New York gets $8 billion Medicaid waiver

New York will keep $8 billion saved by state Medicaid reforms under a tentative deal with federal health officials, Gov. Andrew Cuomo said late Thursday.

The amount is less than the $10 billion New York sought in its original Medicaid waiver request, which has been a source of intense public interest in New York City's borough of Brooklyn. State officials have said the federal funds are critical to assist distressed Brooklyn hospitals.

Cuomo and New York City Mayor Bill de Blasio publicly lobbied federal officials to approve the waiver in recent months as one distressed Brooklyn safety net hospital prepared to shut its doors.

In statement announcing the deal, the governor praised the agreement in principal and thanked federal officials. New York's Medicaid overhaul is expected to save the program $17 billion by the end of 2015, according to state estimates. The waiver sought to allow the state to keep $10 billion to spend on the efforts.

“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 healthcare services,” Cuomo said. “Securing this waiver will address those needs, allowing us to increase access and improve the quality of care for New Yorkers while making New York's healthcare system a model for the entire nation.”

Cuomo has said that the federal funds he was seeking would be used to downsize and invest in the borough's healthcare market.

“We are rationalizing the system,” Cuomo told the Crain's New York Business editorial board. “You have excess hospital capacity. You have beds that you don't need. You have to close beds, you have to reduce hospitals as you know them and have a healthcare system that makes sense. (The CMS waiver covers) an upfront cost to transform the system, so in the long term you save money. I'll bring those hospitals down (to size).”

Cuomo's proposed state budget, released last month, calls for $1.2 billion in healthcare capital investments to consolidate providers and boost care coordination.

Follow Melanie Evans on Twitter: @MHmevans