A politically active medical group in the Bronx garnered an unusual benefit in the new state budget – access to bailout money otherwise reserved for safety-net hospitals and nursing homes.

A provision of the newly enacted state budget tweaked the rules of Vital Access Provider Assurance Program, a $1.4 billion pool of Medicaid funds set aside to rescue health-care institutions in “severe financial distress.”

In notably specific terms, Part E of the Health and Mental Hygiene bill made money from the pool available to:

an entity that was formed as a preferred provider system pursuant to the delivery system reform incentive payment (DSRIP) program and collaborated with an independent practice association that received VBP innovator status from the department for purposes of meeting DSRIP goals, and which preferred provider system remains operational as an integrated care system.

One entity that matches all of those criteria is Somos Community Care, a Bronx-based not-for-profit organization with political ties to Hochul and other high-ranking Democratic officials.

Somos, a network of 2,600 physicians and other medical professionals, was founded in 2015 to participate in the Cuomo administration’s Delivery System Reform Incentive Program, or DSRIP, an attempt to overhaul Medicaid that was financed by a five-year federal grant of $6.4 billion. 

Under that program, health-care providers and social service groups were organized into 25 regional “performing provider systems” (sometimes called “preferred provider systems”) with a goal of better coordinating care for Medicaid patients. 

Somos was the only such system that was organized by physicians (most were led by hospitals) and it was allocated $700 million, the second-largest share of the federal grant. Its affiliated independent practice association is one of a handful of organizations designated as a Value Based Payment (or VBP) Innovator by the Health Department.

Somos has also remained active since the original DSRIP grant expired in 2020.

Over the past decade, Somos’ executives and affiliates have emerged as significant players in state politics.

A prominent member of Somos’ leadership team, Henry Muñoz, is a former high-ranking official of the Democratic National Committee.

In 2019, a Somos-associated political action committee called We Are NY raised $178,000 and contributed most of it to then-Governor Andrew Cuomo and the state Democratic Party. 

In 2021, as Cuomo faced scandals over which he later resigned, a group of Somos-affiliated doctors and executives donated $230,000 to his re-election campaign.

As Cuomo’s successor, Kathy Hochul, successfully ran for her own term last year, Muñoz helped her set up a Latino-oriented get-out-the-vote drive called the Nueva York Initiative.

Through its first six years of operation, with DSRIP grant money flowing in, Somos ran large surpluses and built up cash reserves of almost $187 million, according to its not-for-profit filings with the IRS.

After the DSRIP program expired in 2020, the organization secured $109 million in state contracts to provide testing and vaccination for COVID-19.

Even so, its filings show that it ran deficits in 2020 and 2021 and its assets declined almost by half, to $98 million.

Somos’ new option for state funding, the Vital Access Providers Assurance Program, was originally limited to hospitals. Qualifying providers were supposed to show that they were critically short of cash and had no other options to pay their bills and stay open.

Last year, lawmakers broadened VAPAP to include distressed nursing homes and physician groups affiliated with other distressed providers.

The newest eligibility category, as discussed above, is narrowly targeted. To qualify, an entity must be 1) a preferred provider system under DSRIP, 2) affiliated with an independent practice association that is designated as a VBP Innovator, and 3) still operational.

There are 25 preferred provider systems under DSRIP, some of which have ceased operations, and four VBP Innovators designated by the Health Department. Somos appears to be the only independent practice association that currently falls into both groups.

According to a Health Department spokeswoman, however, other entities would be “potentially eligible under certain circumstances,” including Community Care of Brooklyn, the Staten Island Performing Provider System, Common Ground Health in Rochester, and Healthy Alliance in Schenectady.

Somos would make an unusual candidate for a state bailout. Its organizers knew from the beginning that the federal grant would be limited to five years. It does not appear to directly care for patients, but instead offers support and coordination services for a network of providers who are independently incorporated.

Somos’ 2021 IRS filing lists 14 executives with salaries of $300,000. It has spent heavily on consultants, including more than $30 million paid to Muñoz and his firm MSTZO LLC.

In 2021, it also reported spending $400,000 on lobbyists and donating $1 million to other not-for-profit organizations, including $75,000 to the Maestro Care Foundation of Chicago and $25,000 to the Congressional Hispanic Caucus Leadership Institute.

This year’s budget debate included back-and-forth over the appropriate level of what was called “distressed hospital funding.” The governor initially proposed to scale the program back by $700 million, then agreed to restore $500 million of that amount in her final agreement with the Legislature. However, there was no public discussion of expanding the program to cover non-institutional providers such as Somos.

The Empire Center has sought comment from Somos and will post updates as more information becomes available.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

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