Governor Cuomo’s plan to reform Medicaid has given local governments, municipalities and healthcare providers a little glimpse into how he plans to address issues related to New York state’s budget deficit.

First, the Governor proposes to reform the current Medicaid system with a new Medicaid Redesign Team – or “MRT II” – tasked with reforming Medicaid and identify $2.5 billion in industry efficiencies and/or additional industry revenue by the April 1st budget deadline. Of significant note is that Governor Cuomo plans to empower the Office of Medicaid Inspector General (“OMIG”) by requesting $50 million for OMIG’s funding. The office will add 69 staff members to investigate Medicaid payments and promote program compliance and integrity.

Moreover, Cuomo’s proposed 2021 Budget also focuses on local district spending reform. Under his proposal, the state will commit to paying the entire increase in Medicaid costs for local governments as long as the local governments stay within the 2% property tax cap and control Medicaid costs to 3% growth per year. Any local government that does not stay within those limits will purportedly be required to pay the total spending growth.

Those proposals, coupled with Comptroller DiNapoli’s recent release of Medicaid program audits identifying $790 million in potential savings, indicate that while the state may not be asking local governments to pay more towards Medicaid, they will be seeking to recover funds through an increased focus on enforcing compliance with regulatory and/or enforcement measures against a variety of entities.

While this Budget has yet to be introduced in the state legislature, and application of these plans has yet to be seen, the information provided in Cuomo’s Budget is invaluable in anticipating and preparing for upcoming changes to the Medicaid system and local government landscape.

This alert does not purport to be a substitute for advice of counsel on specific matters.

Harris Beach has offices throughout New York State, including Albany, Buffalo, Ithaca, Melville, New York City, Rochester, Saratoga Springs, Syracuse, Uniondale and White Plains, as well as New Haven, Connecticut and Newark, New Jersey.