Is Medicaid Sense Coming To New York?
New York has a Medicaid program that is two-and-a-half times as expensive as the national average, and larger than those of Texas and California combined. Two stories in the Metro section today's Times speak to why this is, and what can be done to provide a better safety net at a lower cost.
The first article involves a plan to create financial rewards for counties that detect fraud. Because New York's program has traditionally involved a split in which the feds pay half, and the state and counties pay about a quarter each, all parties involved have tended to see the program as a free money generator, in which a dollar spent yields three additional dollars of spending. Instead of a "the buck stops here" approach, the buck never stopped, and New York's Medicaid spending mushroomed into the fastest growing and largest part of the state's budget. Perversely, the Times article explains, "New York is rare in requiring that counties pay a large share of Medicaid costs, yet until recently it did not allow counties to investigate those billing the program."
A recent deal, pushed through after several years of kicking and screaming by Nassau County Executive and failed gubernatorial candidate Tom Suozzi, in effect froze counties' share of spending, with the state picking up almost all new spending. With their share of spending fixed, counties now have an incentive to maximize value per dollar, instead of attempting to maximize the number of dollars coming in. And things are moving in this direction, with New York City now looking to join the 12 counties already involved in a pilot program to go after Medicaid fraud in exchange for receiving a share of returns. While the arrangement's structure, which requires counties to refer cases to the state Attorney General's office, leaves much to be desired, this creates a powerful new incentive to control spending which until now has been largely absent from New York's incredibly expensive and inefficient system.
The second article discusses a $1.5 billion federal grant to New York State to go with $1 billion in state money intended to close under-utilized hospitals in the state, and to cover the heavy short-term costs of hospital closings.
No other state has negotiated a similar deal, and none are likely to, officials said. The hospital industry in most states, like their populations, is growing; New York’s industry is shrinking, and is in uniquely bad financial shape.
“This agreement is a tremendous win for New Yorkers,” said Michael Marr, a spokesman for the governor. He said it would help ensure that the industry “remains strong, efficient and sustainable for many years to come.”
The logic behind the deal, state officials say, is that smart investments will allow the state to reduce the cost of New York’s Medicaid program, the government health plan for the poor, which is the most expensive in the nation, at about $45 billion a year. The federal government pays half that cost, so it would reap half the savings.
Half a billion dollars of the federal money is dependant on the state achieving a nationally unprecedented reduction in Medicaid fraud. Assuming front-runner Eliot Spitzer is elected in November, it remains to be seen if this can be accomplished by a governor who failed to make Medicaid fraud a priority as Attorney General, and who has been coy about reforming the system as a candidate for governor. But pressure from the counties below and the feds above can only help create accountability and results.