Bureau of Global Cap, Rebates, and Supplemental Programs

Medicaid is a means-tested program that finances health care services for low-income individuals and long-term care services for the elderly and disabled, primarily through payments to health care providers.

The Medicaid program is financed by a combination of State, Federal, and local government resources. The State share of Department of Health Medicaid spending is financed by a combination of the General Fund, Health Care Reform Act (HCRA) resources, indigent care support, provider assessment revenue, and tobacco settlement proceeds.

In FY 2012, the State implemented the Medicaid Global Cap, which statutorily sets the annual growth rate to an industry-based metric. Additional information on the Medicaid Global Spending Cap and Medicaid Budget Actions can be found in the following link.

The FY 2018 Enacted Budget established a Medicaid Drug Cap that limits pharmacy spending growth in the Medicaid program to an industry-based metric.

If the Budget Director determines that expenditures will exceed the annual growth limitation imposed by the Medicaid Drug Cap, the Commissioner of Health may refer drugs to the State's Drug Utilization Review (DUR) Board for a recommendation as to whether a supplemental rebate should be paid by the manufacturer.

If the Department intends to refer drugs to the DUR Board, it will notify affected manufacturers and will attempt to reach agreement on rebate amounts prior to DUR Board referral. Additional information on the Medicaid Pharmacy Drug Cap and Drug Utilization Review programs can be found in the following links.

The Medicaid Drug Rebate Program requires drug companies to enter into a rebate agreement with the Federal Secretary of the Department of Health and Human Services (HHS) as a precondition for coverage of their drugs by Medicaid and Medicare Part B.

New York State collects rebates for drug utilization for both the Omnibus Reconciliation Act of 1990 (OBRA 90), and supplemental and diabetic supply rebates. Additional information on the Medicaid Pharmacy Program can be found in the following links.

The Federally mandated UPL program provides annual supplemental payments to providers based on Federal matching funds for how much Medicare would pay for the same Medicaid services.

The UPL is a calculation submitted to CMS that demonstrates that the State is not paying more for Medicaid than what would be paid under Medicare principles. The UPL calculation compares a calculated Medicare principal amount to actual Medicaid payments. The actual Medicaid payments cannot exceed the calculated Medicare principal amount. (The Medicare principal amount is the “upper payment limit”.)

The following link provides additional information from the Federal Center for Medicare & Medicaid Services (CMS) on the UPL program.

The Federally mandated DSH program provides annual funding to over 150 hospitals certified under Article 28 of State Public Health Law (PHL), as well as over 20 Institutes of Mental Disease certified under Article 31 of State PHL, and is intended to offset facilities' uncompensated care costs to improve access for Medicaid and uninsured patients, as well as improve the financial stability of safety-net hospitals.

The Omnibus Budget Reconciliation Act (OBRA) of 1981 established the Medicaid DSH program. Uncompensated care cost is the sum of costs incurred to provide services to Medicaid and uninsured patients, less payments received for those services. Further, hospital-specific DSH payments are limited to no more than 100 percent of each hospital's uncompensated care cost. Federal regulations require states to have annual independent audits of DSH payments.

The New York State Department of Health provides continued outreach to hospitals and hospital associations to assist these stakeholders in understating and reporting appropriate activity for the Medicaid DSH State report. These outreach efforts, including Webinars, FAQs, instructions, and one-on-one discussions, have contributed to steady improvement in patient characterization and record-keeping compliance and quality by many of the DSH payment recipients.

The following link provides additional information from the Federal CMS on the DSH program.

For inquiries relating to the DSH Program, please e-mail dshaudits@health.ny.gov.

The State holds Medicaid checks/payments for two weeks prior to releasing the funds to plans and providers. Organizations with cash flow challenges or Medicaid payment issues are able to request to be taken off the two-week lag once per year, thereby advancing a weekly payment.

The purpose of the lag suspension is to help providers with short term cash flow relief and is considered a temporary solution with the intent of returning providers back to the Medicaid cycle lag. Providers that are experiencing routine financial distress may apply to be removed from the two-week payment lag. These distressed providers are evaluated annually by the Department of Health to determine if they should return to the payment lag.

Medicaid providers requesting an exemption to the payment lag, must submit a written request (fillable form as follows) to lag@health.ny.gov, which includes the following:

  • The specific action being requested (i.e. completely off the lag or one week);
  • The Medicaid Provider ID Number(s) affected; and
  • A statement explaining the impact on Medicaid recipients in the event that the request is not approved.

The following is the required documentation that must be submitted in order to be considered for removal from the Medicaid Lag:

  • The latest available audited financial statements;
  • The latest available unaudited financial statements;
  • A monthly cash flow projection for the next 12 months;
  • A listing of current accounts payable and accounts receivable with an aging analysis; and
  • Demonstration that the problem is a short-term problem caused by an extraordinary event or is related to issues with Medicaid and a projected date for reinstatement of the Medicaid Lag payment.

Please do not forward partial data - all requested data should be furnished in a single e-mail submission.

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