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Watchdog group calls out state budget 'gimmick' in Medicaid payment delay

The Empire Center

A budget watchdog group says New York’s budgeters used a sleight of hand to make it to seem as though the state was adhering to a legal cap on the growth of health care spending, by shifting a Medicaid payment from last fiscal year to this year.

The Empire Center’s Bill Hammond said Gov. Andrew Cuomo’s budget office quietly postponed a $1.7 billion Medicaid payment in late March by three business days and made the payment instead in early April. That’s significant because the state’s fiscal year ended March 31 and a new one began April 1. If the payment were made in March, the state would have been over a statutory cap that limits growth of Medicaid spending to 3% last year.

“It’s definitely a gimmick,” said Hammond “It’s only three days, but it moves this big number from the balance sheet from one fiscal year to the balance sheet of another fiscal year.”

The state might have to reduce health care spending for the rest of this year by as much as 8% if it wants to remain within this year’s cap, Hammond said. The spending limits were set by Cuomo early on in his administration, in an attempt to control what had been double-digit increases in year-to-year Medicaid growth.

The budget office did not mention the delayed payment until they issue a financial plan in May. State Comptroller Tom DiNapoli did not notice it until later and included it in a report issued in early July.

The financial plan does not say exactly how it might resolve the issue, but hints that it might put off the March 2020 Medicaid payment into April and the next fiscal year, 2021.

“It kind of makes a mockery of the budget concept and all of the financial reporting that goes around it,” he said. “The numbers don’t mean what they appear to mean.”

Hammond said the move is reminiscent of past budget balancing gimmicks, including delaying all state workers’ pay by a couple of weeks so the payment would appear in the new fiscal year, and selling Attica Prison to a state agency to gain some temporary extra cash.

But Hammond said, at least in those days, the current governor’s father, former Gov. Mario Cuomo, publicized the actions.

“He would take a lot of criticism for doing these things, but he didn’t hide them,” Hammond said.

A spokesman for Gov. Andrew Cuomo’s budget office, Freeman Klopott, said in a statement that it’s really not all that big a deal.

“The State has flexibility for the timing of Medicaid payments and from time-to-time takes action to manage spending,” Klopott said. “In March, we delayed a Medicaid payment by three days. There were no impacts on services and we are evaluating spending patterns and our options for addressing them going forward.”

Klopott did not rule out postponing one month’s Medicaid payments again, at the end of this fiscal year.

Hammond countered that it is a sign that the state’s Medicaid spending may be growing “out of control” - and that could impact Medicaid providers like hospitals, as well as New Yorkers who depend on the program for their health insurance.

Karen DeWitt is Capitol Bureau Chief for New York State Public Radio, a network of 10 public radio stations in New York State. WBFO listeners are accustomed to hearing DeWitt’s insightful coverage throughout the day, including expanded reports on Morning Edition.