NY, Feds Agree on Landmark $8B Medicaid Waiver


New York reached an agreement Thursday with federal officials for a waiver that would allow the state to reinvest $8 billion in Medicaid savings that officials say will be used to support hospitals and improve health care.

Gov. Andrew Cuomo, who had been seeking a waiver of $10 billion since 2012, said in a statement that an “agreement in principle” had been reached. The agreement with Health and Human Services Secretary Kathleen Sebelius still has to be finalized.

“It’s not everything New York asked for, but it is a generous amount,” Sen. Chuck Schumer said in a statement. “This large amount of money should help all of New York, both upstate and downstate, with both its budgetary challenges and hospital needs.”

Cuomo said the money, which comes from savings generated by the state’s Medicaid Redesign Team, would allow New York to support hospital overhauls and expanded primary medical care to meet growing patient demand under the state’s new health insurance exchange.

State officials had pursued a waiver from Sebelius to use up to $2 billion annually from Medicaid over five years to help financially struggling hospitals shift to more primary and outpatient medical care. More primary care will be needed to accommodate the newly insured, projected to top one million in three years.

The proposed Medicaid spending includes $1 billion for Brooklyn hospitals, some of which have been relying on extra state money to keep operating. Waivers enable states to use federal money resulting from cost savings in their programs. Financially troubled hospitals would likely have to make major changes like closing wings and cutting excess capacity including staff.

“While the state will be reviewing the terms and conditions of this agreement, it is clearly the biggest step forward toward a positive conclusion for our communities, particularly in Brooklyn, that have suffered from diminishing health care services,” Cuomo said in a statement.

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight Committee, wrote to Sebelius that the panel was continuing to scrutinize New York’s Medicaid program, citing a report last year that poor oversight and improper financing led to misspending of tens of billions of dollars over two decades. Issa urged Sebelius to recover the state’s overpayments.

Cuomo said the criticisms are from past issues that have been fixed.