New York Medicaid Panel Backs Cuts

By Thomas Kaplan for the New York Times –

ALBANY — In an unexpected vote, a committee appointed by Gov. Andrew M. Cuomo to cut billions in health care spending approved on Thursday an annual spending cap and across-the-board reductions for all Medicaid providers.

The vote, on 79 cost-cutting measures, was part of a sweeping overhaul of how the state finances the program for the poor and disabled. It came only five hours after some of the measures had been made public, and only minutes after state officials had finished explaining how some of the proposals would work.

But hospital and union leaders on the committee said they believed they had reached their goal and did not need any further study, and Mr. Cuomo said he would add the recommendations to his budget, which is before the Legislature.

“People said, ‘Well, this will never happen, it will never be done, it’s too difficult, they’re too contentious a group,’ ” Mr. Cuomo said. “Lo and behold, they did it.”

Mr. Cuomo had asked the committee to give him recommendations by March 1 on how to reduce Medicaid spending without simply cutting payments to health care providers.

The package the panel approved, which totaled $2.3 billion in savings, includes dozens of ideas culled from the health care industry and from public hearings in a two-month sprint overseen by Jason A. Helgerson, the state’s Medicaid director. But those ideas added up to only $1.1 billion, so the committee concluded that more traditional cuts, including cuts to some reimbursement rates, would be unavoidable.

It remains to be seen how receptive the Legislature will be to the measures, which would give the Health Department significant power to make some future rate cuts without legislative approval.

Mr. Cuomo’s budget director, Robert L. Megna, said that the committee needed to find less in savings than budgeters had originally thought, because a revised budget analysis was projecting that the Medicaid caseload would grow less than expected.

The proposals include measures to move more people to managed care; impose spending controls on home health care and personal care; and limit noneconomic damages in medical malpractice cases.

Other savings would come from the spending cap, which would require a rate cut that totals $345 million, and as much as $640 million in future cuts if providers cannot find their own ways to reduce spending in the meantime.

“You don’t challenge the kind of budget deficit that we had without dealing with pain,” said George Gresham, the president of 1199 S.E.I.U. United Healthcare Workers East. “This,” he added, “resulted in pain, but it was shared pain.”

The vote marked a huge political victory for Mr. Cuomo, whose predecessors had been bludgeoned during budget season by television advertisements financed by many of the same officials who smiled broadly alongside the governor inside the Capitol’s ornate Red Room on Thursday.

“This is a historic day by any stretch of the imagination,” said Kenneth E. Raske, the president of the Greater New York Hospital Association.

Still, Health Department officials acknowledged that many details still needed to be worked out. One committee member, Assemblyman Richard N. Gottfried of Manhattan, a Democrat and the chairman of the Assembly’s Health Committee, doubted that a key provision in the proposal to create the spending cap would even be constitutional.

The committee had been scheduled to meet again Friday to review the proposals, and then hold a formal vote on Tuesday, a month before the Legislature’s deadline to pass a budget. But over lunch on Thursday, the members decided they did not need more time.

“It didn’t serve any purpose to belabor the issue and just continue just for the sake of continuing,” said a co-chairman of the committee, Michael Dowling, the president and chief executive of the North Shore-LIJ Health System.

In the end, 20 committee members voted to approve the cuts, while 4 others abstained — including Mr. Gottfried, who called the abrupt vote “highly inappropriate” — and 3 were absent.

One of those who did not show up at the meeting was Jeffrey A. Sachs, a close friend of Mr. Cuomo’s, who has come under fire from government watchdogs for refusing to fully disclose the clients of his consulting business, which include major New York hospitals likely to be affected by the recommendations approved on Thursday.

A spokesman for Mr. Sachs declined to explain his absence.

Mr. Cuomo, asked by a reporter about the potential conflicts involving friends from whom he seeks policy advice, noted that members of the Medicaid team were not subject to disclosure laws.

“I take friends’ advice, plus or minus, with a grain of salt,” he said yesterday. “If they’re a friend, I know where they’re coming from, I know who they are, I know their bias, I know their perspective.”