In the latest salvo in an ongoing battle between New York state and New York City officials over disproportionate share hospital (DSH) payments, city officials announced they will sue the state for the funds.
Stanley Brezenoff, the interim president for NYC Health + Hospitals, wrote a letter (PDF) to Gov. Andrew Cuomo last week, saying that without receiving about $380 million in DSH payments, the system would face significant cash flow issues within a matter of weeks.
Brezenoff said during a press briefing Friday that the system has about two weeks' worth of cash on hand. In the letter, he said that the system expected to receive the majority of DSH payments months ago, and fully by Sept. 30.
"Regrettably, our efforts to encourage state officials to allow the flow of these funds, which represent federal and city funds, have been unsuccessful," Brezenoff wrote in the letter. "The fact that the state has no financial stake in these payments only adds to the mystery of these delayed payments."
Freddi Goldstein, deputy press secretary for NYC Mayor Bill de Blasio, announced that the city intended to sue for the payments in a Twitter post late Thursday. Goldstein, Brezenoff and Dean Fuleihan, director of the city's Office of Management and Budget, spoke further about the lawsuit and the health system's financial woes at the briefing.
The State is stealing from the most vulnerable New Yorkers & their hospitals. We can’t stand for that, so we’re going to sue.
— Freddi Goldstein (@freddi0303) October 5, 2017
Goldstein said the city would be filing suit next week to recover the payments. The legal argument for the suit, she said, is that the state is merely acting as a conduit for federal funds already allocated for Health + Hospitals, so there's no reason the payments shouldn't have been made already.
Fuleihan noted that other state hospitals and health systems, except for SUNY Downstate Medical Center in Brooklyn, have already received their DSH payments for this fiscal year. NYC Health + Hospitals' patient population is 40% Medicaid enrollees and 25% uninsured, so the funds were already designated to cover services rendered to those patients, he said.
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Brezenoff said that hospital officials have begun discussions on ways to reduce spending and cut costs while they wait for the payments. In a memo sent to staff and obtained by The Wall Street Journal, Brezenoff said he would fill just a quarter of the between 250 and 300 jobs that become available each month at the system to conserve cash.
At the briefing, he said that failing to make payroll was "armegeddon" and that he was taking steps to avoid that possibility, including slowing payments to vendors. "I am slowing down to walk, to a crawl, payments to vendors," Brezenoff said.
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State officials deny that they are purposefully withholding money from the city's health system and instead blamed the Trump administration and federal government for cutting $2.6 billion in federal healthcare aid to New York, according to the WSJ.
“The suggestion that the state is somehow in a position to reverse federal cuts is willful political ignorance and a distortion of reality—only the federal government can possibly restore cuts they’ve enacted,” Jason Helgerson, New York state Medicaid director, told the publication.
NYC Health + Hospitals was already cash-strapped prior to missing the DSH payments, as FierceHealthcare has reported. The system faces a $1.8 billion budget gap in 2020, and de Blasio has proposed moving it from an inpatient to outpatient model.