Governor Cuomo’s proposal to expropriate “excess” reserves from Medicaid managed care plans would apparently target just two insurers—Fidelis Care and MetroPlus—even though their reserve levels are not unusually high.
The plan adds to the pressure on the state’s Catholic bishops, who control Fidelis, to transfer part of the proceeds of the plan’s pending $3.75 billion sale to the state treasury, as Cuomo is also demanding in last-minute budget talks with the Legislature.
If the Legislature approves Cuomo’s proposals, the bishops would effectively face a choice: go ahead with the sale and give up part of their proceeds, or continue as a non-profit and give up part of their reserves.
Politico New York reported Thursday that a negotiated settlement between the bishops and Cuomo is “nearing the finish line.”
The governor’s proposal on excess reserves, recently floated in budget negotiations, would apply only to non-profit prepaid health services plans, of which there are five. In that group, Catholic Church-affiliated Fidelis and New York City-operated MetroPlus have the largest reserves.
Among the 16 insurers that enroll Medicaid recipients, however, there are at least four other plans with higher reserves as a percentage of premium revenue, as shown in the chart below.
Health insurers are required under state laws and regulations to keep a portion of their money in reserve, to make sure they can pay their bills even in the face of a surge in claims or a loss of revenue. The minimums vary according to type of plan: Medicaid plans are expected to have reserves equal to 8.25 percent of revenue, or about one month’s worth of cash. The ratio for commercial plans is 12.5 percent, or six-and-a-half weeks of cash.
Under the governor’s proposal, the state would be entitled to expropriate “excess” funds from Medicaid PHSPs with reserves that exceed 150 percent of the minimum. Draft language provided to legislative negotiators does not say exactly how the excess would be calculated, leaving details to be determined by the health commissioner.
The chart above is based on a hypothetical threshold of 12.375 percent, which is 150 percent of the Medicaid minimum. By that standard, 10 Medicaid managed care plans of all types would potentially have accumulated excess reserves as of 2016, according to data reported by plans to the Health Department. Of that group, only Fidelis and MetroPlus are PHSPs that would be subject to expropriation.
Cuomo also recently proposed for the state to claim 80 percent of the proceeds when a non-profit health plan becomes a for-profit company. The only known example of that is the Fidelis. As Politico reports, the plan’s deal with Centene includes a clause allowing Fidelis to cancel if the state claims more than 10 percent of the sale price, or $375 million.
About the Author
You may also like
One of New York’s Biggest Medicaid Contractors Is Quietly Acquiring a Competitor
Author's note: This post has been updated to correct an error in the second paragraph.
As state lawmakers debate the future of Medicaid home care, one of the program's bigg Read More
New York’s Home Health Workforce Jumped by 12 Percent in One Year
New York's home health workforce has continued its pattern of extraordinary growth, increasing by 62,000 jobs or 12 percent in a single year, according to newly released data from the U.S. Bureau of Labor Statistics. Read More
While New York’s Medicaid Budget Soared, Public Health Funding Languished
Four years after a devastating pandemic, the state has made no major investment to repair or improve its public health defenses.
While funding for Medicaid over the past four years Read More
A Medicaid Grant Recipient Sponsors a Pro-Hochul Publicity Campaign
While much of the health-care industry is attacking Governor Hochul's Medicaid budget, at least one organization is rallying to her side: Somos Community Care, a politically active medical group in the Bronx that recently r Read More
New Jersey’s Pandemic Report Shines Harsh Light on a New York Scandal
A recently published independent review of New Jersey's pandemic response holds lessons for New York on at least two levels.
First, it marked the only serious attempt by any state t Read More
A Politically Active Medical Group Gets $29 Million in ‘Distressed’ Provider Funds
State officials awarded $29 million in 'distressed' provider funding to a politically active medical group in the Bronx, state records confirm.
a network of physicians and other he Read More
Albany Lawmakers Push a $4 Billion Tax on Health Insurance
Legislative leaders are proposing an additional $4 billion tax on health insurance plans in the upcoming state budget – but withholding specifics of how it would work. Read More
Loss of Patients and Revenue Foreshadowed Downsizing for SUNY Downstate
The SUNY-owned hospital in Brooklyn facing a newly announced downsizing plan has seen its patient volume and revenue plunge over the past decade, according to a review of its financial reports.
Read More