Health & Human Services

New York Medicaid Change Fuels Rush for Profitable Clients

May 9, 2014

When Hurricane Sandy flooded two adult homes in Queens, hundreds of disabled, elderly or mentally ill residents were caught in the surge. After weeks in public shelters, they were bused, over their objections, to a dilapidated four-story building called King’s Hotel, in a crime-ridden section of Brooklyn.

Many had not showered in days. Crammed three cots to a room, they lacked basics like clean underwear. But in the parallel universe of New York’s redesigned Medicaid program, they represented a gold mine.

Business managers from CenterLight Healthcare, a managed care company specializing in long-term services, huddled in a ground floor hotel room, poring over health data and spreadsheets that identified residents by name and room number. At the managers’ direction, crews of enrollment nurses tracked down residents to pressure as many as possible to sign up with the company’s long-term care plan, according to current and former CenterLight employees who were there.

To CenterLight, which had struck an unusual deal with the state to run the hotel as a temporary adult home, the evacuees were a captive audience, and each signature was worth $45,600 a year in fixed monthly Medicaid fees. To an agency supplying aides there, the signatures also meant more money.

But for taxpayers, the sign-up frenzy at King’s Hotel points to hidden costs and potential abuses in an ambitious Medicaid overhaul in New York that has shifted $6 billion in public spending on long-term services for disabled and aged people to managed care companies like CenterLight. The state’s goal was savings, but the changes set off a scramble among managed care companies and service providers to enroll clients requiring minimal care, including residents of adult homes who could be brokered in bulk, an investigation by The New York Times found. Many frail people with greater needs were dropped, and providers jockeying for business bought, sold or steered cases according to the new system’s calculus: the more enrollees, and the less spent on services, the more money the companies can keep.

Adult home residents, like those caught in the hotel, had long been victimized under the old fee-for-service Medicaid system, in which providers were paid for services rendered. Now, under managed care, they find themselves prey to new versions of old tactics, including intimidation to accept services they do not need.

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