Gov. Cuomo Announces Major Medicaid Overhaul Deal

This is tremendously good news for New Yorkers and the long term fiscal stability of the state. Gov. Andrew Cuomo and various health related groups struck a deal to revamp Medicaid financing and spending. The deal will be wrapped into the Governor's program budget, which has to be approved by the Legislature before it can be enacted:

The first-of-its-kind plan handed up by Cuomo's Medicaid Redesign Team would limit total spending on the program to $52.8 billion this year -- capping the state's share at $15.1 billion -- and allow no more than 4 percent growth each year going forward.

The proposal, which was OK'd by groups such as the state's hospital association and the health-care union 1199 SEIU, recommended a series of rate cuts, incentives and program overhauls to cut projected Medicaid spending by $2.3 billion for the next fiscal year -- as Cuomo laid out in his first budget proposal.

Proposed reforms include:

* Capping non-economic medical malpractice awards, like pain and suffering, at $250,000.

* Assigning specific providers to oversee complex cases.

* Beginning to transfer nearly all of the state's 4.5 million Medicaid enrollees to managed care from the dominant fee-for-service model.

1199 SEIU President George Gresham and Greater New York Hospital Association President Kenneth Raske, who have waged multimillion-dollar ad campaigns against previous proposals, both appeared with the governor to praise the plan.

"This certainly resulted in pain, but it was shared pain," Gresham said. "I wanted to thank the governor for the opportunity to allow working people to be part of the solution."

The deal empowers health care providers to enact their own ideas to save $640 million in Medicaid annually or face state-imposed cuts.

"This is a hard cap," Raske said. "The industry has to live with it, come up with ways to become more efficient, singularly and collectively. Otherwise, they're going to get a cut. This is a loaded weapon."

Cuomo said he'll fold the plan into his budget proposal, which lawmakers have limited power to amend. The governor called on Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Majority Leader Dean Skelos (R-LI) to pass the budget before the April 1 start of the state's fiscal year.

With the SEIU backing this proposal, it will be tough for the legislature to claim that the proposal isn't supported by the unions or that it will harm the state in the long run.

Cuomo has essentially done an end run around the legislature, and the onus is now on the legislature to pass the legislation that will begin to provide structural reform to the Medicaid funding and spending formulas.