A coalition of health care trade groups has accused state officials of illegally cutting $352 million in Medicaid funding for nursing homes in New York.
The groups announced a lawsuit Friday that claims many nursing homes could be forced to close or reduce staffing and services for thousands of elderly and disabled New Yorkers due to the Medicaid cuts that took effect in July.
“A cut of this magnitude will directly jeopardize access to quality resident care,” said James Clyne, Jr., President of LeadingAge NY, one of the groups in the lawsuit.
The case involves the formula that state regulators use to calculate reimbursement rates for Medicaid, the health-care program for millions of poor and disabled Americans jointly funded by state and federal government.
The trade groups asserted state Health Commissioner Dr. Howard Zucker and the Department of Health targeted Medicaid reimbursement rate reductions that unfairly harm nursing homes statewide.
Health Department officials on Friday said the 2020 state budget included a Medicaid rate change to ensure that nursing homes are paid accurately and fairly based on the care needs of the 80,000 New Yorkers they serve at an annual cost of about $6 billion.
"The Department does not expect this change to result in any disruption to nursing home residents and the care they receive, and is reviewing the court case,” department officials wrote in an email.
The Medicaid rates in part are based on a measure of need and service, known as the case mix index, according to the trade groups.
Among other allegations, state health department officials made the case mix adjustment without getting the required federal government approval through the Centers for Medicare and Medicaid Services, the lawsuit claims.
Further, state health department officials allegedly failed to follow state laws, such as those controlling how they alter data analysis used to make Medicaid rate adjustments, court records show.
“There is no rational basis for (the state’s) actions in this matter,” the lawsuit states. “Rather, (the state officials) acted solely to cut nursing home reimbursement to address an unrelated State Budget shortfall, without regard to whether such a cut was justified.”
Health Department officials asserted the new reimbursement rates were based on a six-month average of nursing home care needs, or acuity levels. Previously, the rates were based on acuity levels on two specific days each year, health officials said, adding the new rates create a more fair and accurate picture of needs.
Still, the lawsuit claims the new rates will result in funding cuts that "pose an immediate threat to nursing home residents and employees.”
In addition to impacts on staffing levels and care, the funding cuts could make it so some nursing homes will be unable to honor wage and benefit increases recently negotiated with unions, the lawsuit states.
“New York’s non-profit nursing homes face many fiscal and operational challenges yet always strive to provide the highest quality care,” said Bea Grause, president of Healthcare Association of New York State.
“A funding cut of this magnitude will demoralize providers and make it more difficult to protect and care for the most vulnerable New Yorkers” she added.
The lawsuit in Albany County Supreme Court seeks to halt the Medicaid funding cuts during litigation over restoring the money permanently.
The other trade groups include New York State Health Facilities Association, Southern New York Association, Greater New York Health Care Facilities Association and Continuing Care Leadership Coalition.
The lawsuit contended the state estimated the Medicaid cut would generate $246 million in savings over nine months. The amount was set to meet state budgetary needs, as opposed to those of nursing home patients, the lawsuit claims.
The trade groups noted the Medicaid cuts total $352 million based on their calculations for an entire 12-month period.