New law could save New York USD 2B in health costs

New York is closer to making the city and its hospitals more accountable for soaring health care costs.

A new proposed local law would create a committee to monitor the city’s employee-related health care expenses and disclose prices for hospital procedures. The measure could come to a vote as early as next week and save New York $2 billion a year, according to its main sponsor, City Council member Julie Menin.

The Office of Healthcare Accountability would be the first of its kind for a US municipality, said Menin, noting that the city’s annual health-care costs for its employees and retirees have ballooned to an expected $11 billion this year from $6.3 billion in 2017 — accounting for more than 10% of its budget.

The measure comes as states across the nation push for hospitals to be more accountable for charity care — providing low-cost care to uninsured or under-insured patients — and call for greater transparency.

“This bill is so incredibly important because it finally will allow a real savings in terms of driving down health care costs, which simply are unsustainable right now,” said Menin, a former consumer-affairs commissioner who represents a portion of Manhattan’s east side. She expects the bill to be approved with 42 of the council’s 51 members listed as sponsors.

The office will create a public website that provides information on the wide-ranging pricing for common procedures. For example, a colonoscopy at one of the city’s private hospitals can cost around $10,000, she said, compared to about $2,000 at a municipal facility.

Though Bill Hammond, senior fellow for health policy at Albany think tank Empire Center for Public Policy, said Menin’s $2 billion savings estimate is on the high end, he supports the bill.

The city is not receiving a level of care commensurate with its spending, Hammond said. The US leads the world in per-capita spending on health care, and New York state leads the country, he said.

“New York City probably spends more per capita than the rest of the state,” he said in an interview. “We don’t get the best quality that you might expect from the level of spending.”

Nationwide, state and local spending on health care and hospitals soared to about $1,041 on a per-capita basis in 2020 from about $115 in 1978, according to calculations based on US Census Bureau data compiled by the Urban Institute.

Opponents of Menin’s bill say it’s duplicative of a 2021 federal law that requires hospitals to disclose pricing information. But some findings show only an estimated 6% in New York City fully abide, according to hearing testimony from Ilaria Santangelo of PatientRightsAdvocate.org.

David Rich, executive vice president of the Greater New York Hospital Association, disagrees. In a testimony, he pointed to federal data showing most hospitals comply with the pricing disclosure rule. The group declined to provide additional comment.

The measure also comes at a time when hospitals are struggling financially.

More than 75% of payments in New York City aren’t negotiated but are set by Medicare and Medicaid, Rich said. If hospitals received only Medicare-level reimbursement rates, “100% of our hospitals would need subsidies to survive,” he added.

However, a health-care think tank, Lown Institute, found that more than three quarters of the 1,773 nonprofit hospitals in the US it examined shortchanged communities by providing less charity care and investments than the value of their tax breaks. Its most recent Fair Share Spending report shows a total “fair share” deficit of $14.2 billion for those hospitals in 2020.

New York City-based NYU Langone Hospitals was among the top 25 hospitals with the largest deficit, receiving $173 million more in tax breaks than it spent on charity care and community investment, according to Lown.

Hospitals have disputed the findings and methodology. NYU Langone didn’t respond to a request for comment.

Menin said the new office would issue compliance grades and make sure the city’s private hospitals provide the charity care that their tax-exempt status is premised upon.

Bipartisan effort
Even red states like Ohio and Indiana have proposed cost caps and penalties for hospitals that don’t comply with transparency mandates. And a Republican-led Ways and Means subcommittee hearing last month probed whether hospitals were providing sufficient charity care and information about their practices.

When Colorado began gathering data, it learned it was among the top 10 states for highest hospital prices and profits, Nancy Dolson, special financing division director at Colorado’s Department of Health Care Policy & Financing, said in an interview.

Since then, it’s undertaken a variety of measures to lower costs, including a new law requiring more community involvement in and detailed reporting of hospitals’ community spending.

“All these efforts, if you will, are about improving health-care affordability and transparency, accountability, quality, with our hospital sector,” Dolson said. Bloomberg