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State To Reinvest Medicaid Savings On Hospitals, Health Care

Deal Reached With Federal Officials, Cuomo And Schumer Announce
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Brookdale Hospital and Medical Center in Brooklyn. (Credit: CBS 2)

Brookdale Hospital and Medical Center in Brooklyn. (Credit: CBS 2)

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ALBANY, N.Y. (CBSNewYork/AP) — New York State has reached an agreement with federal officials for a waiver allowing the state to reinvest $8 billion in Medicaid savings to support hospitals and improve health care, Gov. Andrew Cuomo and Sen. Charles Schumer said Thursday evening.

Cuomo, who had been seeking a waiver of $10 billion since 2012, said in a statement that an “agreement in principle” had been reached.

“The money can be used to help keep hospitals open,” Schumer told WCBS 880. “We’ve had a particular problem in Brooklyn. While the federal government doesn’t give money to keep a certain hospital open, the amount of money and the flexibility will allow the state to keep hospitals open.”

Cuomo said the money, which comes from savings generated by the state’s Medicaid Redesign Team, would allow New York to support hospital overhauls and expanded primary medical care to meet growing patient demand under the state’s new health insurance exchange.

More than 412,000 New Yorkers have enrolled for health insurance coverage through the exchange since October.

State officials had pursued a waiver from Health and Human Services Secretary Kathleen Sebelius to use up to $2 billion annually from Medicaid over five years to help financially struggling hospitals shift to more primary and outpatient medical care. More primary care will be needed to accommodate the newly insured, projected to top 1 million in three years.

“While the state will be reviewing the terms and conditions of this agreement, it is clearly the biggest step forward toward a positive conclusion for our communities, particularly in Brooklyn, that have suffered from diminishing health care services,” Cuomo said in a statement.

Mayor Bill de Blasio also released a statement lauding the agreement to the the waiver.

“This is long-overdue good news, and it’s a tremendous victory for the elected officials and communities that have fought long and hard over these many months. For neighborhoods at risk of losing their access to health care, the waiver will help stabilize and transform struggling institutions. Governor Cuomo and his team were tenacious and effective in fighting for the funds we were owed, and I applaud Secretary Sebelius and Senator Schumer for ensuring the federal government met its obligations,” de Blasio said in the statement.

De Blasio said the deal will halt the rash of hospital closures the city has seen in recent years – a major issue for the mayor when he previously served as city public advocate.

“With this funding, we can finally turn the page on a decade of reckless hospital closures, and confront the immediate crises facing seven hospitals in Brooklyn alone. This is our opportunity to focus on long-term solutions that deepen access to preventative, primary and emergency care. I look forward to working with the Governor and communities across the city to seize it,” the mayor said.

The proposed Medicaid spending includes $1 billion for Brooklyn hospitals, which state officials say have about 1,200 excess patient beds. Some have been relying on extra state money to keep operating. Waivers enable states to use federal money resulting from cost savings in their programs.

Without the funding, Brookdale University Hospital and Medical Center, Interfaith Medical Center and Long Island College Hospital would have likely been shuttered.

The money would provide temporary hospital subsidies and fund primary care programs for patients, all meant to reduce preventable hospital admissions by 25 percent. Financially troubled hospitals would likely have to make major changes like closing wings and cutting excess capacity including staff.

U.S. Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, wrote to Sebelius this week that the panel was continuing to scrutinize New York’s Medicaid program, citing a committee report last year that concluded that poor oversight and improper state financing arrangements led to New York misspending tens of billions of dollars over two decades.

Issa and two Republican colleagues urged Sebelius to hold New York to strict program standards and recover overpayments.

Cuomo said the criticisms of the state’s Medicaid practices are from past issues that have been fixed.

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