A change in Medicaid funding for prescription drugs could cost New York safety net hospitals big in the state budget, industry groups warned state officials last week in a letter. 

Leading hospital associations in the state are urging the Department of Health and Governor Andrew Cuomo to reverse the provision, which switches the Medicaid pharmacy benefit from Medicaid managed care to fee-for-service. 

This, in turn, will lead to New York's safety net, or 340B hospitals, to be reimbursed for the drugs at cost, meaning they can no longer draw down the cost of those when purchasing them. 

"This is a significant loss coming at the worst possible time for our safety net hospitals and their communities," the groups wrote in the letter. 

It's estimated that around 100 hospitals will lose $87 million next year due to the change in funding policy. On top of that, hospitals are losing millions of dollars amid the response to the coronavirus pandemic. 

Savings from the current prescription drug pricing plan are reinvested into the hostpials, the groups said. 

"If allowed to stand, this massive policy and operational shift will jeopardize the solvency of critical health care services and programs for vulnerable and low-income populations currently benefiting from the investments made by hospitals using 340B savings," the groups wrote in the letter. 

A half-dozen hospital groups are backing the reversal in the policy, including the Healthcare Association of New York, the Greater New York Hospital Association, and the Suburban Hospital Alliance.