Cap on Local Medicaid Costs Provides Million in Savings to Counties, New York City

ALBANY, N.Y. (Oct. 20, 2008) – State Health Commissioner Richard F. Daines, M.D. announced today that New York City and the state's counties shared in savings of $127.9 million due to the cap on the local share of Medicaid costs.

New York City and 49 of 57 counties outside of New York City achieved an aggregate local share savings of 2 percent, with some county savings as high as 18 percent. The local cap legislation has saved local governments a total of $330 million since January 2006. The state Department of Health anticipates that these savings will increase over time as the state continues to pick up a larger percentage of overall Medicaid costs, including local administrative costs.

Historically, the county share of Medicaid expenditures has increased substantially almost every year and has put an ever increasing strain on local budgets. The cap on the local share of Medicaid costs provides a predictable, capped amount of the county share of Medicaid expenditures for services to medically needy populations. The cap provides much-needed fiscal relief to counties after years of significant Medicaid budget growth.

In accordance with the Medicaid local share cap legislation, the nine counties outside New York City who did not achieve savings will receive refunds totaling almost $2.3 million, holding them harmless from any increase due to the cap. These counties should eventually achieve savings pursuant to the cap.

In addition to the savings provided by the cap, the legislation provides for county Medicaid anti-fraud initiatives which are currently under way. Counties can share in recoveries resulting from these initiatives, providing further fiscal relief to county budgets. One such demonstration program has resulted in a $40 million recovery resulting from litigation initiated by many of the state's counties. The counties participating in this litigation will receive approximately $12 million.