Crain’s: Assembly and Senate propose restoration of Medicaid funding

By Jonathan Lamantia, March 13

The Assembly and state Senate on Tuesday released details of their budget proposals, restoring $550 million in Medicaid funding that Gov. Andrew Cuomo had stripped from his spending plan after a downward revision in expected tax revenue.

The new proposals will kick off negotiations between the Legislature and the governor, which have feuded over differing projections on tax collections, ahead of the April 1 start of fiscal 2020.

The Senate, in its budget resolution, said it strongly opposes” the governor’s diversion of $222 million from the Healthcare Facility Transformation program to subsidies for housing. The money “was meant to provide much-needed relief to hospitals and nursing homes,” the Senate said.

The Assembly’s one-house proposal also added back the money, which Assembly Speaker Carl Heastie said in a statement “protects the progress we have made to ensure access to high quality affordable health care.”

The proposals eliminated a planned across-the-board cut to Medicaid payments that was forecast to save $190.2 million and rejected the elimination of $137.8 million in indigent-care funding. The latter would have significantly lowered charity care payments to financially stable hospitals without redistributing that money to hospitals that provide the most care to Medicaid and uninsured patients.

Those three savings initiatives backed by Cuomo would have reduced state Medicaid spending by $550 million, but hospitals and nursing homes said the real impact would have been about $1.1 billion because of federal matching funds.

Hospitals and nursing homes have said additional Medicaid payments were expected when they agreed to new contracts last year with the state’s largest health care union, 1199SEIU. An increase in Medicaid payments went into effect in November, with a 2% increase to hospitals and a 1.5% increase to nursing homes before Cuomo proposed reversing the decision.

The Assembly also stripped language from the governor’s budget that would have revived a tax on opioid manufacturers, which had been struck down in federal court. It removed Cuomo’s plan to regulate pharmacy benefit managers. A planned mandate requiring large employers to cover in-vitro fertilization was left out of the Assembly budget.

The Senate supported the governor’s proposed tax on opioid manufacturers. It said it would “support modifications to promote consumer fairness and ensure hospitals and treatment facilities are not unduly burdened by the new charges.” It supported the governor’s in-vitro fertilization mandate but modified it to remove a coverage limit of three cycles and apply it to the broader state-regulated insurance market.

The Senate modified the governor’s proposal on pharmacy benefit managers to require it only apply to contracts agreed to after the bill is signed. It increased penalties imposed on PBMs that violate law and sought more transparency in their contracts.

The Assembly and Senate rejected Cuomo’s proposal to create a commission for the purpose of achieving universal access to affordable health care. Assemblyman Richard Gottfried, who sponsored the New York Health Act to create a state single-payer plan, had indicated during hearings on the budget that he opposed a commission to study the issue.

A spokesman for the state Division of the Budget said Tuesday the Cuomo administration looks forward to passing “another timely and balanced budget” and is still reviewing the proposals.