State officials awarded $29 million in ‘distressed’ provider funding to a politically active medical group in the Bronx, state records confirm.

Somos Community Care, a network of physicians and other health professionals, received the money in 2022 through the Vital Access Provider Assurance Program, or VAPAP, according to Health Department records obtained by the Empire Center under the Freedom of Information Law.

VAPAP – a $2.9 billion pool within the Medicaid budget – was previously reserved for financially unstable hospitals, nursing homes and assisted living facilities. Earlier in 2022, however, Governor Hochul proposed as part of her first executive budget to expand the program to cover “independent practice associations” and “accountable care organizations” – categories that would include Somos. The Legislature approved the little-noticed change along with the rest of the budget that April.

The expansion was apparently arranged with Somos specifically in mind: An internal summary of VAPAP funding in the enacted 2022-23 budget shows $29 million allocated for “Somos VAPAP.”

The records do not indicate exactly when or how the money was transferred. However, Somos’ IRS filings show that it received $29.4 million in government grants in calendar year 2022, which was $25 million more than any previous year.

Somos’ leadership and some of its affiliated doctors have become frequent political donors, contributing a total of $2.2 million to various state political accounts over the past decade, according to Board of Elections records. Their giving ramped up significantly in 2022 as Hochul ran for governor in her own right, having initially taken office due to Andrew Cuomo’s resignation.

During the 2022 election cycle, Somos-linked individuals and organizations contributed more than $400,000 to the campaign accounts of Hochul and her running mate, Lieutenant Governor Antonio Delgado, and another $150,000 to the state Democratic Party, records show (see chart).

One of Somos' top leaders, Henry Muñoz, also helped Hochul organize a Latino-oriented get-out-the-vote drive called the Nueva York initiative.

Muñoz, a vice chair of the Democratic National Committee, collected $51 million in consulting fees from Somos from 2018 through 2022, both personally and through his firm, MSTZO LLC. Reporting by the Daily Beast has raised questions about the nature of Muñoz's work for Somos, noting that he "has no medical degree and possessed no experience in health administration at the time he joined the group."

Muñoz contributed $100,000 to the state Democratic Party, which was supporting Hochul's campaign, on April 6, 2022. That was one day before the governor and Legislature announced a deal on the state budget that included the VAPAP expansion as one of many components.

As described on the Health Department's website, VAPAP has been aimed at providers "requiring extraordinary financial assistance … to maintain operations and provision of vital services." As a rule, applicants are supposed to show that they lost money in each of the past two years and have less than 15 days' worth of cash on hand.

Somos did lose money in 2020, 2021 and 2022, but at the end of that period it still reported reserves of $74 million, enough to finance about nine months of its normal operations.

Its reserves appear to be left over from Somos' role in the Delivery System Reform Incentive Payment program, or DSRIP, an attempt to overhaul Medicaid that ran from 2015 to 2020. 

As part of that effort, Somos was designated as one of 25 regional “performing 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 initially allocated the second-largest share of the federal grant. From 2014 to 2020, it received $607 million in state funding and spent $478 million on its programs.

Somos has remained active since DSRIP ended and received further state grants to provide Covid testing and vaccination during the pandemic.

Last year, Hochul and the Legislature enacted a further expansion of VAPAP eligibility as part of the 2023-24 budget, this time to include:

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.

Although that language appeared narrowly tailored to Somos, a Health Department official said at the time that other entities would be “potentially eligible under certain circumstances." From the recently released records, it's now clear that the state had earmarked VAPAP money for Somos before the new language was added.