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NYS Medicaid Panel Recommends $2.5B In Spending Reductions

New York state Capitol
Jim Levulis

A panel tasked with reducing New York’s Medicaid budget has voted on a plan to cut $2.5 billion out of the state’s health care system. But the commission’s work likely falls far short of closing a widening budget deficit that will likely be expanded by the coronavirus.

The panel, chaired by two longtime allies of Governor Andrew Cuomo, voted on a package that includes tightening rules on home health care programs, including one that allows sick or disabled New Yorkers to employ relatives to help with their care.  

The changes would also make it harder for people with assets to qualify for Medicaid for home care or nursing home care, requiring a new five-year lookback window where any wealth a patient had during that time will be counted against their eligibility for the program. It would also eliminate what’s known as spousal refusal, where a husband or wife can refuse to pay for their partner’s care, allowing them to go on a state funded health care program.  

The state would also try to get better control of rising drug prices, by getting rid of managed care pharmacy programs and replacing them with fee for service programs instead. The shift would eliminate insurance company middlemen known as pharmacy benefit managers, who critics say help to inflate drug prices. 

The plan, would also cut the reimbursement rate to health care providers by just under 1%, or around $400 million for the state’s hospitals, and would save a total $1.6 billion. It also takes into account $900 million in savings to Medicaid already implemented in the current fiscal year.

The reductions cannot take place, though, as long as a federal emergency order is in effect that prohibits health care cuts, says a spokeswoman for the panel, Erin Dennis.  

The governor’s budget director, Robert Mujica, who is advising the panel, says the cuts won’t likely be enough, given the state’s rapidly ballooning deficit.

“As we move forward, we’re going to have to make some tough budget choices,” Mujica said. “And every state is going to have to be doing that.” 

But Mujica says some of the cuts to hospitals could be delayed as money comes in from a federal aid package approved by Congress, which would add several billion more dollars to the state’s health care program.

But the funding is complicated by a rule that prevents the state from passing on any new Medicaid costs to local governments. Cuomo had hoped to have counties and the City of New York pay for a larger share of the program.

Karen DeWitt is Capitol Bureau chief for New York State Public Radio, a network of public radio stations in New York state. She has covered state government and politics for the network since 1990.
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