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 Nursing Homes Allege NY Medicaid Underpayments In Lawsuit

​A group of New York nursing facilities has filed a lawsuit against Gov. Andrew Cuomo’s administration for what they term as illegal Medicaid funding cuts.

Nearly three dozen facilities filed the suit against the state Health Department in Albany Supreme Court in September. They want to eliminate a change in the Medicaid funding formula enacted earlier in 2011 that reduces funding and recovers payouts from the past two years.

Long term care advocates are seeking more details on the lawsuit, but note that such suits are not uncommon in New York. “It is not unusual to have lawsuits over reimbursement in the state of New York,” says Richard Herrick, president and chief executive officer for the New York State Health Facilities Association.

The group filing the lawsuit fears that nursing homes will have to close because of the lost funds.

The lawsuit notes that in usual circumstances when a change is made to the formula it is for future periods, allowing facilities time to budget for increases or decreases in money.

The Medicaid changes made this year were retroactive to April 2009, meaning facilities experience reduced Medicaid payouts at double the rate, the suit said.

New York essentially flat-lined its Medicaid expenditures for its 2011-2012 fiscal year, but also placed an overall monetary cap on the program no matter how many recipients were in the program.

The lawsuit also took issue with the “unequal” way a state fund operates to help nursing homes that are losing money this year from suffering more because of the formula change. Nursing facilities losing $6 million or more under the new formula will get all of it back this year from the special fund, while most of those losing under $6 million will only recoup half.              

Adding to the Medicaid funding debate was a separate report by New York state auditors that said the state’s health department overpaid nursing facilities about $42 million in Medicaid over a 44-month period because many were not collecting money from their clients’ income as required. 

Auditors said many residents have Social Security and pension incomes that should have been used to offset the cost of nursing care.                                                                                        

New York’s Medicaid program has expanded from 4.6 million recipients and $43 billion in 2007 to 5.2 million recipients and $53 billion in 2010.
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