Medicaid Global Cap Savings

The 2014-15 Executive Budget will likely include a proposal to begin sharing savings from the Medicaid global spending cap with providers. LeadingAge NY and other members of the Medicaid Global Spending Cap Advisory Group have also asked that “living wage” costs be funded outside of the global cap, an idea that DOH plans to discuss with the Administration.

Under the proposed approach, if it appears at the midpoint of a state fiscal year (i.e., on or about Sept. 30) that state Medicaid expenditures are running below the projected amount, the associated savings would be shared with providers. Initially, the methods for distributing the savings would include a “dividend” payment that would be allocated based on Medicaid expenditures for providers and managed care plans, with some amount used towards grants to vital access/safety net providers. DOH indicated that this approach will require state legislative authority, and would be advanced in the governor’s proposed 2014-15 budget. 

In the future, DOH envisions a multi-year plan to evolve the global cap dividend payment approach to more sophisticated alternative payment arrangements between Medicaid managed care plans and providers, such as risk-based arrangements, bundled payments and/or other shared savings approaches. In early 2015, DOH plans to establish a workgroup comprised of provider/plan representatives and state officials to develop goals and timelines around these arrangements.

The Advisory Group raised significant concerns about the estimated $300 million cost of the living wage mandate on providers and plans, specifically on DOH’s proposal to fund the costs out of the global spending cap. DOH agreed to bring forward for consideration by its principals the group’s recommendation to fund these costs outside of the cap.

LeadingAge New York strongly supports the state sharing savings from the global cap with providers and managed care plans. We believe this is the fair and equitable approach to take, since providers and plans are subject to possible cuts if the cap is exceeded.

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