ALBANY, N.Y. — New York reached an agreement Thursday with federal officials for a waiver that would allow the state to reinvest $8 billion in Medicaid savings that officials say will be used to support hospitals and improve health care.
Gov. Andrew Cuomo, who had been seeking a waiver of $10 billion since 2012, said in a statement that an "agreement in principle" had been reached. The agreement with Health and Human Services Secretary Kathleen Sebelius still has to be finalized.
"It's not everything New York asked for, but it is a generous amount," Sen. Chuck Schumer said in a statement. "This large amount of money should help all of New York, both upstate and downstate, with both its budgetary challenges and hospital needs."
Specific terms and conditions for the waiver still need to be finalized and the state will have to meet ongoing milestones to receive the funding, according to an HHS spokeswoman.
Cuomo said the money, which comes from savings generated by the state's Medicaid Redesign Team, would allow New York to support hospital overhauls and expanded primary medical care to meet growing patient demand under the state's new health insurance exchange.
More than 412,000 New Yorkers have enrolled for health insurance coverage through the exchange since October.
State officials had pursued a waiver from Sebelius to use up to $2 billion annually from Medicaid over five years to help financially struggling hospitals shift to more primary and outpatient medical care. More primary care will be needed to accommodate the newly insured, projected to top 1 million in three years.
Joanne Peters, a spokeswoman for the department of Health and Human Services, said that the waiver agreement "represents a significant commitment to improve care delivery in Medicaid that will result in better health outcomes for patients and lower health care costs for the program."
The proposed Medicaid spending includes $1 billion for Brooklyn hospitals, which state officials say have about 1,200 excess patient beds. Some have been relying on extra state money to keep operating. Waivers enable states to use federal money resulting from cost savings in their programs.
The money would provide temporary hospital subsidies and fund primary care programs for patients, all meant to reduce preventable hospital admissions by 25 percent. Financially troubled hospitals would likely have to make major changes like closing wings and cutting excess capacity including staff.
"While the state will be reviewing the terms and conditions of this agreement, it is clearly the biggest step forward toward a positive conclusion for our communities, particularly in Brooklyn, that have suffered from diminishing health care services," Cuomo said in a statement.
U.S. Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, wrote to Sebelius this week that the panel was continuing to scrutinize New York's Medicaid program, citing a committee report last year that concluded that poor oversight and improper state financing arrangements led to New York misspending tens of billions of dollars over two decades.
Issa and two Republican colleagues urged Sebelius to hold New York to strict program standards and recover overpayments.
Cuomo said the criticisms of the state's Medicaid practices are from past issues that have been fixed.