Medicaid provider cuts fix just a small percentage of the budget deficit
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Over the New Year’s holiday, Governor 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 December 31st will be in effect through March 31, the end of the fiscal year.

It will save an estimated $126 million dollars this fiscal year, and nearly $500 million dollars next year, if the cut remains in effect.

The Medicaid portion of the budget, however, has a deficit of 3 to 4 billion dollars.

Bill Hammond, health policy analyst with the fiscal watchdog group The Empire Center, says by his calculations, the provider cuts announced would cover just a small portion of the total deficit.

“These cuts are just a drop in the bucket,” said Hammond, who says the cuts represent just 3% of the deficit. “ 97 % of the shoes are still left to drop” .

Cuomo’s budget officials announced in November that they will likely, for the second year in a row, delay the state’s final $2.2 billion dollar Medicaid reimbursement of the fiscal year into the next fiscal year. That still leaves a significant gap to close.

Hammond says time is running out to remedy the full problem in the next three months. And he says he’s puzzled why the governor’s budget office did not act sooner, since Medicaid costs have been rising in recent years, 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 of 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, says, 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.”

“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,” Montag said.

Governor Cuomo said in December that he will be unveiling a full plan to deal with the deficit when he presents his state budget proposal later this month.