State lawmakers passed a budget Saturday that will funnel Medicaid dollars to hospitals and nursing homes while overhauling the state’s home care program.
The final budget deal, passed nearly three weeks late, comes after months of negotiations between Gov. Kathy Hochul and state legislators about how to control Medicaid spending while preserving access to services. Hochul’s proposals centered on ways to cut Medicaid spending, specifically in the long-term care sector. But lawmakers pushed back on those cuts, ultimately proposing new ways to unlock federal funds to bolster the Medicaid program.
Here are the notable health care policies in the state’s $237 billion budget deal.
Millions flow to hospitals and nursing homes
The health budget reverses most of Hochul’s proposed $1.2 billion cuts to the Medicaid program, restoring $800 million for hospitals and nursing homes. Hospitals will get $525 million in Medicaid payment increases, while nursing homes and assisted living facilities will receive $300 million.
It’s still unclear how much of a Medicaid bump individual facilities will receive. Policymakers are still deciding whether to implement an across-the-board Medicaid rate increase or target payments based on each facility’s financial need, said Tim Ruffinen, a spokesman for the state budget office.
The final Medicaid rate increases also remain to be determined because they hinge on a state plan to tax health plans and bring in billions of federal dollars for health care. The budget directs state officials to submit an application to the federal government to create a managed care organization tax, but it’s not clear how much revenue the tax would generate or when it would be available to hospitals and nursing homes. Legislators initially estimated that the tax could generate $4 billion a year, but the total will likely be less than that.
The budget establishes a “health care stability fund” for all revenue generated by the managed care organization tax, estimating that $350 million will be available in the 2025 fiscal year. It remains to be seen whether that number could increase once the tax is approved.
Upcoming cuts to home care
Hochul did uphold her budget promise to cut administrative spending in the consumer-directed personal assistance program, a $9 billion home care program that allows New Yorkers to hire family members or friends as caregivers. New York will appoint a single entity to manage payroll and administrative tasks for the 250,000 people who participate in the program statewide – a reduction from the 700 organizations, which are called fiscal intermediaries, that do that job currently. Hochul said that the move could save the state up to $500 million a year.
Although the state will move to a single fiscal intermediary to manage the entire consumer-directed personal assistance program, there are some caveats that allow existing entities to preserve their status. For example, the state will offer subcontracts to the state’s 11 independent living centers, which are nonprofits that serve and are run by people with disabilities, so that they can continue operating as fiscal intermediaries.
Despite changes to the consumer-directed personal assistance program, the final budget did not include wage cuts for personal care aides that Hochul proposed in January.
Programs for safety-net hospitals
The budget outlines $500 million in additional funds for safety-net hospitals, according to the Greater New York Hospital Association. These funds are earmarked for financially distressed facilities.
The plan also creates a specific program for safety-net institutions to partner with financially stable hospitals to shrink their deficits. The health care “transformation” program offers $300 million in funding for safety-net facilities that partner with other hospitals, physician organizations or health plans through mergers or acquisitions to improve their financial status.
In addition to opening up funds for safety-net hospitals, the budget also includes specific plans for one struggling Brooklyn safety-net facility: SUNY Downstate’s University Hospital. The deal between lawmakers and the Hochul administration will halt the closure of the East Flatbush teaching hospital while officials appoint an advisory commission to examine the facility’s services and financial status, which will have a year to produce recommendations about the hospital’s future.
Mental health and insurance changes
The state budget also requires commercial insurers to increase their rates to outpatient facilities that provide mental health and substance use services. Medicaid pays higher than commercial insurers for behavioral health care which prevents agencies from serving large swaths of patients on commercial plans. The budget mandates that commercial insurers pay the same rate as Medicaid does, a policy that advocates say will improve access to mental health care.
Amanda D'Ambrosio , 2024-04-22 11:33:04
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