screen-shot-2018-11-02-at-2-40-02-pm-150x150-9764498In a replay of the notorious Pataki-Rivera deal of 2002, the Cuomo administration has quietly ordered a multi-billion-dollar Medicaid rate increase for hospitals and nursing homes, with the money earmarked to boost employee pay and benefits.

According to a memo circulating among industry insiders, the rate increase is to be financed with funds that Governor Cuomo extracted from the sale of Fidelis Care in exchange for state approval of the transaction.

The only public announcement of the move, which took effect Thursday, was a notice published in the New York State Register (page 90) on Wednesday, six days before an election in which Cuomo is seeking his third term. The notice describes a 2 percent increase in the operating component of Medicaid’s hospital inpatient rates, and a 1.5 percent increase in the operating component of nursing home rates, but gives few details.

It says an update of the state’s Medicaid plan further explaining the rate increases “will be available for public review” on the website of the Department of Health. That update did not appear to have been posted as of mid-day Friday.

However, the Cuomo administration has been briefing industry groups, and LeadingAge, a coalition of not-for-profit nursing homes and other long-term care providers, shared further details in a Nov. 1 memo to its members.

“Good news,” the memo said. “All nursing homes in the State will be receiving an increase to their Medicaid rates to reflect increases in workforce costs, with supplemental funding available to facilities for recently settled collective bargaining agreements. These increases are being funded from proceeds to the State from the sale of the insurer Fidelis Care to Centene, and we are advised that the increases do not require additional authority from the Legislature to be implemented.”

Institutions that have contracts with 1199 SEIU, the political influential labor union, are due to receive extra funds, the memo says:

According to our understanding, these nursing homes would receive added funding reflective of 85 percent of the additional compensation costs associated with the new collective bargaining agreement, net of the value of the 1.5% trend factor adjustment. Certain details are still being worked out, including whether and how nursing homes with pre-existing SEIU 1199 labor agreements will receive supplemental funding over and above the 1.5% adjustment.

The move is reminiscent of 2002 deal between then-Governor George Pataki and former 1199 leader Dennis Rivera, under which the state’s Medicaid program spent $1.8 billion over three years to finance raises and benefit enhancements for health care workers. The union, normally an ally of Democrats, endorsed the Republican governor for re-election later that year.

At the time, Cuomo, who was then making an ill-fated run for governor, criticized Pataki for negotiating the deal in secret. But that rate increase took the form of legislation that was discussed with Assembly and Senate leaders and submitted to the full Legislature for approval.

In this case, the Cuomo administration is ordering a similar increase through executive power, with only 24 hours’ notice and no formal input from the Legislature.

Now headed by George Gresham (photo), 1199 gave its endorsement to Cuomo in February.

To pay for the deal, Cuomo is dipping into a one-time windfall of cash: the $2 billion in proceeds from the Fidelis-Centene salewhich the state’s Roman Catholic bishops (who controlled Fidelis) and Centene officials agreed to share with the state, quasi-voluntarily, under heavy pressure from the governor. The rate increase deal is expected to cost $1.35 billion over four years, to be matched with a similar amount of federal aid.

The Fidelis-Centene money is flowing to a “Health Care Transformation Fund,” which, under terms of this year’s state budget, Cuomo is authorized to spend on a wide range of health-related purposes without notifying the Legislature until 15 days after the fact.

Cuomo’s campaign to claim the Fidelis-Centene proceeds was supported by an advertising campaign sponsored by the Healthcare Education Project, jointly funded by the Greater New York Hospital Association and 1199, which was the biggest-spending lobbyist in Albany for the first six months of the year. 

The lobbying campaign, like Cuomo’s January budget proposal, called for the state to establish a “Health Care Shortfall Fund,” to offset anticipated cuts in federal funding. But the name and purpose of the fund changed by the time the budget was finalized in late March, when it was clear that major federal cuts would not happen in the near future.

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

The Public Can Now See the Vaccine Task Force Recommendations that the Cuomo Administration Held Back

Even as Governor Cuomo touted vaccine approvals by a state-appointed panel of experts, his office was withholding the group's detailed findings from public view. The governor's six- Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Empire State’s new budget is a bridge to nowhere

Looking ahead to an uncertain post-pandemic recovery, New York’s newly enacted state budget for fiscal year 2022 raises spending by staggering amounts that—barring an unlikely rapid return to peak 2019 economic activity in New York City—can't possibly be sustained for more than a few years. The budget is a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink. Read More

New York Lags in COVID-19 Vaccinations for Older Residents

In the race to vaccinate its oldest and most vulnerable residents, New York has fallen behind. Although the state's overall COVID-19 vaccination rate is somewhat higher than the nat Read More

Lawmakers Mull Medicaid Proposals That Would Speed New York Toward a Fiscal Cliff

As a budget deal nears in Albany, reining in spiraling Medicaid costs seems to be the last thing on anyone's mind. Governor Cuomo is advancing only Read More

Tax hike and huge spending increase seem likely in next NY budget

New York state today began its 2022 fiscal year without an adopted budget—which, in itself, is not a big deal. The state government can continue to pay bills and employee salaries next week if either final appropriations Read More

Cuomo Pushes Budget Change Sought by Hospital Group Implicated in Pandemic Scandals

A hospital lobbying group at the heart of scandals plaguing the Cuomo administration is again getting the governor's help in pushing a late change to the state budget. Aides to Gove Read More

The Cuomo Administration Is Withholding Pandemic-Related Records Again

In an echo of the Cuomo administration's stonewalling on nursing home data, the governor's office has for a third time delayed releasing records of its vaccine review panel, this time until mid-April. 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
Fax: 518-434-3130
E-Mail: info@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 "...the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo's government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it (the Empire Center) sued, Team Cuomo finally started coughing up some of the records." -Wall Street Journal, February 19, 2021

SIGN UP TO READ ABOUT THE ISSUES IMPACTING NEW YORKERS.