NY Slashes Medicaid Payments to Nursing Homes, Other Providers by $124M — with $500M Annual Cuts Coming

New York made a 1% cut to Medicaid payments starting on January 1, with reimbursements to nursing homes included in the cost-cutting moves — which could soon translate to nearly $500 million in annual spending reductions.

The New York Daily News first reported the cuts, which were published in a notice in the New York State Register on December 31.

Other affected providers include hospitals, physicians, pharmacists, home care entities and Medicaid managed care plans, according to the Daily News.


The “estimated annual net aggregate decrease in gross Medicaid expenditures” from the cuts will be $124 million for state fiscal year 2019-2020, with decreases of $496 million in “each state fiscal year thereafter,” according to the State Register notice.

The reduction, which would take effect for services dated on or after January 1 through March 31 and for each state fiscal year thereafter, according to the notice, is different from the state’s earlier attempts to cut Medicaid payments to skilled nursing facilities, New York State Health Facilities Association president and CEO Stephen Hanse told Skilled Nursing News via e-mail.

“This is a new cut, and New York now leads the U.S. in the nursing home Medicaid shortfall at $65 per patient per day — the difference between the amount Medicaid reimburses providers and the actual cost of providing care in skilled nursing facilities,” Hanse wrote. “Nursing homes throughout New York have been struggling financially for years and we simply cannot absorb more cuts to make up for the State’s $4B Medicaid shortfall.”


The cut was approved by the state Legislature as part of the fiscal 2020 budget and is being implemented in the fourth quarter of New York’s fiscal year while the DOH develops a plan to lower Medicaid spending growth, according to a statement from the NY DOH.

New York Gov. Andrew Cuomo’s plan to address a projected $6 billion budget gap includes moving $2.2 billion in Medicaid costs into a future fiscal year, according to the Daily News. Cuomo, a three-term Democrat, also is seeking to set a “savings plan” that would reduce Medicaid spending in the current year by $1.8 billion, the publication noted.

Nursing homes in the state had recently scored a victory related to the DOH’s earlier attempt to reduce Medicaid spending through changes to the calculation for reimbursement, when a judge issued a preliminary injunction on November 7, 2019, preventing those alterations.

The DOH had projected that it would gain $246 million in gross budgetary savings due to the changes that were held up by the injunction.