DOB Warns That Medicaid Spending Is Tracking Above Projections

In their first Quarterly Update to the State’s Enacted Budget Plan for 2020, the Division of the Budget (DOB) stresses that Medicaid spending is tracking above Medicaid Global Cap projections. The Global Cap, enacted in 2012, limits increases in the State share of Medicaid spending to the 10-year rolling average of the medical component of the Consumer Price Index (CPI) and empowers DOB and the Department of Health (DOH) to make reductions if spending exceeds projections. In addition, the final State Fiscal Year (SFY) 2019-20 Budget included additional authority for DOH to unilaterally take $190 million in across-the-board cuts if the need arises.

The report states that as part of management of the 2018-19 Global Cap, the State share value of $1.7 billion in Medicaid payments, primarily to Medicaid Managed Care plans, scheduled for March 2019 were shifted into April, pushing them into SFY 2019-20. Absent the deferral, 2018-19 Medicaid spending would have exceeded the cap. DOB indicates that higher spending in SFY 2018-19 appears to have been driven by higher growth in managed care enrollment along with savings actions and offsets that were not processed before the SFY ended. The report warns that “DOB and DOH are working to develop options to reduce spending within the Global Cap and/or continue to manage the timing of payments. Options to reduce spending include the execution of statutory powers granted to the Commissioner of Health to limit spending, which includes across the board rate reductions to health care providers and plans.”

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841