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NYSNYS NEWS: Cuomo Health Department announces across the board 1 percent Medicaid cut, effect January 1.

By Kyle Hughes

ALBANY, N.Y. (December 31, 2019) -- With a $6 billion budget gap looming in 2020, the Cuomo administration announced Tuesday an across-the-board 1 percent cut in state-funded Medicaid spending starting on January 1.

The proposed cut, published in the NYS Register, would yield an estimated $124 million in savings in the current 2019-20 budget year and an additional $496 million annually afterwards, the Health Department estimated.

"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 percent," the agency said in a public notice.

“Today the Department of Health issued public notice of its request for federal approval of a 1 percent uniform reduction of all non-exempt Medicaid payments, effective January 1," the agency said in a statement Tuesday. "This reduction in spending growth was approved by the Legislature as part of the FY 2020 Budget and is being implemented in the fourth quarter of the State’s fiscal year 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.”
The cut will not apply to certain programs, including those exempted by federal law or funded exclusively with federal and local government funds. That includes money paying for services in schools, local jails, NYC government hospitals and "certain disproportionate share payments to non-state operated or owned governmental hospitals." Hospice centers and programs funded through state mental hygiene law would also not face cuts.

Two-thirds of the $6 billion budget gap disclosed in November is due to the rising cost of New York's Medicaid program, now estimated at $75 billion a year. That is double the cost of Texas, a state with 50 percent more residents than New York, and three times the cost of the program in Florida, a state that since 2010 has replaced New York as the third most populous state in the U.S.

In March, the rising costs prompted Gov. Andrew Cuomo to delay $1.7 billion in Medicaid payments, pushing them past the April 1 start of the current budget year. The bookkeeping move was designed to keep Medicaid spending within last year's cap, leaving the gap to be addressed in the following year.

One of Cuomo's signature issues since taking office in 2010 has been to try to control the growth of the massive state budget, now at $175 billion. But Medicaid's cost continues to grow as the aged and poor population of the state grows and pay increases have raised costs for healthcare providers. In 2018, the state also hiked reimbursement rates for hospitals.