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Proposed NYS budget restructures Medicaid to address $6.1 billion deficit

Posted on January 23, 2020

GOVERNOR CUOMO RELEASES HIS 2020-2021 STATE BUDGET PROPOSAL

Governor Andrew Cuomo unveiled his 2020-2021 $178 billion State Budget proposal on Tuesday, January 21, 2020.   The $178 billion executive budget outlines a plan to reduce the growth of government spending and restructure the state’s Medicaid program to combat a looming $6.1 billion deficit.

The Governor highlighted program initiatives that he would advance, including:

  • MRT II: Reconvenes the Medicaid Redesign Team (MRT II), that is charged with identifying cost-containment measures to provide approximately $2.5 billion in gap-closing savings in FY 2021 and ensure Medicaid spending in future years adheres to the Global Cap indexed rate
  • School Aid: A School Aid increase of $826 million, or 3 percent, with more than 80 percent of the increase targeted to high-need districts
  • Local Aid: Targeted savings in local aid programs
  • State Agencies: Continues to limit growth in agency operations to “investments that are expected to yield improved performance or reduced costs over time.”
  • Marijuana: Legalize Adult-Use Marijuana
  • Bail Law Reform: Proposes to update last year’s Bail Law reforms
  • Middle Class Tax Cuts: Continues middle class tax cuts for 4.7 million New Yorkers earning under $300,000 a year and recommends no new tax increases
  • Fighting Domestic Terrorism:  Enact the “New York Hate Crime Anti-Terrorism Act” which creates a domestic act of terrorism motivated by hate crime as a new A-1 class felony punishable by up to life in prison without parole

The Executive Budget proposal includes the following legislation:

  • Prevailing Wage: Requires that workers on projects, with a significant public subsidy, would be paid a prevailing wage.  This applies to projects valued at more than $5 million and exempts ESSHI funded projects.
  • Paid Sick Leave: Requires businesses with five to 99 employees to provide their employees at least five days of job-protected paid sick leave per year and businesses with more than 100 employees,to provide at least seven days of paid sick leave per year.
  • Continuing the Regional Economic Development Councils: $750 million to continue the regional economic development strategy.

The Budget proposes substantial capital investments, including:

  • $33 billion 5-year capital plan to tackle climate change
  • $275 billion infrastructure program
  • $133 million for homeless and affordable housing
  • $2.9 billion to combat childhood poverty
  • $12 million for emergency management equipment
  • $147 million for the Olympic Regional Development Authority capital improvements

Key elements of the FY 2021 gap-closing plan include:

  • County management of the Medicaid program:   If counties stay within the 2% tax cap but exceed 3% Medicaid growth, they will pay for Medicaid expenditures above the 3% for that year. If they stay within the 2% tax cap and under a 3% Medicaid increase, they get 25% of the savings. If counties fail to stay within the 2% tax cap, they have to cover 100% of Medicaid growth.
  • DOB has revised the tax receipts forecast across all years in the Financial Plan based on stronger receipts to date and updated economic information. Through the first three quarters of FY 2020, General Fund receipts, including transfers from other funds, totaled $57.8 billion, $1.5 billion (2.7 percent) above the initial estimate of which PIT receipts were $1.3 billion higher.
  • The MRT II is charged with identifying cost-containment measures that will provide approximately $2.5 billion in gap-closing savings in FY 2021 and ensure Medicaid spending in future years adheres to the Global Cap indexed rate. The spending targets are incorporated into the Financial Plan projections. The Team’s recommendations are due prior to the Enacted Budget.
  • Another $1.8 billion in local assistance savings is expected from targeted actions and the continuation of prior-year cost containment.
  • Savings in agency operations, including fringe benefits, are expected to reduce spending by $359 million from the baseline forecast. The Executive Budget holds agency operations spending flat at $10.7 billion. In addition, sensible reforms are again advanced to achieve savings in health insurance and judgments against the State.

OPWDD held a call with the provider associations on January 22 to review the Governor’s 2020-2021 state budget proposal.  We were pleased that the 2% #bFair2DirectCare funding, effective 4-1-2020, was in the budget and not surprised that neither the COLA nor the 3 for 5 funding

were in the Governor’s budget proposal.  We met with the Health and Medicaid team from DOB and they provided clarification on Medicaid, MRT II, Early Intervention and telemedicine for dual eligible individuals. Any details or clarification from the OPWDD call and DOB meeting are contained below.

Below is an overview of the Governor’s budget proposal by section.  We will provide additional details as we get them.

OPWDD

  • #bFair2DirectCare Increases & Minimum Wage funding:  The budget contains $127 million (state & federal) in funding to cover the continuation of the 1/1/20 2% increase for 100 & 200 CFR Code positions and another 2% for the 4/1/20 increase for 100, 200 & 300 CFR Codes.  $44 million (state & federal) is included to continue the minimum wage increase.  As part of the “two-year agreement” to provide these two 2% increases, there is no COLA in this budget proposal.
  • Development:  Once again the budget includesadditional State resources “that can leverage up to $120 million” all shares fully annualized (state and Federal) in additional funding available for “Program Priorities,” including; certified housing supports in the community; more independent living; more day program and employment options and increased respite.
  • Housing:  $15 million in capital funds to develop affordable, independent living housing.
  • “Improve Accountability and Oversight”: Includes legislation that provides OPWDD with the authority to issue operating certificates to providers of certain Medicaid State Plan services.   “The purpose of this legislation is to create more direct authority for oversight and ensure quality of services by providers…and to eliminate duplication of efforts between multiple State agencies.” (See“CCO’s” below)
  • “Promote More Efficient Use of State Resources”: “OPWDD will leverage federal Medicaid funding, utilize other supplemental aid where available and take other actions to more cost-effectively support the provision of person-centered programs.”.  Recoupments of surpluses in supplemental room and board and other state fund payments should yield $10M, reduced State Operations overtime payments should produce $7M.
  • Managed Care:  Guidance on Specialized I/DD Plans – Provider Led (SIP-PL) “is expected to be released for public comment soon.”  Responses will inform OPWDD on the system’s fiscal and other readiness for Managed Care.  In July 2018, OPWDD developed regional Care Coordination Organizations (CCOs) as a first step.
  • Justice Center:  Discontinue the requirement that every Justice Center investigation of abuse and neglect must also include a Statewide Central Register of Child Abuse and Maltreatment (SCR) check except in cases where the check may aid the investigation.
  • CCO’s:  $30M in savings are expected to be realized from reductions in CCO rates.  Since the 90% enhanced federal support of CCO’s is now reduced to 50%, OPWDD will provide $178 million and will assume oversight of CCO’s from DOH.

SED

  • School Aid: The proposed school aid increase is $826 million or 3.0% for a total of $28.5 billion which is the largest line item in the budget. Therefore, we hope that our 853 schools will get 3% growth as they have received the same percentage increase as school aid in recent years.
  • 4410 & 853 Schools: We were extremely disappointed that there weren’t any funding or teacher retention proposals for our 4410 or 853 schools or any inclusion of the Regents proposals to add funding for teacher certification or loan forgiveness.
  • School Mental Health Resource and Training Center: $500,000 is provided for the Resource and Training Center.  The funding will be utilized to continue the work of educating teachers, administrators, students and other school personnel about the inclusion of mental health education in schools and to help promote school climates that are conducive to mental health and wellness.
  • Master Teacher Program:  $1.5 million for the Master Teacher Program to create a corps of outstanding teachers and counselors in order to improve the quality of instruction and counseling at public schools.

DOH

  • Medicaid Redesign Team (MRT) II: The Governor has proposed a reconstitution of the MRT to identify $2.5 billion in Medicaid savings.  If the MRT II doesn’t come up with $2.5 billion in savings, the Governor’s budget proposal provides the authority for the Division of Budget to implement up to $2.5 billion in across the board cuts. Although, the Mental Hygiene agencies, including OPWDD, are “excluded” from the MRT, OPWDD providers are the only ones that continue to have a 2011 MRT cut (#26) in place (Article 16s that provide more than the average number of therapies).  The first MRT was given almost a year to identify savings but the MRT II has just two months. The short time frame will make it difficult to involve stakeholders and devise thoughtful strategies.
  • Early Intervention: Although 42% of children who receive EI services have commercial insurance coverage, only 2% of EI services are paid for by commercial insurance.  The other 98% is paid for by the state and counties (including Medicaid).  The Governor’s budget proposes language to ensure that commercial insures pay for covered EI services.
  • Consumer Directed Personal Assistance Program (CDPAP): The Governor’s proposal names the CDPAP program for a large portion of the increase in Medicaid costs.  It says, [Managed Long Term Care] spending growth overall – and CDPAP within it – have been the biggest drivers of spending growth in New York’s Medicaid program” and notes that “Between 2017 and 2018 alone, spending for CDPAP grew by 85 percent from $1.5 billion to $2.4 billion.”   While DOH has put out the CDPAP RFO for Fiscal Intermediaries and the 12-12-19 proposed regulations on per member/per month payments, CDPAP is also included  in  MRT II which states that the cuts shall be uniform across all categories and geography, unless there are “sufficient grounds” for non-uniformity, such as the extent to which a specific category has contributed to the excess spending.   Therefore, while there are no specific cuts to CDPAP in the Governor’s budget proposal, there continues to be grave concern for the viability of the program and the potential impact of MRT II recommendations.

OMH

  • #BFair2DirectCare: The Budget includes the 2% increase effective 1-1-2020 for 100 & 200 codes and 2% increase effective 4-1-2020 for 100, 200 & 300 codes but delays the COLA.
  • Housing: $20 million for increased funding for community housing rates which doubles prior year funding.
  • School Mental Health Resource and Training Center: $500,000 in funding for the Resource and Training Center.  The funding will be utilized to continue the work to educate teachers, administrators, students and other school personnel about the inclusion of mental health education in schools and helping to promote school climates that are conducive to mental health and wellness.
  • Master Teacher Program:  $1.5 million for the Master Teachers Program to create a corps of outstanding teachers and counselors in order to improve the quality of instruction and counseling at public schools.
  • Behavioral Health Parity: Establishes the Behavioral Health Parity Compliance Fund for the collection of penalties imposed on insurance
  • Homeless Veterans: $5 million for projects for homeless veterans.
  • Adult Home residents: $12.5 million to support the transition of adult home residents to the community.
  • Community Reinvestment: there is no mention of Community Reinvestment funding that has long been derived from state hospital beds closing or facility consolidation.
  • Kingsboro Psychiatric Center: Includes a plan to develop a voluntary-operated, step-down transition to community residence program on the Kingsboro PC campus and transform the campus into a “Recovery Hub Facility.”
  • Substance Use Disorder and Mental Health Ombudsman Program: Continues $1.5 million in funding to support the behavioral health ombudsman program, which helps individuals and their families navigate the behavioral health care system.

 Budget Documents can be found at https://www.budget.ny.gov/