State finalizes deal for $8B Medicaid waiver

state-finalizes-deal-8b-medicaid-waiver
Andrew Cuomo. (Governor's Office)
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ALBANY—New York State has reached a final agreement with the federal Centers for Medicare and Medicaid Services on an $8 billion Medicaid waiver, designed to support the state’s struggling hospitals over a five-year period, Governor Andrew Cuomo announced Monday.

The $8 billion will be broken up into three parts: $500 million for an Interim Access Assurance Fund, which will provide temporary funding for Medicaid safety-net providers, $6.42 billion to help hospitals reform their delivery systems, and $1.08 billion for "other" purposes, including "health home development," "investments in long term care, workforce and enhanced behavioral health services," Cuomo's office announced in a release.

The administration first applied for the waiver in August of 2012, but was forced to amend their application in December of last year, after the federal government determined that some of the state's planned uses for the funding, including capital construction costs for health facilities, could not receive federal aid. The state's original waiver application sought $10 billion, but the final agreement was scaled down to $8 billion. 

A critical piece of the final waiver agreement spells out which hospitals are considered “safety net” institutions, eligible for the waiver’s largest pot of money, $6.42 billion set aside to help the state’s struggling health care facilities.

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The waiver's terms specify that in order to be designated as a safety-net provider, hospitals must either have high numbers of Medicaid and uninsured patients, or be designated as a “public hospital, Critical Access Hospital or Sole Community Hospital,” according to the federal C.M.S.

Likewise, non-hospital providers can only be designated as safety-net institutions if they serve high volumes of Medicaid and uninsured patients.

Under the waiver’s guidelines, any provider who doesn’t meet those criteria is ineligible to receive more than 5 percent of the total funding. The funding would be disbursed to providers based on a formula tied to the number of Medicaid patients seen by the providers. 

But the waiver does include three exceptions to the safety-net definition, for hospitals to receive funds even if they don’t meet the standards set forth by C.M.S.: A hospital can receive funds if it is located in a community with no other service providers. Hospitals can be granted an exception if they are uniquely qualified to serve the community, financially viable, have longstanding relationships within the community, and have a record of success in lowering preventable hospital admissions among patients. And exceptions will be granted to any state-designated health home or group of health homes, according to the waiver’s terms.

The final waiver agreement appears to be a compromise—the bulk of the funds will go to hospitals that serve poorer patients, with some notable exceptions. 

Lawmakers and health industry advocates did battle in recent months over the "safety net" definition, with upstate lawmakers and health industry trade groups arguing for a more expansive interpretation that would include hospitals in rural regions of the state that serve fewer Medicaid patients. Health providers in New York City argued the lion's share of the funds should be used for struggling hospitals in Brooklyn, where several institutions are either in bankruptcy proceedings or facing imminent closure.