fidelis-logo-300x200-2355111Fidelis Care, a Catholic Church-affiliated health plan, is the target of a second revenue-raising proposal from Governor Cuomo.

The proposal, floated in closed-door negotiations, would require certain non-profit Medicaid managed care plans to disgorge reserve funds in excess of 150 percent of the mandatory minimum. Industry insiders say Fidelis would be one of only two plans likely to owe money under such a rule—the other being MetroPlus, which is operated by New York City Health + Hospitals.

Insurers are required to keep funds in reserve as a hedge against facing unexpectedly high claims or the loss of revenue. The minimum for Medicaid plans is 8.25 percent, or roughly one month’s worth of premium income.

The push to claim reserve funds for the state treasury comes less than three years after the collapse of Health Republic Insurance of New York, a money-losing non-profit insurer that had inadequate reserves and left behind hundreds of millions in unpaid claims.

The new proposal is a variation on one in Cuomo’s original executive budget, which would have empowered the Health Department to reduce premium payments to non-profit Medicaid plans deemed to have excessive reserves. That plan was rejected by leaders of both the Assembly and Senate.

Fidelis is also facing pressure from Cuomo to turn over proceeds of its pending $3.75 billion sale to Centene Corp., a for-profit insurer.

Under current law, that money would stay in the control of state’s Catholic bishops, who had planned to endow a charitable foundation in support of health care for the needy. Cuomo argues the state is entitled to the funds because so much of Fidelis’ revenue came from government programs such as Medicaid, Child Health Plus and the Essential Plan.

The governor’s plan requires changes in law, the first draft of which he shared with legislative negotiators in recent days. It calls for 80 percent of Fidelis’ sale price to go into a “public asset fund,” over which his appointees would hold a controlling three-fifths majority. The funds could be spent without further appropriation by the Legislature. The other 20 percent would go to a charitable foundation to be jointly controlled by the bishops and state officials.

Cardinal Timothy Dolan and other church officials have signaled that they might cancel the Centene deal if the state insists on taking too much of the proceeds.

“When we were able to negotiate a contract with Centene … both sides said there’s always the peril of the government wanting to take some of our money, and we have to be realistic about that,” Dolan told Politico. “So we put in there if the government tries to seize anything above a certain amount, we wouldn’t go through with it. So the worst that could happen to us is we’d go back to running Fidelis, which we’ve done very well.”

It’s also unclear is whether the Assembly and Senate will approve the plan to seize health plans’ conversion proceeds or excess reserves.

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

You may also like

Minimum wage for home care aides is likely to mean bigger raises for downstate than upstate

The newly enacted wage hike for home care aides is likely to increase workers' pay more than three times as much in the New York City area as in other parts of the state, according to a review of labor data. Read More

The flawed arguments behind ‘Fair Pay for Home Care’

As they contemplate a major increase in Medicaid spending on home care for the elderly and disabled, state legislators are relying on information that's outdated, incomplete or inaccurate – and neglecting to think through the predictable consequences. Read More

The debate over Medicaid home-care funding needs a reality check

The push in Albany to boost wages for home health aides is seemingly disconnected from the larger realities of the state’s long-term care system. As they , officials in the home care industry are warning that the state faces an of in-home caregivers Read More

Answers needed on Governor Hochul’s health-care budget

The health-care agenda laid out by Governor Hochul in her budget proposal this week leaves a lot of questions unanswered. Here are a few of them. Read More

Putting Governor Hochul’s $10 billion health-care ‘investment’ in context

In her State of the State address this week, Governor Hochul prominently called for a $10 billion "multi-year investment" in the state's health care system, including $4 billion earmarked for wages and bonuses, with a goal Read More

Hochul faces a test on health insurance costs

With judicious use of her veto pen this month, Governor Hochul could draw a line against spiraling health expenses for consumers and taxpayers. Several health insurance-related bill Read More

The Health Department takes a big step toward COVID transparency

The state Health Department released a flurry of 20 COVID-related data sets this week, taking its biggest step yet toward full transparency about the state's pandemic response. Read More

Hochul’s Emergency Order Imposes Insurer Restrictions Sought by Hospital Group

Buried in Governor Hochul's emergency order on health-care staffing is a temporary bar against insurance companies challenging claims submitted by hospitals–and an influential hospital association is taking credit. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!