Rate Regulation as a Policy Tool: Lessons From New York State

For over a decade, New York State has used hospital rate regulation (the New York Prospective Hospital Reimbursement Methodology [NYPHRM]) as a policy tool to achieve three objectives: containing costs, supporting financially stressed hospitals, and financing access to care for the uninsured. This case study of NYPHRM suggests that the regulatory approach, if pursued with vigor, can achieve any one of these goals. On the other hand, the New York experience also shows that these are competing goals, and that achieving all of them over a period of time can prove to be difficult.