Over the New Year’s holiday, Gov. Andrew Cuomo announced that New York’s health care providers will see a 1% drop in the reimbursements they receive for the government-funded Medicaid health care program. It’s part of an effort to reduce a multi-billion-dollar budget gap that the state is facing.
For the next three months, hospitals, nursing homes, doctors, pharmacists and other health care providers will see a cut in the amount they get from New York state for services billed through the Medicaid program for lower-income New Yorkers.
The reduction, announced quietly by the Cuomo administration’s Health Department on Dec. 31, will be in effect through March 31, the end of the fiscal year.
It will save an estimated $126 million this fiscal year and nearly $500 million next year, if the cut remains in effect.
The Medicaid portion of the budget, however, has a deficit of $3 billion to $4 billion.
Bill Hammond, health policy analyst with the fiscal watchdog group the Empire Center, said by his calculations, the cuts would cover just a small portion of the total deficit.
“These cuts are just a drop in the bucket,” said Hammond.
He said the cuts represent just 3% of the deficit -- so “97% of the shoes are still left to drop.”
Cuomo’s budget officials announced in November that they would likely, for the second year in a row, delay the state’s final $2.2 billion Medicaid reimbursement of the fiscal year into the next fiscal year. That still leaves a significant gap to close.
Hammond said time is running out to remedy the full problem in the next three months. And he said he’s puzzled why the governor’s budget office didn't act sooner since Medicaid costs have been rising in recent years. That's due to a number of factors: The minimum wage has gone up, and there have been raises for union members. Also, more people got health insurance through Medicaid under the Affordable Care Act.
“This problem has actually been festering for three or four years,” he said. “It’s kind of snowballed.”
Even though costs were rising, the health department in October 2018 approved a 2% increase in reimbursements for hospitals and nursing homes. With the newly announced 1% reductions, those providers will still make out ahead, with a 1% increase in their payments from the same period last year.
The head of the state’s largest hospital lobby, Bea Grause of the Health Care Association of New York, is against the reductions. She wrote in a blog post that “Medicaid cuts to providers are not the solution to New York’s budget issues.”
A spokeswoman for the state health department, Jill Montag, said in a statement that the cuts are a first step in coming up with a more comprehensive plan “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.”
Cuomo said in December that he would unveil a full plan to deal with the deficit when he presents his state budget proposal later this month.