Reforming the Way We Finance Medicaid (DOWNLOAD THE PDF REPORT HERE)
Counties’ number one mandate relief property is removing county property taxpayers from the funding Medicaid. This report details property taxpayers’ costly $7.3 billion role in the Medicaid program and identifies the ways and means to fund a State takeover of county costs.
Reforming the Way We Finance Medicaid
Counties’ number one mandate relief priority is removing county property taxpayers from funding Medicaid. In 2012, counties across the State, including New York City, will provide more than $7.3 billion to the State in weekly Medicaid installments. Counties have subsidized the State’s Medicaid program since 1966. New York is the only state in the nation that essentially requires the use of property taxes to pay such a large percentage of their Medicaid program.
NYSAC is proposing a multi-pronged plan for the State to gradually takeover the full fiscal responsibility for its own Medicaid program. This will allow county property taxpayers to finally end the subsidy they provide to the State budget that supports a Medicaid program under the complete control of lawmakers in the State Capitol. Within the coming years, New York State has a unique opportunity to:
1. Apply a portion of the MRT savings to provide property tax relief-there is ample savings going forward that can be used to support the gradual State takeover;
2. Pursue a federal 1115 Medicaid waiver to leverage advanced funds from the federal government; and
3. Allow federal health care reforms to cover more New Yorkers-In his State of the State Address, Governor Cuomo has stated that the Affordable Care Act will result in $18 billion in new federal resources to New York State over the next several years.
State Programs Funded by Property Taxes [& Medicaid is a huge one] (DOWNLOAD THE PDF HERE)
This report represents NYSAC’s continuing efforts to raise awareness of the systemic inequity of the State’s public service delivery system that relies on property taxpayers to fund State programs, services and policy decisions. read more…
Calling for the State Assumption of Local Medicaid Costs
The number one priority for this year’s State Legislative Session must be enacting a state assumption of local Medicaid costs—and county leaders are not the only voices calling for that proposal.
Counties and New York City will spend nearly $7.3 billion in local taxes to support the state’s Medicaid program in 2012. Outside of New York City, a typical county’s Medicaid costs will consume about half of the property tax levy. The State law requirement that counties pay for a large share of the cost of the State’s Medicaid program is one of the top reasons for New York’s highest-in-the-nation property taxes.
In late December, the Governor’s Medicaid Redesign Team (MRT) sent its final recommendations to the Governor on ways to improve and further reform the State’s largest-in-the-nation Medicaid program. A key component of those recommendations includes a long-sought NYSAC proposal for the State to gradually assume full fiscal responsibility for the Medicaid program. The Governor will review all of the proposals from the MRT in the coming year for possible action. MRT reforms related to financing and state/local responsibilities can be viewed at: www.health.ny.gov/health_care/medicaid/redesign/docs/program_streamlining_report.pdf
Additionally, the Citizens Budget Commission released a report in early December which highlighted the significant inequity and unfairness of using local property taxes as a way to finance a statewide program. The nonpartisan Citizen’s Budget Commission released a report entitled, A Poor Way to Pay for Medicaid. The report concludes that, “New York’s local share Medicaid policy, which requires counties to pay a portion of program costs, is out of line with other states, causes taxpayers in some counties to pay more for Medicaid on average than taxpayers in neighboring counties, and undercuts efforts to control costs. Review the full report at: http://www.cbcny.org/content/poor-way-to-pay-medicaid.
Finally, the Governor’s State of the State speech acknowledged and validated that, as NYSAC has advocated the last two years, $18 billion in new federal resources will be made available to New York through the Affordable Care Act, which is scheduled to become effective in 2014. These new funds should be one of several funding sources used to leverage the State assumption of the local share of Medicaid costs. The tens of billions of dollars in savings over the next decade from the Governor’s own MRT proposals, along with the recovery in State tax receipts also offer other sources of funding to leverage this takeover of local Medicaid costs. (Dave Lucas)
Multi-year Proposal to Phase Out County Share of State’s Medicaid Program.
County leaders from the capital region and across the State embrace a new legislative proposal that provides for a multi-year phase out of the county share of the State’s Medicaid program.The proposal provides for a gradual State takeover of the full financial costs of Medicaid, which is currently financed at the local level through property taxes.
Tuesday, November 08, 2011, 7:00:00 PM
Small Business Celebrates Decision Striking Down Federal Health Care Law Latest court ruling is a major victory for individual liberty generally and for small businesses specifically.
(This next piece is great, but in our opinion here at MandateReliefNy, we have a long wy to go, needing to reach not millions in reforms, but rather billions)
Written by Sonia Lindell on October 6, 2011 – 6:06 am
Casey Seiler of the Times Union writes:
“The first phase of the state’s attempt to overhaul its health insurance program for low-income residents has achieved almost $600 million in savings in its first six months, according to a progress report released Wednesday.
Gov. Andrew Cuomo’s Medicaid Redesign Team gathered at The Egg to hear team reports and receive a demonstration of the Medicaid Visual Data Mining system, which allows state officials and health care managers to track spending in a more targeted and quick-response fashion.
“We are now live-managing the program,” said Greg Allen of the state Department of Health, who demonstrated how the system could be used to track anomalies that could indicate possible fraud or other problems.”
To read the full article click here.
To view the Medicaid Redesign Team’s presentation click here.
Written by Rob Lillpopp on April 22, 2011 – 6:33 am
Scott Walker the Republican governor of Wisconsin writes in a op-ed in today’s New York Times – “WHAT does Medicaid have in common with “I Dream of Jeannie,” “Lost in Space” and “Get Smart”? They all made their debut in 1965. Although we enjoy watching reruns of these classics, the television networks have updated their programming. The federal government should do the same.
In recent years Washington has taken an obsolete program, which covers health care for low-income Americans, and made it worse through restrictive rule-making that defies common sense. It is biased toward caring for people in nursing homes rather than in their own homes and neighborhoods. It lacks the flexibility to help patients who require some nursing services, but not round-the-clock care.
If we were designing a health insurance program for low-income families today, we would use a much different model to drive efficiency and innovation — one that recognizes that the delivery of health care is fundamentally personal and local.”
To read more click here.
Written by Michael Moran on March 21, 2011 – 6:20 am
A New York Post editorial supports Gov. Cuomo’s proposed cap on non-economic damages in medical malpractice suits.
The Post writes: “New York stands on the brink of tak ing its first-ever serious steps to ward genuine tort reform — and the benefits could be huge.
Provided Gov. Cuomo stands firm.
Because the ambulance chasers and their legislative allies — led by Assembly Speaker Sheldon Silver (D-Weitz & Luxenberg) — are at full throttle, screaming about the supposed triumph of “special interests.” (They’re ones to talk!)
Trust us: It’s all about billable hours.
As part of its 79 recommendations to realize $2.3 billion in savings, Cuomo’s Medicaid task force called for a $250,000 cap on non-economic damages in medical-malpractice cases — i.e., “emotional pain and suffering.” It also proposed an indemnity fund for brain-damaged infants.
Together, the two moves are expected to produce $700 million in Medicaid savings. But they also mean a potentially significant loss of income for tort lawyers, who love to boast of their multimillion-dollar jury verdicts and settlements — of which they get a very healthy slice.”
The editorial continues: “Last week, the two legislative houses addressed the issue in starkly different ways in their budget bills: The GOP-controlled Senate preserved both med-mal measures; Silver’s Assembly ditched the cap and proposed the trial lawyers’ changes to the indemnity fund, effectively making it unworkable.”
Written by Rob Lillpopp on February 28, 2011 – 7:07 am
Jim Odato writes in the Times Union about the hidden tax placed in the proposed Medicaid reform.
“Gov. Andrew Cuomo’s Medicaid reform package is at odds with his declaration that he stands firmly against expanding taxation. “No new taxes, period,” he said as he assumed the job in January.
But the redesign team he appointed gave him a report that he is sewing into his budget for the upcoming year, and it calls for taxing radiology visits and physician-based surgeries in the same way prior governors sought unsuccessfully to expand the surcharge on hospital discharges.
Business groups across the state are hammering Cuomo on what they see as an about-face. His panel wants to expand the 9.63 percent surcharge on the other medical services to raise $100 million more a year. But that would add up to 2 percentage points more to health insurance premiums.’
To read more click here.
“The Business Council opposes taxes on health insurance premiums and services and asks the Task Force to focus on the mission of re-engineering a Medicaid program which is the most costly in the country,” added Briccetti. “New York’s employers and their workers cannot afford another cost shift to subsidize the most expensive Medicaid system in the nation.”
Medicare & Medicaid: NY Needs Better Management
Sept 26, 2010 Article from the Herald Examiner Written by Thomas Reynolds Candidate for NYS assembly seat 125
As someone who aspires to represent Tompkins and Cortland counties in the State Assembly, I wince whenever county and state officials say Medicaid is the fastest growing portion of the budget and there is nothing they can do about it. One of my qualifications for the Assembly is my professional experience with the Medicaid system. There is actually a lot that can and should be done.
I once took over as the Chief Financial Officer (CFO) of a local nursing home that had just lost $930,000 and had over $500,000 in bills it could not pay. By the end of my first year, the nursing home was $230,000 in the black and had cleared up all of its bills. Over the six years I was CFO, the nursing home had six Administrators, five Directors of Nursing, four Maintenance Directors, and two completely different Boards of Directors. But the nursing home continued to be financially stable in spite of this turnover and the multiple challenges with Medicaid.
From my firsthand experience in health care, I can list specifics about the bloated, inefficient, ineffective Albany Medicaid bureaucracy and the duplication of effort with Medicare. I have specific ideas on how to reduce these costs.
How efficient are Medicare and Medicaid (I’ll refer to them as M&M) in daily practice? Allow me a few examples from my personal experience in nursing home management. I believe you will be astounded!
Medical insurance companies publish their rates in advance and those rates remain in force for a set period, generally a year. Not so with Medicaid. In 2008, I worked at a nursing home that was waiting for rate adjustments going back to 1995. One of these adjustments was necessary because our 2008 rate was based on a former 80 bed capacity, though we had expanded to 120 beds in 1995. How would you react if, today, your insurance company adjusted your medical premium of 13 years ago and every year in between? Does that paint a picture of efficiency?
In 2008, Medicaid lowered our nursing home’s rate (unrelated to above) by $3 a day. But they made it retroactive to 2003 and we had 180,000 Medicaid days in between. We suddenly owed over half a million dollars. On another occasion, Medicaid revised our rate upward by $40 a day, but it was a mistake! We verbally informed the Department of Health (Medicaid) of the mistake and followed that up in writing within 30 days. Due to the mistake we received an additional $15,000 every week. By the time Medicaid finally corrected the mistake, we had to pay back $996,000.
In 2004, New York State set its record for a late budget. That budget raised an assessment from 5% to 6%. (This is a percentage added to a person’s nursing home bill, much like sales tax.) The change became effective in September, retroactive to April 1st. Nursing homes were expected to go back and collect the extra 1%. It must not have occurred to the state that some patients may have died in the interim! (Our nursing home absorbed the 1% in new costs.)
I’ve had a role in several financial “turn-arounds”. A lack of urgency is a trait I’ve found in every company I worked with that was in financial trouble. These examples clearly demonstrate a lack of urgency in our state bureaucracy.
Dare I mention the lack of urgency in the state’s budget process?
Some local officials praise the efficiency of M&M as compared to private insurance companies. They assert that the administrative costs of M&M are around 3% while those of insurance companies are around 15%. To be fair, we need to compare “apples to apples”. Are all equivalent expenses counted in the 3% M&M figure? No, they’re not.
Insurance companies pay income taxes, franchise taxes, sales taxes, property taxes… all kinds of taxes. M&M does not. We’d better subtract taxes from the insurance companies’ 15% to get a valid comparison. Insurance companies also have to collect premiums. But the IRS collects all the premiums for M&M. Was a part – a big part – of the IRS budget allocated into the 3% figure? (Remember, every paycheck has a Medicare deduction in it.)
The insurance companies’ expenses include the cost of borrowing money. The federal budget is running at a 40% deficit. Therefore, 40 cents of every M&M federal dollar is borrowed and interest is paid. For an honest comparison, the Medicaid figure must include the interest on borrowing 40% of every federal M&M dollar paid in benefits and administration. And some day, the principal will need to be paid back, too.
The insurance company rents or buys space, may have to pay mortgage expenses and has an expense for depreciation. How many federal, state and M&M offices have building depreciation and mortgage interest charged to their M&M budgets? (Look at your local county budget for a clue, but you can guess the answer.)
There are other insurance company costs not included in the M&M figure, but I believe the point has been adequately made.
My experience tells me that governments do not perform as efficiently as Not-For-Profits and private businesses are generally more efficient than N-F-Ps. Notice that the County contracts out for many social services to Not-For-Profits. They do that because the N-F-P’s are more efficient than the county, and they help to reduce bottom line costs.
Now let’s talk about solutions. Every nursing home working with M&M has to do separate end-of-year cost report for Medicaid and Medicare. I’ve personally filled them out. The Medicaid report is over 100 pages long and the Medicare report is closer to 70 pages long. The majority of the 70 pages are duplicated in the 100 pages. But each of the M&M reports has its own way of doing things, so the duplicated information is also reported in different formats.
The M&M programs pay different rates, calculated in different ways and paid differently. Yet, the M&M programs deal with the same doctors, therapists, hospitals, nursing homes, etc., and a single patient often moves between Medicare and Medicaid. Lots of required information is obviously duplicated: name, age, social security number, diagnosis, etc. Why not combine Medicare and Medicaid billing and make it more efficient – and less costly – for the state, the taxpayers who ultimately pay the state’s bills, for customers, doctors, nursing homes, and other caregivers.
Rate setting is another area ripe for improvement. It costs each nursing home tens of thousands of dollars to comply with the current Medicaid rate setting system — adding extra costs to the price of health care in New York. Imagine how many millions it costs New York State to administer this system. Since all the information needed to calculate a rate is already in the system, it should be automated and accomplished without any further cost to nursing facilities. With these reforms, we could eliminate much of the rate setting bureaucracy, potentially saving the public millions of wasted health care dollars.
The cost of Medicaid in our state is twice that of the number-two state, California. Let’s examine California’s program, side-by-side with New York’s program, and implement reforms wherever possible.
New York has very low eligibility requirements. Out-of-state people are likely drawn into New York because of its high benefits and ease of becoming eligible. Why should New Yorkers pay high state taxes to support residents from other states? Let’s reform the eligibility requirements.
Our rate reimbursement system is way too complex. The current Medicaid reimbursement system is more complex than the IRS tax code. Why do I say that? You can sue the IRS over a tax issue and a judge will decide the issue. You can also sue the NY Department of Health (Medicaid) over rate issues and it will go before a judge. However, some Medicaid rate issues are so complex that the judges have deferred the decision back to Medicaid.
How can medical professionals and facilities be expected to comply with regulations that are too difficult to be understood by judges? Some simplification is clearly called for!
Finally, governments do not generally pay taxes. If they did, they would be paying themselves or another government body. Well, Medicaid is a government program that voluntarily pays a sales tax. Of course, politicians could not get away with openly taxing health care, so its technical name is the “Health Care Facilities Cash Receipts Assessment” — it’s an assessment, not a sales tax.
If we go to the store and pay $100, the clerk adds $8 for sales tax, which the store collects and passes the $8 on to the state. When Medicaid pays $100 to a medical provider, it adds $6, which the medical provider collects and passes on to the state. Sounds like a sales tax, doesn’t it? Since the counties pay about a quarter of the Medicaid bill, the county is forced to pay a sales tax to the state. The federal government pays 50% of Medicaid, so it is also paying a tax to the state (and the state is paying a tax to itself).
During my career I’ve had the opportunity turn around financially failing for-profit and not-for-profit organizations — by doing things differently from my predecessors, who had created the problem. What we need now in Albany are Assemblypersons with real world experience and management ability. Echoes are nothing more than the same thing, over and over again. It doesn’t take courage or leadership to be an echo. All we hear from our current leaders are echoes.
I have no illusions that the entrenched interests in Albany’s legislature and bureaucracy will go quietly, meekly or easily. But someone must call to account the self serving practices and economic illiteracy that dominates our state government. These issues overlap party lines. Our legislators owe New Yorkers their strongest efforts to bring real change to confront the crises that grips Albany.
Health Care Reform
The rising cost of health care is our members’ most significant cost of doing business concern. When it comes to the challenges of heath care and how to pay for it, New York is ahead of the curve, well past much of the nation in health care infrastructure, medical education and research, insurance mandates, health care and insurance taxes, an expansive Medicaid program, and taxpayer-supported plans for the uninsured. Far from perfect, our system is extremely expensive compared to most other states.
If national health care reform leads to increased taxes for New York’s employers, those new costs must be offset by reforms here at home. We must look for reforms that reduce the high cost of health care in New York, including mandate and tax relief, and more efficient, technologically advanced delivery of health care service. When considering health care reforms proposal in Washington, our representatives need to remember that you can’t make something more affordable buy making it more expensive.
For more information on health care legislation visit: www.bcnys.org/inside/healtcom.htm