State lawmakers in Albany are pressing health officials after discovering that approximately $1.4 billion collected from New York’s managed care insurer tax has not yet been distributed to hospitals, nursing homes, or community clinics. The delay has raised questions about when, or if, the funds will reach providers that are already operating with limited financial flexibility.
The number came to light at a joint legislative budget hearing on Tuesday, where Department of Health Commissioner James McDonald attributed the holdup to changes in the state’s budget methodology and the need to secure federal approval. Medicaid director Amir Bassiri added that “very little, if not no new money” from the MCO tax has actually been spent so far, according to Crain’s New York Business. The department also submitted written testimony outlining its Medicaid and waiver priorities for the spending plan, according to budget materials from the New York State Department of Health.
How much money is actually on the table
Federal regulators at CMS signed off on New York’s managed care (MCO) assessment in December 2024, and the executive budget now counts on roughly $3.7 billion in net state share benefit over two years, with about $1.4 billion booked in the current year, according to budget summaries cited by stakeholders at Iroquois Healthcare.
Budget analysts point out that state accounting splits the package into about $1.2 billion treated as reimbursements to health plans and $1.4 billion shown as program spending. Lawmakers have repeatedly talked about that combined $2.6 billion figure, a framing that has drawn skepticism from fiscal researchers at the Fiscal Policy Institute.
Providers say the money can’t wait
Hospital and long term care leaders told legislators that many facilities are counting on the MCO revenue to keep their doors open and to support Medicaid rate hikes that are already built into the budget. In written remarks, the Greater New York Hospital Association urged lawmakers to steer the extension generated funds toward hospitals, nursing homes, and safety net clinics to avoid what it warned could become a funding cliff…