Governor Cuomo’s Executive Budget Spares Health, Long-Term Care

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Governor Cuomo’s Executive Budget Spares Health, Long-Term Care

But Medicaid Redesign Team Recommendations Move Forward

Not-For-Profit Executive Compensation/Operational Costs At Issue


Governor Andrew Cuomo’s second Executive Budget, released on January 17, would reduce state operations (all funds) by 0.2 percent – from $132.7 billion in the current state fiscal year to $132.5 billion in FY 2012-13.  The Executive Budget addresses a $3.5 billion budget gap primarily through reductions in state operations, and through recurring actions and restructuring of the State’s income tax system.  This is a far cry from the $10 billion budget deficit New York State faced a year ago.  When looking at State Operating Funds, the overall budget increases by a small 1.9%.  The state fiscal year begins on April 1.  While the Executive Budget contains no new significant Medicaid cuts, the global spending cap remains in place, and if exceeded it will automatically institute reductions.


Health Care / Medicaid


Unlike last year, where Medicaid was a major focus of reductions and reform, this time health care is left relatively alone.  The Governor reminded the public in his budget address that state Medicaid spending last year had been projected to grow at an “unsustainable rate” of 13 percent; his budget that was adopted in 2011 limited Medicaid growth to 3 percent last year. 


This year’s budget bills (Article VII) do include language that would adopt Medicaid Redesign Team (MRT) proposals, but much of this was anticipated. 
Some of the MRT proposals identified in the budget include:


Supportive Housing / Assisted Living Programs


Allow for the reinvestment of Medicaid savings from hospital and nursing home closures or bed decertifications to fund a supportive housing development reinvestment program.
Allow Assisted Living Programs to contract with multiple home health agencies and other qualified providers.
Eliminates the authority to establish up to 6,000 ALP beds after the decertification of an equal or greater number of nursing home beds.

Allow the Commissioner of Health to establish a temporary operator of an adult care facility when the Health Department has issued a statement of deficiencies and the Commissioner determines that significant management failures exist in the facility.




Provide that coverage under the Medicaid program include podiatry visits for adults with diabetes.
Modify the “spousal refusal” provision, which allows a spouse or parent to refuse to contribute any available income or assets towards the costs of health care and long-term care services being provided to a spouse or family member.
Reinstate Medicaid coverage for Enteral formula and nutritional supplements for persons living with HIV/AIDS, an important win for the HIV community, Coverage for this supplement was removed from Medicaid last year, but HIV advocates successfully argued the importance of this nutritional supplement for many persons living with HIV.
Expand Medicaid coverage for harm reduction and Hepatitis C services.  Harm reduction counseling and services to reduce or minimize the adverse health consequences associated with drug use would be expanded as Medicaid reimbursable services. The budget states that “Hepatitis C wrap-around services to promote care coordination and integration support services” reimbursed by Medicaid would be expanded.  “Such services may include client outreach, identification and recruitment, Hepatitis C education and counseling, coordination of care and adherence to treatment, assistance in obtaining appropriate entitlement services, peer support and other supportive services.”


Medicaid Managed Care


Require managed care and managed long-term care plans to offer the consumer-directed personal care program to enrollees.

Eliminate the requirement that an applicant seeking to operate a Managed Long-Term Care (MLTC) plan be a hospital, licensed or certified home care agency, health maintenance organization or not-for-profit organization with a history of providing or coordinating health care and long-term care services to older adults and disabled persons.

The Governor seeks to gradually have the State take over the growth in the county share of Medicaid costs and implement a phased takeover of local government administration expenses.  The actions would result in local government growth in Medicaid costs to become frozen by 2015.  This will save New York City alone $1.2 billion over five years.


Of particular note, the state budget notes New York’s pursuit of a federal 1115 waiver for its Medicaid program:  “The new waiver will allow the State to prepare for implementation of national health care reform as well as effectively bend the cost curve for the State’s overall health care system.”


The Department of Health’s AIDS Institute will be the beneficiary of $1.8 million in increased funding.  There is a proposed increase of $4.8 million for NY NYIII housing for persons living with HIV/AIDS who have a co-occurring mental health diagnosis, and there is a $1.6 million increase in HIV/STD/Hepatitis C prevention and services.  This is offset somewhat by a $101,000 cut in HIV health care and supportive services and $1.5 million cut to clinical and provider education.  State funding for the AIDS Drug Assistance Program remains unchanged a $42.3 million.  One area that is unclear however, is whether there will be any reductions (or increases) in personnel at the AIDS Institute; due to a consolidation of funding lines in last year’s budget, it’s impossible to determine how the Institute’s personnel and operating budget would be impacted.  The Executive Budget does include a 2.7 percent cut for overall agency operations at the Department of Health.


Some cuts are included in the Executive Budget.  They include reform of the early intervention program, discontinuation of automatic human services cost-of-living adjustments, reductions in tobacco control funding and Naturally Occurring Retirement Communities funding.


Also, the budget calls for the creation of an individual and small business health insurance exchange, per the federal Patient Protection and Affordable Care Act.  Specific language is included in the Article VII bills to enact legislation to conform to federal requirements for the national law.


Other Changes


This governor’s Executive budget proposes two major reforms outside of health care: A new Tier VI pension system that creates a defined contribution (in lieu of defined benefit) pension plan, as well as reforms to Education, including statewide measures to evaluate public school teachers and tie increased state aid to Education to these measures, in part.  Both of these proposals will be highly contentious for the state’s public sector and teacher unions. 


Not-For-Profit Executive Compensation and Operations


The Executive Budget would limit the amount of funds from government-reimbursed programs that can be allocated to salaries at not-for-profits.  The limit is $199,000.  This means that for executive compensation exceeding $199,000, monies that support such a pay level cannot be from reimbursed funds.  That is, providers must fund that part of the salary exceeding the cap from other sources. 


In a preemptory move, Governor Cuomo on January 18 issued an Executive Order enacting the salary cap and other provisions.   Last year, the Governor established a task force charged with looking at the executive compensation at all not-for-profit entities in the State.  The Executive Budget language places limits on reimbursement of provider costs for administration and executive compensation, including a requirement that 85 percent of every public dollar be spent on direct services, not administration.  The Governor’s Executive Order reduced the 85 percent to 75 percent.


Various statewide provider associations and others have been in touch with both the Governor’s office and legislative leadership to express concerns about the cap.  For example, the executive compensation cap fails to contain any adjustment that reflects the size or complexity of the contracting entity or the geographic region where it operates.  The budget language does allow, however, for providers to receive a waiver from compliance with the requirements for good cause subject to the approval of the State agency and State budget director.


In addition, the budget will allow the Commissioner of Health to suspend or limit operating certificates of non-profit corporations participating in Medicaid and make temporary board member appointments due to repeated violations, felony violations by board members or state Attorney General actions to remove any board members.


Last year, the Governor delayed a planned 10 percent increase in the cash public assistance grant.  This year’s proposed budget was supposed to include this deferred increased.  It will now be phased in over the next two years.  If approved by the Legislature, the increase would bring the base level cash assistance grant for NYC Human Resources Administration clients up to about $365 starting July 1, 2012 and about $372 on July 1, 2013.


Next Steps


The Executive Budget will be negotiated in the coming weeks to achieve adoption of a FY 2012-13 state budget by April 1.  For the human services and health care community, while their remain some issues to be addressed, this is a much more agreeable state budget year than the budget seasons of recent memory.