The state Health Department is cutting Medicaid payments by 1% starting Wednesday as the Cuomo administration seeks ways to reduce a ballooning budget gap projected to exceed $6 billion.
A notice in the New York State Register published Tuesday said the move will reduce gross Medicaid payments, including federal matching aid, by $124 million in the final quarter of the current fiscal year and $496 million in following years.
“This reduction in spending growth was approved by the Legislature as part of the FY 2020 Budget and is being implemented in the fourth quarter of the State’s fiscal year as the Department of Health works with its partners to develop an overall plan to reduce Medicaid spending growth while continuing to provide high-quality care to over 6 million New Yorkers,” Health Department spokeswoman Erin Hammond said.
The cut applies to the majority of Medicaid spending, including payments to hospitals, nursing homes, doctors, pharmacists, home-care providers and Medicaid managed-care plans.
Fiscal watchdogs say the reductions will do little to alleviate the growing costs of New York’s Medicaid program, which covers more than six million state residents.
“It should be emphasized that these cost-cutting moves are about slowing growth,” the Empire Center’s Bill Hammond wrote in a blog post about the changes. “Even if they are fully implemented, overall spending on Medicaid will almost certainly increase in the year ahead.”
Cuomo and budget officials have repeatedly blamed Medicaid overruns on the state’s minimum wage increase for health care providers, cuts in federal funding and increases in enrollment and costs for long-term care.
The governor’s plan for dealing with the projected $6 billion gap includes pushing $2.2 billion worth of Medicaid costs into a future fiscal year, a move that has faced increasing criticism after it was revealed the state held $1.7 billion in spending over from last year.
Cuomo is also looking to impose a “savings plan” that reduces current-year Medicaid spending by $1.8 billion. Details of the plan won’t be available until the governor’s annual budget proposal is unveiled later this month.
A separate notice in the state Register this week revealed the Health Department plans to again attempt to revise reimbursements made under the Medicaid-supported Consumer-Directed Personal Assistance Program after a judge found the way the changes were implemented in 2019 to be unconstitutional.
Over 75,000 senior and disabled New Yorkers rely on the program, which allows disabled and older New Yorkers who don’t want to live in a nursing home or assisted-living facility the freedom to choose who takes care of them.
The program allows the elderly and people with disabilities and chronic illnesses to receive care in their homes by a person of their own choosing, often a friend or relative. The program employs over 100,000 caregivers.
Advocates battled the state last year after DOH first tried to change the way it pays “fiscal intermediaries,” the nonprofit agencies and companies that act as go-betweens for the CDPA. The revamped rate reimbursement methodology amounted to a $150 million reduction in funds.
While the state argued the rate cuts were necessary and would not impact consumers, the new rate equated to an 80% reduction in fiscal intermediaries’ administrative budgets, forcing them to cut wages and overtime for personal assistants, advocates argued.
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