New York state may cap Medicaid costs at $15.1 billion

New York Governor Andrew Cuomo presents his 2011-12 budget proposal in Albany, New York February 1, 2011.

NEW YORK (Reuters) - New York state would cap its share of Medicaid at about $15.1 billion a year, slice costs with a 2 percent across-the-board reduction and shift all of the 4.7 million recipients to managed care over three years under a plan unveiled on Thursday.

Governor Andrew Cuomo appointed a commission to determine how to cut the state's Medicaid program -- one of the nation's most generous -- by $2.85 billion.

The recession decimated New York state's economy. The Medicaid reduction was one of the ways Cuomo proposed to close a nearly $11 billion deficit in the new budget that starts April 1.

Critics faulted Cuomo, a Democrat, for not specifying how he would cut Medicaid when he unveiled his $132.9 billion budget plan in January. His commission beat its March 1 deadline by about a week.

"We just filled in the blanks; now we need the legislature to do their job," Cuomo said. He will send the Senate and the Assembly the commission's recommendations as part of the 30-day amendments governors submit after issuing their budget plans.

Commission member Ken Raske, the president of the Greater New York Hospital Association, told reporters in Albany, the state capitol, that this would be the first hard Medicaid cap enacted by a state.

New York spends $52.8 billion a year on Medicaid, the health plan for the poor, disabled and elderly, when all federal, state and local funds are counted.

"This is a loaded weapon," said Raske, referring to the cap. Hospitals, nursing homes, clinics and other health care providers would see their reimbursements cut if they start to exceed the cap, he said.

Commission members said the plan aims to equalize reimbursement rates for treating patients in hospitals or clinics.

Cuomo's commission included George Gresham, the president of 1199SEIU, one of the unions that ran blistering ads attacking previous governors' attempts to throttle the ever-rising costs of Medicaid.

Gresham said he backed the plan. "We're not only going to have a more efficient system, we're going to have better outcomes; for us in the health care field that's what really matters," Gresham said.