aut6474-8397851Just-released November data indicate that Medicaid spending was within Governor Cuomo’s new cap through the first two-thirds of fiscal 2011-12 — but just barely.

The $15.3 billion cap on state-funded Medicaid spending within the Department of Health (DOH) was a hallmark of Cuomo’s budget control and reform for fiscal 2011-12. Future annual growth is supposed to be limited to the 4 percent average rate of medical cost inflation over the last 10 years.

In keeping with this limitation, the governor’s proposed budget for 2012-13 calls for DOH Medicaid spending at $15.9 billion. To hit his target, growth in Medicaid spending had to be  reduced by $2.2 billion in the current-year budget and a further estimated $3.3 billion next fiscal year through the adoption of measures suggested by the Medicaid Redesign Team.

DOH is charged with producing monthly reports on spending in relation to the cap.  Data just released for November 2011 shows that spending through two-thirds of the current year is perilously close to the cap, less than 0.1 percent under as opposed to being 1.3 percent under in October. Actual spending is at $10.94 billion as opposed to the projected $10.95 billion.

As we pointed out here recently, the October 2011 Medicaid spending report highlighted risks to the spending forecast. The November data show that spending in certain areas including outpatient emergency room costs, nursing home costs and other long term care costs are below projections, but many other risks remain and some have worsened as shown by the November data.

Findings from the November DOH report include:

  • Medicaid enrollment continues to increase, particularly in Family Health Plus and managed care, boosting costs.  Total Medicaid enrollment was just under 5 million at the end of November. This enrollment growth of over 94,000 or 1.9 percent since April 2011 will drive additional spending which, if unabated, could place more pressure on the global cap.
  • Cash collections from Medicaid provider audits, including those for fraud, are now running further behind than they were in October, lagging by over $50 million.
  • Accounts Receivable from providers projected in October to crest at $600 million now will grow to over $700 million — to the extent they are not recovered through rate adjustments they impact the cap.
  • Federal reimbursements to the state for its Medicaid share are short of estimates by $56 million.
  • Local spending on Medicaid is exceeding the local cap, potentially shifting $82 million in costs to the state if the same trajectory continues (the state is responsible under 2005 legislation establishing a local cap on Medicaid expenditures to pick up costs exceeding the cap).

It is also worth noting that total state share Medicaid spending in the current year is not the $15.3 billion within DOH, but projected to be just over $21 billion, according to the Executive Budget Financial Plan for FY 2013. This is a result of an additional $5.8 billion in state share Medicaid spending in other agencies that is outside the cap. These expenditures, predominantly for mental hygiene and substance abuse, are also growing at a rate of $134 million over projections.

The state will continue to closely monitor spending and enrollment trends for the remainder of the year and the November DOH report urges caution in making judgements based on results to date. But, with this degree of risk in certain areas this late in the fiscal year, the governor may be forced to use the extraordinary powers granted to him as part of the current year budget agreement to make automatic reductions in numerous areas to stay within the cap. If such actions becomes necessary, it remains unclear as to the dimension or what impact such reductions could have on both service providers and patient care.

You may also like

Emails show Cuomo’s staff working on his memoir at the peak of New York’s pandemic

Newly available records shed further light on the origins of former Gov. Andrew Cuomo's pandemic memoir, which won him a $5.1 million publishing contract before contributing to his political downfall. The records reveal that his government staff were a Read More

The AG’s nursing home lawsuits are a wake-up call for the Health Department

Attorney General Letitia James' recent lawsuits against nursing homes have not only exposed dangerous conditions for the residents – but also dangerous blind spots at the Health Department. Read More

Hochul’s agenda mostly sidesteps health care

Governor Hochul gave health care surprisingly little attention in her State of the State speech on Tuesday – a sign that taking on dysfunction in one-sixth of the state's economy ranks low on her list of priorities. Read More

Federal omnibus deal has big implications for New York Medicaid

The big spending bill heading for a vote in Washington this week would scramble the outlook for Medicaid in next year's state budget, mostly for the better. The $1.7 trillion federa Read More

Hochul’s Pandemic Study Is Off to an Underwhelming Start

Although Governor Hochul's long-promised review of New York's COVID response hasn't formally started yet, it has already exposed important information about the state's pandemic preparedness – much of which is unflattering. Read More

The Essential Plan’s accumulated surplus balloons to $8 billion, with no fix in sight

The state's Essential Plan has generated billions in surpluses as the program automatically drew pandemic relief money that it did not need Read More

New York’s Medicaid costs are soaring at double-digit rates

New York's already high Medicaid spending is growing at a double-digit rate for the second year in a row, recently released state figures show. After dipping during the first year o Read More

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

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!