State Proposes Across-the-Board Cut to State Medicaid Payments

The Department of Health (DOH) provided public notice on page 101 of the Dec. 31, 2019 State Register of its intention to reduce State-share Medicaid payments across the board by 1 percent. The reduction comes in the wake of a looming State Budget deficit estimated at $6.1 billion and a projected $4 billion breach of the Medicaid global spending cap in the current state fiscal year (SFY), which ends March 31, 2020.

The text of the State Register notice appears below:

“Pursuant to 42 CFR Section 447.205, the Department of Health hereby gives public notice of the following:

The Department of Health proposes to amend the Title XIX (Medicaid) State Plan for institutional, non-institutional and long term care services to comply with proposed statutory provisions. The following changes are proposed:

All Services

Effective for dates of service on or after January 1, 2020, through March 31, 2020, and each State Fiscal Year thereafter, all non-exempt Department of Health state funds Medicaid payments will be uniformly reduced by 1.0%. Medicaid payments that will be exempted from the uniform reduction include:

Payments based on federal law prohibitions include, but are not limited to, the following:

Federally Qualified Health Center services;
Indian Health Services and services provided to Native Americans;
Supplemental Medical Insurance – Part A and Part B;
State Contribution for Prescription Drug Benefit (aka Medicare Part D payments);
Any local share cap payment required by the Federal Medical Assistance Percentage (FMAP) increase legislation;
Required payments related to the School Supportive Health Services Program and Preschool Supportive Health Services Program;
Services provided to American citizen repatriates;
Payments pursuant to the mental hygiene law;
Court orders and judgments; and
Hospice Services.

Payments funded exclusively with federal and/or local funds include, but are not limited to the following:

Upper payment limit payments to non-state owned or operated governmental providers certified under Article 28 of the NYS Public Health Law;
Certified public expenditure payments to the NYC Health and Hospital Corporation;
Certain disproportionate share payments to non-state operated or owned governmental hospitals;
Certain managed care payments pursuant to section 3-d of Part B of the Chapter 58 of the Laws of 2010; and
Services provided to inmates of local correctional facilities.

Payments where applying the reduction would result in a lower FMAP as determined by the Commissioner of Health and the Director of the Budget will also be exempt.

The estimated annual net aggregate decrease in gross Medicaid expenditures attributable to this initiative contained in the budget for State Fiscal Year 2019-20 is ($124,000,000) and ($496,000,000) for each State Fiscal Year thereafter.

The public is invited to review and comment on this proposed State Plan Amendment, a copy of which will be available for public review on the Department’s website at: http://www.health.ny.gov/regulations/ state_plans/status. Individuals without Internet access may view the State Plan Amendments at any local (county) social services district.”

In its Mid-Year Financial Plan Update, the Division of the Budget (DOB) had indicated that if left unaddressed, Medicaid spending would exceed Global Cap projections by $4 billion by the end of the current fiscal year. The figure includes $1.7 billion in Medicaid payments from the prior fiscal year that were shifted into the current fiscal year. The Global Cap limits increases in the State share of Medicaid spending to the 10-year rolling average of the medical component of the Consumer Price Index and empowers DOB and DOH to make reductions if spending exceeds projections. The final SFY 2019-20 Budget included additional authority for DOH to make cuts if the need arises.

The FY 2020 Savings Plan being developed by DOB will also reportedly include a permanent adjustment to the timing of health care payments and may include other cost containment measures in addition to this across-the-board reduction. The State intends to unveil other elements of this savings plan as part of the release of the Governor’s SFY 2020-21 Executive Budget Proposal in January, which is expected to have additional Medicaid cost containment proposals for the upcoming year.

We will provide further details on this payment reduction as they become available.

Contact: Dan Heim, dheim@leadingageny.org, 518-867-8866