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  • State Update

    Budget takes note of funding uncertainties stemming from DC

    Amid an uncertain federal funding background, Governor Cuomo unveiled the state's 2018-2019 $168 billion proposed budget on Tuesday, January 16, 2018. The administration's proposal calls for no new major provider cuts, but the ultimate fate of hospitals' funding and the final state budget hinges on the outcome of several federal items, including delay of federal Medicaid Disproportionate Share (DSH) cuts and reinstatement of the cost sharing reduction (CSR) payments made to insurers to help low-income Americans afford their co-payments and deductibles.

    The governor's budget closes a projected $4.4 billion state deficit through a variety of revenue producing measures such as funds from not-for-profit to for-profit health insurer conversions, excise tax on health insurers whose profits benefit from the recently enacted federal tax law changes, and a new tax related to the sale of opioids by drug manufacturers. Without congressional action on the CSRs and DSH payments, the impact of federal healthcare cuts on New York State would multiply by the billions, according to the governor's office.

    Other highlights of the governor's budget include the establishment of a $1 billion Healthcare Shortfall Fund to continue theavailability of funding for quality health services and to lessen the blow from any loss of federal dollars. The budget also maintains funding for distressed hospitals, the methodology for distributing DSH funds, and funding related to capital improvement projects.

    On the other hand, the budget calls for $425 million of Medicaid dollars to be re-directed to the state's general fund, as a result of changes to the Medicaid global spending cap. Hospitals would endure rate reductions linked to quality pool funding and emergency room and lab services, among other areas targeted for reduction.

    The proposed budget retains the federal funding contingency plan put in place last year that would allow the state tomake spending reductions if federal funding to the state is reduced by $850 million or more. The plan would take effect immediately unless the legislature adopts its own plan within 90 days. This proposal leaves hospitals in a very vulnerable situation in terms of Medicaid funding.

    The governor's office has the option to issue amendments to the budget at the 21-day mark and the 30-day mark. One-house budget bills are expected early to mid-March. The state will hold a health and Medicaid budget hearing on February 12, 2018 at which our regional and state hospital association leaders will press for favorable action on Medicaid, DSH, capital investment, and insurance access. The next state fiscal year begins April 1, 2018 and an on-time budget is due by this date.

     

    Federal Update

    Lawmakers must reach a deal to avoid another partial shutdown

    After a three-day partial shutdown of the federal government, lawmakers returned to the negotiating table and delivered another continuing resolution to keep the government funded until February 8, 2018. While still only a short-term fix, the legislation did extend funding for the Children's Health Insurance Program (CHIP) for six years.

    The legislation did not address, however, delay of Disproportionate Share (DSH) cuts nor reinstatement of the cost sharing reduction (CSR) payments. Funding for the nation's community health centers, critical to providing healthcare services in poor and underserved areas, remains in limbo, as well. The legislation did address several Affordable Care Act taxes. The medical device tax and tax on generous, high-cost health insurance plans are delayed for two years, and the tax on health insurance providers is delayed for one year.

    Funding for CHIP means nearly 300,000 children in the state will not lose their insurance, including 99,119 children in the nine counties located throughout the Suburban Hospital Alliance of New York State regions. CHIP funding expired September 30, 2017, and New York State was inching ever closer to running out of funds for this program during the current fiscal quarter.

    The CSR payments made to insurers selling on the health insurance exchanges were halted by the Trump administration on October 12, 2017. For many months prior, the administration threatened to stop the payments. These payments help low-income Americans afford their co-payments and deductibles. The permanent loss of CSR payments means New York would lose $900 million in funding for the state's Essential Health Plan. The Essential Plan is available to low-income New Yorkers who earn too much to qualify for Medicaid, but not enough to afford commercial insurance products sold on the exchange. Last year, 136,324 individuals in the nine Suburban Hospital Alliance counties purchased an Essential Plan from New York's marketplace, with about 60 percent of enrollees residing in Nassau and Suffolk counties.

    New York's Attorney General Eric Schneiderman and the governor filed a lawsuit against the Trump administration for ending the federal funding for New York's Essential Health Plan. The lawsuit alleges that the U.S. Department of Health and Human Services (HHS) unlawfully withheld legally-required funding to New York to operate its Basic Health Plan, which is the Essential Health Plan. The state argues that the funding cut is arbitrary and capricious and violates the Administrative Procedure Act. The state of Minnesota is party to the lawsuit.