health care

Booming Long-Term Care Industry Drives Budget-Busting Medicaid Cost Surge

Governor Andrew Cuomo speaks about health care during his State of the State address in Albany, Jan. 8, 2020.
Governor Andrew Cuomo speaks about health care during his State of the State address in Albany, Jan. 8, 2020. Photo: Ben Fractenberg/THE CITY

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Gov. Andrew Cuomo is demanding New York City and county governments shoulder more of the rising cost of Medicaid, the main driver of a $6.1 billion state budget gap.

Cuomo last week condemned “blank-check syndrome” he said led localities to run up Medicaid tabs paid for by the state to nearly $22 billion this year, without helping control skyrocketing expenses. New York City could be on the hook for hundreds of millions more dollars.

But a closer look at the areas where the governor’s office is seeking to tackle health care costs show a system where localities have little control.

Private plans have racked up billions of dollars in bills. Just how much is difficult to determine, because details on state Medicaid spending remain closely guarded. Meanwhile, a program that pays people to care for loved ones also is driving up the Medicaid price tag.

In the governor’s crosshairs is a program accelerated by the Cuomo administration during its overhaul of New York’s Medicaid system, the insurance for the poor. Managed Long Term Care (MLTC) delivers home care attendants to the elderly and chronically ill, contracting with private insurers.

The largest of those insurers was the subject of a law enforcement settlement in 2018 after investigators alleged the plan had illegally billed Medicaid for services not rendered.

Looking for ‘Gatekeepers’

Spending on Managed Long Term Care has tripled between the 2013 and 2019 fiscal years, a $4.8 billion increase, state budget director Robert Mujica said last week following Cuomo’s budget announcement.

While pointing to rising wages and longer lifespans, Cuomo and his budget director also laid blame on New York City and other local governments for failing as “gatekeepers.”

New York is one of the few states that requires counties to pay a portion of Medicaid. Under a cap set in 2012 on the local share, New York City pays roughly $5.9 billion a year, according to the city Independent Budget Office. Meanwhile, the state has picked up the remainder, $2 billion this past year— with increasing resentment from the governor as costs rise.

State Budget Director Robert Mujica.
State Budget Director Robert Mujica. Photo: Kevin P. Coughlin/Governor Andrew Cuomo’s Office

“We don’t necessarily know what’s going on with that program — what’s driving all of the costs. But there is a real role for the gatekeeper [localities] to play a role in making sure that there’s integrity in the program,” Mujica said.

Mayor Bill de Blasio begged to differ, telling WNYC’s Brian Lehrer on Friday:The State of New York runs the Medicaid program, period.”

“Localities only enroll people,” he added. “We don’t decide what the rules are.”

Medicaid Redesigned

Spending and enrollment surged after the governor convened a so-called Medicaid Redesign Team in 2011 to reduce costs and improve care. Cuomo recently announced he is reconvening the panel and charging it with finding $2.5 billion in Medicaid savings.

One of the panel’s projects, starting in 2012, steered those enrolled in long-term care plans into Managed Long Term Care — private insurance plans contracting with Medicaid that the panel anticipated would let sick people stay at home instead of moving to more costly nursing facilities.

Mujica acknowledged to reporters that some of the rapid growth in Managed Long Term Care stemmed from 2012’s shifting of large numbers of patients into the program. The state Division of Budget did not say what share of that growth was attributable to the mandated switch to Managed Long Term Care.

The changes ushered in a burgeoning multi-billion dollar industry. Each insurer pre-approves services a patient may need and sets the hours of care they require from health aides.

The more hours and more services provided, the more the coverage costs taxpayers — a “red flag that cannot be ignored,” said Bill Hammond, the director of health policy at the Empire Center, a fiscally conservative think tank.

“The state must get to the bottom of why this is happening to make sure the taxpayers’ generosity is not being abused,” he said.

Hammond expressed particular concern about providers competing with one another to sweeten offerings to lure or retain patients, who are largely free to switch from one plan to another.

“The plans know that the customers can do this, and they have an interest. They don’t want to lose the premium revenue, so they can meet the client halfway,” he said.

Millions in False Billing

Major Managed Long Term Care providers already have been sued for allegedly taking in millions more dollars than they’ve been entitled to.

In 2018, federal and state investigators reached a settlement for $1.65 million in restitution and penalties with Staten Island-based Centers Plan for Healthy Living, an insurance plan that provides long-term health care services.

The Department of Justice and state Attorney General’s Office alleged Centers Plan falsely billed Medicaid for Managed Long Term Care services the enrolled plan members did not receive, between April 2013 and December 2015. Centers Plan received between $2,500 to $4,300 per person each month, according to the AG.

CPHL neither admitted nor denied the charges in the settlement, but agreed not to make any “public statement denying, directly or indirectly, any finding in this Agreement or creating the impression that this Agreement is without factual basis.”

A managed care company Centers Plan acquired in 2017, CenterLight Health System, entered into two settlements totaling $57 million in 2016 with the AG and feds following whistleblower complaints.

CenterLight admitted in the settlements that it improperly billed for more than 1,400 plan members who should not have received coverage — including participants at social adult day care centers who did not qualify for long-term care.

Those centers, the insurer acknowledged, either did not provide long-term care services that were billed for or were not competent or legally authorized to do so.

Today, Centers Plan is the biggest and most rapidly growing Managed Long Term Care plan in the state, with approximately 45,000 enrolled, state Department of Health enrollment data shows. According to the office of State Comptroller Tom DiNapoli, the firm received $2.29 billion in New York Medicaid payments from the state, localities and the federal government in 2019.

Centers Plan for Healthy Living declined to comment on the rising enrollment numbers.

“As a vibrant and thriving organization, CPHL is in good standing and the company’s overall goal is to provide members and all those involved in their care with the guidance and health plan choices they need for healthy living,” a spokesperson said in a statement. “CPHL is committed to providing quality, coordinated health care to some of the most honored and yet still vulnerable members of our community.”

Boom in Relative Care

More than 6 million New Yorkers are enrolled in Medicaid, the state and federal insurance program, with only 5% enrolled in Managed Long Term Care. Yet that 5% accounts for one-third of the state’s Medicaid spending, according to the state Division of Budget.

In New York City, enrollment in Managed Long Term Care has taken off, from 91,000 in 2012 to 216,000 last year, according to data provided to THE CITY from the Division of Budget. MLTC enrollment has followed a similar trajectory for the rest of the state.

Much of the spending growth was driven by the Consumer Directed Personal Assistance Program (CDPAP) — which allows the elderly and people with disabilities to choose their own in-home care providers, including friends and family. The governor’s office estimates that between 2017 and 2018, state spending through CDPAP grew from $1.3 billion to $2.4 billion.

While the Cuomo administration did not disclose CDPAP enrollment or costs for New York City, the five boroughs are experiencing a boom in the home health care industry largely attributable to the program, according to the city Independent Budget Office.

Employment in the home health sector grew from less than 30,000 in 1999 to over 190,000 in 2018, the IBO found — with 100,000 of those workers people paid by the state to care for disabled relatives under Medicaid.

That surge has opened avenues for abuse, say some who’ve been paid through the program.

“When it comes to CDPAP, because it’s your mom, because it’s your sister, you think you ain’t gotta do s—. You ain’t even gotta come,” said Vickie Johnson, a Bedford-Stuyvesant resident who cared for her aunt last year through the program. Her aunt has since died, she said.

Vickie Johnson, 55, cared for her aunt through the CDPAP program.
Vickie Johnson, 55, cared for her aunt through the CDPAP program. Photo: Courtesy of Vickie Johnson

“You know what the criteria is to take care of your loved one? There is none,” Johnson, 55, has been doing home health care work for seven years, she told THE CITY.

“You don’t even have to have a certificate. You can just take care of your aunt and get paid for it.”

Before resigning in 2018, then-Attorney General Eric Schneiderman brought numerous criminal cases against CDPAP workers the state alleged billed for work they did not perform.

Those included an upstate parolee who pleaded guilty to falsifying business records for billing Medicaid for caring for a relative in Geneva when his ankle bracelet revealed he was 40 miles away in Rochester.

Thwarted Cuts

To run CDPAP, managed long term care plans contract with fiscal intermediaries — middlemen that hire caregivers and deal with payroll and administration. As of early 2019, more than 600 fiscal intermediaries had registered with the state, Medicaid Director Donna Frescatore told state lawmakers last year.

Cuomo attempted to rein in the home health aide program last year by reducing the number of fiscal intermediaries and inserting budget cuts in his executive budget proposal. Unsuccessful, he instead created a panel to advise on how to overhaul CDPAP.

The state, via the Department of Health, went ahead with cuts anyway. In October, the Albany County Supreme Court nixed the rate cuts as invalidly issued. The state is trying again, this time through a formal rule-making process.

Meanwhile, Cuomo wants the city to pony up — a tab that would have run to $646 million had it been in place this year, say city officials.

The city Human Resources Administration must abide by federal and state-set rules on income eligibility, said IBO analyst Paul Lopatto.

“So I’m not quite sure what the state is suggesting when they say that the city is being irresponsible or implying that they’re somehow being overly generous,” said Lopatto.

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