomo health bill 'assesses' hospitals

ALBANY -- Buried in Gov. Andrew M. Cuomo's health care appropriation bill is a new $170-million "assessment" on hospitals, which the institutions accepted quietly in exchange for limiting damages in medical malpractice lawsuits.

The Cuomo administration, which vowed to close a $10-billion budget gap without raising taxes, did not use the word "tax," instead calling it a "quality contribution."

The bill, part of sprawling health care package not yet approved by the legislature, would authorize the state to take 0.3 percent of inpatient revenue at all general hospitals, including those on Long Island. If revenue falls short of or exceeds $170 million at these hospitals, the assessment could be reduced or increased.

Hospitals say they will reap much more than they will pay out for the assessment. That's because as part of the deal with Cuomo, they'll be relieved of about $384 million annually in insurance premiums due to a proposed $250,000 cap on pain and suffering damages for victims of medical negligence.

"Malpractice reform is such a welcome relief; the hospitals are willing to go along with this," said Kevin Dahill, president of the Nassau-Suffolk Hospital Council.

Billed as "savings" rather than new revenue, the assessment represents one of many accounting maneuvers the administration has used to close the deficit.

Jason Helgerson, state Medicaid director, while calling the new hospital payment an "assessment," said it's actually booked as savings because it helps the administration close the budget gap. "It's savings to us in the sense that there are less state tax dollars that have to go to the hospitals," said Helgerson.

The bill also sets up a fund for children injured at birth, saving hospitals another $384 million a year.

But the malpractice changes appear to be contributing to a budding budget fight. On one side are trial attorneys, a powerful interest in the Democrat-controlled Assembly. On the other are hospitals, which are running ads in support of Cuomo's bill.

Helgerson said the hospitals chose the assessment instead of cuts in state reimbursement rates, because rate cuts cost hospitals more.But, in the arcane world of public health care -- where money flows in from multiple places and can be swapped in complex accounting schemes -- it's not clear how much the state would reap.

The hospital assessment money goes into the stand-alone Health Care Reform Act fund, from which $100 million will be taken to set up the injured infant fund. The infant fund then helps Medicaid, a separate program, save $40 million, Helgerson said.