November 9, 2012

Ms. Cynthia Mann Director, Center for Medicaid & CHIP Services Department of Health and Human Services Centers for Medicare & Medicaid Services 7500 Security Boulevard MS S2-26-12 Baltimore, Maryland 21244-1850 Dear Ms. Mann: New York formally requests an amendment to the Federal-State Health Reform Partnership (F-SHRP) Medicaid Section 1115 Demonstration to provide emergency cash relief to assist numerous Medicaid providers that have been seriously impacted by Hurricane Sandy. These funds would be distributed to providers through a Storm Recovery Grant Program to be administered by the Department of Health (DOH). Impact of Hurricane Sandy In late October, Hurricane Sandy battered New York City, Long Island, and the entire Northeast Coast with severe flooding, wind gusts that exceeded 90 miles per hour, downed trees, wide scale power outages, flying debris, fires, and other safety hazards before moving inland. Millions of individuals throughout New York City, Long Island, the Hudson Valley, Broome County and other areas of New York have been without power for more than a week, and power outages are expected to continue for an extended period of time. The impact of the storm was mostly absorbed in the New York City metropolitan area, where approximately two-thirds of New York States Medicaid population resides. The damage to the health care infrastructure was extensive. Multiple health care facilities sustained both short-term as well as long-term damage due to the storm surge. Many of these providers serve large numbers of Medicaid and uninsured individuals. New York is continuing to assess the full impact of the damage, but early estimates indicate that many facilities will need to be either decommissioned for weeks and months as reconstruction occurs, or in some cases, completely rebuilt.

In recognition of this disaster, on October 28, 2012, President Obama signed an emergency declaration for New York and Governor Cuomo declared a state of emergency in every county in New York. Secretary Sebelius determined that a public health emergency exists in New York and has existed since October 27. During the state of emergency, New York City Mayor Bloomberg ordered a mandatory evacuation of certain metropolitan areas, in response to the anticipated threat level of coastal flooding due to the storm surge. During the course of the hurricane and in the days after, hospitals and nursing homes in vulnerable areas including New York City, downstate counties and Long Island evacuated thousands of patients and residents due to power loss, flooding, and facility damage. An assessment and cost of repair to damaged facilities is still being conducted. It is projected that the loss of revenue and other operational storm costs for evacuated facilities will likely total over one billion dollars. Over 5,000 patients from hospitals, nursing homes and other congregate facilities had to be relocated as those facilities became inundated with water or lost power without suitable backup. The evacuation of individuals into receiving facilities has resulted in overcapacity and also has resulted in these providers experiencing additional expenses to sustain operations. Public transportation and private means of travel within and between these areas have been severely compromised, limited, or declared closed for safety reasons for extended periods of time. Fuel has been extremely limited in some of the hardest hit areas including all five boroughs, downstate counties and Long Island. These issues have further complicated recovery efforts and patient access to care. The full effect of Hurricane Sandy on New York and its health care system has yet to be assessed as state officials focus their attention on mobilizing crisis response efforts directly related to health and safety. Storm Recovery Grant Program Providers lost revenues and associated cash flow issues are of paramount concern for the Medicaid program, especially for those providers that were evacuated and may be offline for several weeks or months. Receiving facilities are also experiencing cash flow issues due to the closure of certain services and, in some cases, cancellation of certain services. The most critical need is an immediate infusion of flexible federal funds to meet cash flow needs of both evacuated and generator-dependent facilities and those receiving patients. Many of the providers impacted are vital members of the Medicaid and safety net provider network, and without their capacity access to critical services will be jeopardized. Further complicating the situation, many of the facilities receiving displaced patients are in dire fiscal situations today, and taking on additional patients is destabilizing their fragile financial condition. New York requests immediate temporary changes to its existing F-SHRP waiver to allow funds to flow to the most impacted health care providers and services. This immediate cash assistance would focus on addressing the emergency needs of impacted providers through a Storm Recovery Grant Program. The Storm Recovery Grant Program would be Phase 1 of a two-phased approach and will quickly provide an injection of cash relief to assist impacted providers over the next three weeks. New York will work closely with CMS to develop Phase 2, which will focus on long-term relief over the ensuing weeks for implementation of a more comprehensive restructuring plan.

The Storm Recovery Grant Program would provide awards to impacted providers to cover a variety of unmet needs related to Hurricane Sandy, including, but not limited to: Capital Improvements for facility repairs not otherwise reimbursable by other federal or state programs; Assisting with lost revenue as a result of the storm; and, Covering extraordinary costs for services provided during and after the course of the storm. New York is seeking $427 million in federal funding to fund the Storm Recovery Grant Program. This funding will assist providers with an immediate cash flow for a 1, 2, or 3 week period. The cash flow period is based on the DOH estimate of providers actual average weekly Medicaid fee-for-service and Managed Care payments. Up to $5 million will also be pooled to fund the cost of sheltering beneficiaries in non-Medicaid certified residences, such as Adult Homes. DOH is developing a survey tool for dissemination to trade groups and individual providers that will be used to collect more granular data at the provider level concerning the storms impact. Eligibility for cash flow grants is determined by such factors as whether there was a facility evacuation, generator failure, billing system failure, and whether they were a facility receiving an influx of beneficiaries. Eligible providers are assigned a 1, 2, or 3 week cash relief designation, and each designation has the following general criteria: 1-Week Cash Relief* 2-Week Cash Relief The facility was not damaged but received a significant volume of patients. The facility was temporarily damaged or lost power and its deemed services were disrupted, or the facility experienced a significant surge in patients from evacuated facilities. The facility is off line and is expected to remain closed or decommissioned over the foreseeable future.

3-Week Cash Relief

*A half-week award will be used for transportation providers. The identification of eligible providers, their cash relief designation, and therefore the Storm Recovery Grant Program funding requirements, is an iterative process which may be subject to further change. Over the coming weeks, providers will be required to provide documentation certifying funds awarded through the Storm Recovery Grant Program were appropriately used for hurricane relief and recovery efforts. The chart below provides a summary of the storms impact by major provider category. This chart may change as DOH is continually collecting updated information on various health care providers within impacted regions. Also, attached to this letter is a preliminary list of impacted providers in these categories determined to be eligible for Storm Recovery Grant awards, and potential award amounts.

Also in the chart below, a $15 million Other category has been created to address: 1) $10 million for any new provider impacts that becomes available prior to fund distribution and 2) to fund the $5 million adult home shelter pool described above. Additionally, a $20 million category has been created to address home health, personal care, ALP and hospice providers. In the coming days, DOH will provide a detailed list of providers in these categories as well.
Provider Type Receiver Facilities (1) Temporarily Impacted Facilities (2) Closed/ Decommissioned Facilities (3)
# 4 17 4 11 Impact $28,384,323 $14,814,675 $836,026 $2,981,806 # 65 174 1,038 241 145 TBD TBD 27 135 36 $47,016,830 1,825

Total

# Hospital Nursing Homes OPWDD Clinic/Other OMH Other Various Home Health OASAS Transportation Grand Total 39 134 1,038 216 100

Impact $77,628,947 $43,967,466 $54,938,903 $27,021,595 $12,229,758

# 22 23 21 34

Impact $91,392,900 $20,695,593 $3,943,466 $6,771,999

Impact $197,406,170 $79,477,734 $54,938,903 $31,801,087 $21,983,563 $15,000,000 $20,000,000 $4,372,883 $2,365,292 $427,345,632

8 1,535

$1,112,216 $216,898,885

19 119

$3,260,667 $126,064,625

Any provider payments made during the Phase 1 Storm Relief Grant Program will be deducted from the overall costs accumulated for the forthcoming Phase 2 request once a final assessment of storm costs is complete and the overall impact of the storm is known. As part of this storm damage cost collection, provider-specific assessments will be made and any provider overpayments from Phase 1 will be redistributed to more needy providers. No funds from Phase 1 will be paid above a providers specific storm related costs. Financing Strategy New York intends to utilize approved, unclaimed Designated State Health Program (DSHP) expenditures in the current F-SHRP waiver, and redirect the federal match funding to the hurricane relief efforts. This would consist of the following programs listed in STC 25: 1. Office of Mental Health Community Support Services and Residential Services Programs; and, 2. Office of Alcoholism and Substance Abuse Services Prevention and Treatment Programs. As noted above, the state has incurred expenditures for these programs but has not yet utilized them under F-SHRP for the purpose of obtaining a federal match. It is requested that CMS allow New York to utilize the two-year claiming limit specified under the waiver in order to maximize the total dollars available for the Storm Recovery Grant Program, allowing the state to claim back to October 1, 2010.

Furthermore, the state requests that CMS approve a 100% match on these programs in order to meet the anticipated short-term and long-term financial needs of providers. Any funds received by hospitals as a result of the Storm Recovery Grant Program will not be counted as a Medicaid offset against Disproportional Share payments. Based on these requests and the unusual nature of this situation, we are requesting that the following Special Terms and Conditions (STC) requirements be waived or modified. STC 7 Requests to amend the Demonstration must be submitted to CMS for approval no later than 120 days prior to the planned date of implementation of the change. In light of the catastrophic nature of this situation and the need to implement this amendment as soon as possible, we respectfully request to waive the 120 day requirement. STC 7(a) and STC 14 Delaying the amendment in order to meet public notice, tribal consultation, and consultation with interested parties requirements will create further complications and delays in restoring the health care system in affected areas. STC 23 Outlines that under the current F-SHRP agreement dollars can be spent on approved health reform initiatives. This section will need to be modified to authorize new spending for the Storm Recovery Grant Program. STC 24(i) FFP for DSHP is limited to the amount of monies the State expends over the demonstration period on the health system reform activities described in STC 23 multiplied by the States FMAP rate over the same period, except that in no case may FFP be claimed in excess of $1.5 billion between the period of October 1, 2006 and March 31, 2014. Under this amendment, the state requests that CMS provide a 100% match on previously approved F-SHRP DSHPs, similar to the methodology approved by CMS for the Clinic Uncompensated Care Demonstration under the 1115 Partnership Plan waiver. It is also requested that expenditures are not limited to the amount of state dollars spent on the Storm Recovery Grant Program. Therefore, for every dollar spent by New York on approved DSHPs, a federal dollar will be generated that can be spent to assist those impacted by this catastrophic event. STC 41 The State must estimate matchable Demonstration expenditures (total computable and Federal share) subject to the budget neutrality expenditure cap and separately report these expenditures by quarter for each Federal fiscal year on the Form CMS-37 for both the Medical Assistance Payments (MAP) and State and Local Administration Costs (ADM). New York submitted its CMS-37 for the period October through December in August. Due to the urgent need to claim and receive funding, it is requested that CMS allow the state to modify the report to include additional estimates associated with the Storm Recovery Grant Program.

The state previously submitted a budget neutrality calculation to CMS under F-SHRP which demonstrated that approximately $21.0 billion in savings would be generated over the life of the waiver. By modifying the current waiver and using approximately $427 million in DSHPs, the overall demonstration savings will decrease to $20.6 billion. Thank you in advance for your prompt response to this request. I appreciate your assistance as New York and CMS work together to respond to the needs of providers coping with the damage and massive financial impact of Hurricane Sandy. Please contact me directly at (518) 474-3018, should you have any questions or require additional information.

Sincerely,

Jason A. Helgerson Medicaid Director Office of Health Insurance Programs

Attachment

cc:

Secretary Kathleen Sebelius