More than two in three New York City hospitals will be penalized by federal health authorities for falling short of standards of care for elderly patients enrolled in Medicare.

Twenty-six hospitals in all five boroughs are collectively set to lose millions of dollars in federal funding under the Hospital Value-Based Purchasing program, established by the Affordable Care Act to give hospitals financial incentives to strive for quality services.

Another 10 hospitals in the city will get bonus funds through the program for good performance. The Centers for Medicare and Medicaid Services announced awards and penalties for 2014 this month.



In New York City, the worst-performing hospital is the ailing Interfaith Medical Center in Brooklyn. The 287-bed Bedford-Stuyvesant facility is already on life support, with mediation underway to salvage it from bankruptcy.

Interfaith will forfeit 0.8 percent of its Medicare payments for the current fiscal year, which ends in September 2014. That’s twice as big as the penalty the institution received last year, the first for the incentive program.

The new penalty will be deducted from Medicare billing payments and will likely amount to hundreds of thousands of dollars for Interfaith, if past Medicare billing is a guide.

The pain will also be felt acutely in the city’s public hospitals, all but one of which was penalized. Last year, according to the New York City Independent Budget Office, New York City’s Health and Hospitals Corporation’s facilities anticipated $777 million in Medicare revenue for 2013. Collectively, their penalties could cost the city millions of dollars in federal funds.

Brooklyn’s hospitals also fared poorly: 10 out of the 13 institutions there will see reduced Medicare payments.

New York University Langone Medical Center, in Manhattan, was New York City’s top-performing hospital in this year’s round, and will be rewarded with a 0.5 percent increase in its Medicare funding, potentially worth more than $1.6 million to the hospital.

As a whole, New York City hospitals are doing better this year than last, when more than three in four local hospitals received penalties from the federal program. Still, the net penalty for city hospitals, 0.15 percent, is significantly higher than the national average of 0.03 percent. Statewide, New York hospitals are being penalized a net 0.17 percent of Medicare funding.

The quality incentive program follows a carrot-and-stick principle: the Centers for Medicare and Medicaid Services pools 1.25 percent of the value of its annual payments into a $1.1 billion pot, and redistributes it unevenly to hospitals nationwide depending on performance. Hospitals are evaluated on measures that range from clinical procedures to mortality rates and satisfaction among their Medicare patients. Improvement compared to the last evaluation is also rewarded. Winners receive bonus funds, while losers get penalized on their Medicare payments, up to 1.25 percent of a hospital’s Medicare income.

The new data underscores predictions of early critics of the value-based purchasing program who cautioned that it would disproportionately penalize medical centers that serve poor communities and uniquely unhealthy populations — so-called “safety net hospitals.”

Citywide, hospitals classified as safety nets by the Commission on the Public’s Health System, a New York City advocacy group, will lose on average more Medicare funding than others: .28 percent compared to .02 percent.

Anthony Feliciano, director of the nonprofit commission, said that for all its positive impact on health services, the quality incentive program was the “wrong policy move.”

“On the one hand it may improve the hospitals’ preventive and primary care because they have to meet those benchmarks,” he said. “But then at the same they’re going to still have a population that tends to be sicker and to get penalized because of the population they serve.”

At Interfaith Medical Center, spokesperson Melissa Krantz pointed to the institution’s safety-net status as a factor in its penalty for poor performance.

“We provide care to probably the largest percentages of patients who are government-subsidized by Medicaid and Medicare, certainly in the city, maybe even close to the state,” she said.

As for the low rating, she said, “I just think you have to put that aside right now because there’s just so much going on for us.”

Additional reporting by Curtis Skinner