ALBANY — Numerous upstate hospitals are wrestling with fiscal shortfalls and staffing shortages that could be lessened by increasing Medicaid reimbursement rates that only pay for a portion of care that is delivered, according to an upstate hospital association.

“The cost of labor has just gone through the roof over the last few years,” Gary Fitzgerald, president and CEO of the Iroquois Healthcare Alliance, told CNHI.

Iroquois — an association representing 54 hospitals and health systems — has deployed representatives to meet with key lawmakers and members of Gov. Kathy Hochul’s staff as the Hochul administration prepares to release a proposed state budget next Wednesday.

It’s unknown whether Hochul will seek to adjust the current Medicaid reimbursement rates for health care facilities. But even if she doesn’t, lawmakers will have two months to make their own additions or subtractions to the state spending plan slated to go into effect April 1.

Iroquois is seeking a 25% increase in reimbursements for the health care program covering an estimated 30% of the state population. The nursing home industry has also been making its case for an increase in Medicaid reimbursements, arguing that a 20% boost is needed to help facilities that have seen a marked dip in occupancy rates and continue to struggle with staffing gaps over the past three years.

Hospitals have struggled to meet challenges filling openings for nurses and other medical specialties, Fitzgerald said.

“We can’t find the people, even though we’re paying more than we’ve ever paid before,” he added. In some cases. hospitals have scrambled to fill openings with staffers from temporary employment agencies, but the cost of lining up those workers has also skyrocketed, he said.

The staffing challenges at nursing homes has resulted in some patients remaining in hospitals longer than they need to be there, Fitzgerald said.

“When hospital beds are backed up, there are longer waits for the E.R. (emergency room) and the ambulances coming into the hospital get backed up,” he said. “The whole system is slowed down by the lack of staff.”

Hospital staffing data gleaned by Iroquois through a recent survey of its member facilities found In a recent survey, IHA found an overall staff vacancy rate of 14.7%, with the rate of vacancies for registered nurses at 18.3%. Iroquois reported those rates are 2.5 times more than where they stood before the pandemic arrived in early 2020.

Another group, LeadingAge New York, which lobbies for nursing homes, has been advising lawmakers that New York’s Medicaid rate “is among the worst in the country and that nursing homes have not received an operating rate inflation adjustment in 15 years.

Healthcare and education are the two biggest spending items in the state budget. The spending blueprint for the coming fiscal year is expected to approximate $230 billion.

One budget watchdog, William Hammond, senior fellow for health care policy at the Empire Center for Public Policy, said there should be a push for greater efficiency in how health care dollars are channeled.

“New York already spends more per capita on Medicaid than any other state,” Hammond said. “While there’s a case to be made for improving certain provider reimbursements, the state can’t afford to do that in isolation. Any fee increase should be tied to reforms that refocus the program on the needy and disabled, crack down on waste and fraud and bring spending under control.”

But Iroquois warned the upstate region faces grave consequences if the financial needs of hospitals are not addressed.

“Without a significant rate increase for upstate and rural hospitals, it is only a matter of time before their resources are completely drained ,” Iroquois said in a statement. “Ultimately, upstate residents will suffer when facilities and services continue to get dialed back or cut completely. This is a certainty.”

Assemblywoman Amy Paulin, D-Scarsdale, recently named chair of the Assembly Health Committee, has signaled she will seek a 20% increase in New York’s Medicaid reimbursement rate.