Feds Urge More Talks on NY Medicaid Application


New York has revised its request for a $10 billion Medicaid adjustment, which would allow using that money in related health care programs, after federal officials concluded capital investment and some other programs are ineligible.

The application was first filed 18 months ago, prompting Gov. Andrew Cuomo and Health Commissioner Dr. Nirav Shah last week to publicly blame the federal delay for threatening financially distressed New York hospitals.

U.S. Health and Human Services Secretary Kathleen Sebelius said in a letter responding to Cuomo that they’ve begun drafting “a potential agreement” based on New York’s revisions, but there are “outstanding issues.” She wants more meetings this week “to expedite this process.”

Sebelius wrote that the so-called Medicaid waiver, intended to improve care for patients while lowering system costs, “will not, nor should it, determine the future path for particular New York hospitals.”

Waivers enable states to use federal money resulting from cost savings in their programs.

New York now proposes spending most of the $10 billion over five years on more primary care and alternative care, like home visits by nurses to expectant women who are high-risk, along with transitional subsidies for hospitals that will lose patients. The goal is to reduce avoidable hospitalizations by 25 percent.

Among the items in the state’s initial application that federal officials rejected as “unfundable” are capital investment, rent subsidies for high-needs patients with mental and physical health issues, regional planning grants, evaluation projects and information technology.

The Cuomo administration’s proposed budget for the coming year said that “the Medicaid waiver and complementary investment will expand the availability of capital.”

However, state officials clarified that the new $1.2 billion capital program for health care would only involve non-federal funds, not money from the Medicaid waiver. They also propose “encouraging private equity investments.”

Shah said Tuesday nearly half of New York’s 227 hospitals are financially distressed, “yet the biggest problem is in Brooklyn, where eight hospitals are fiscally distressed, including three that are at risk of closing.”

“The reality is this,” Shah said, “if the federal government continues to delay our waiver, hospitals in Brooklyn and statewide will close very soon.”