Judgment, Supreme Court, New York County, entered June 19, 1974, annulling respondent's determination to the extent of directing recalculation of the 1973 rates, affirmed, without costs or disbursements. Special Term remanded for recalculation only to the extent that the percentage increase allowed for projected future costs relied on the 6% limit imposed by the Economic Stabilization Act of 1970, without amplifying whether that limitation in the rate schedule was "reasonably related to the costs of efficient production" (Public Health Law, § 2807, subd 3). The dissent would further remand the calculation of the "community service factor" as well. We have dealt with this issue in greater detail in the companion appeal of Matter of Presbyterian Hosp. of City of N.Y. v Ingraham 48 A.D.2d 491). Suffice it to say here that the allowance of reimbursement for the community service factor is discretionary (Public Health Law, § 2807; 10 NYCRR 86.2[d]), since in essence it is a subsidy to the hospital for losses which as a result are not generated by Associated Hospital Service subscribers. The community service factor portion of the formula has in fact achieved the purpose intended; namely, partial reimbursement to the hospital for cash losses expended in the providing of free outpatient services.
See, e. g., Sigety v. Ingraham, 29 N.Y.2d 110, 116, 324 N.Y.S.2d 10, 272 N.E.2d 524 (1971). For a general discussion of the New York plan see Presbyterian Hospital in the City of New York v. Ingraham, 48 A.D.2d 491, 369 N.Y.S.2d 738 (1st Dept. 1975), aff'd, 39 N.Y.2d 867, 386 N.Y.S.2d 217, 352 N.E.2d 135 (1976). In November 1975, the State amended 10 NYCRR § 86.21(k), enacted pursuant to Public Health Law § 2807, to provide as follows:
Petitioner's contention that reimbursement on the basis of actual, reasonable costs is constitutionally required is similarly without merit (see, Matter of Sigety v. Ingraham, 29 N.Y.2d 110, 115). The trend factor of 350% for malpractice insurance was rationally arrived at through, inter alia, cost data furnished by the Hospital Association of New York State. Petitioner has not demonstrated more than that the general formula for reimbursement in this respect did not work as well for it as, perhaps, for other members of the entire group to which it was applied, which is insufficient to establish that the determination was arbitrary or capricious (see, Matter of Presbyterian Hosp. v. Ingraham, 48 A.D.2d 491, 496, affd 39 N.Y.2d 867). It is true that the regulations then in effect permitted a departure from the trended actual costs of the earlier base year to take into account expansion of services or additional programs such as the dialysis, cardiac surgery and neonatal intensive care program described in petitioner's application for revision of its 1975 rate (10 N.Y.CRR former 86.17 [a] [3], [4]).
We further find, however, that Blue Cross' failure to include the community service factor was contrary to law. Under the statutes and regulations which existed during the relevant time, the awarding of the community service factor was held to be discretionary (see, Matter of Presbyterian Hosp. v Ingraham, 48 A.D.2d 491, affd 39 N.Y.2d 867; 10 N.Y.CRR former 86.2 [d]). The discretionary nature of the decision, however, was whether or not to include the community service factor in the rate formula in the first instance. Once Blue Cross included the factor in its reimbursement formula and the formula was approved by the appropriate agencies, Blue Cross did not have discretion to disregard its own rate setting formula.
46 figure calculated on the assumption of an unregulated economy a realistic or appropriate figure for 1972, either prospectively or retrospectively. Thus the Commissioner of Hospitals did not act unreasonably in refusing retroactively to fix a reimbursement figure of $146.46 on a mere showing that the Cost of Living Council had granted an exception to the hospital from the 6% limitation on its over-all revenues. It may be that the commissioner could recompute the rates retroactively to relieve hardship or to cover gross inequities. (Cf. Presbyterian Hosp. v Ingraham, 48 A.D.2d 491, 495.) But at a minimum this would seem to require a factual showing of hardship and inequities and this the petitioner did not attempt to do.