Nascentia Health, a home-focused health system based in New York, recently notified its staff that it was forced to lay off 71 employees across 48 counties.

The nonprofit, which formerly employed nearly 800 employees, was forced to do so because of New York’s Medicaid cuts. The company estimates that it will lose $400 million from those cuts due to the loss of 65% of its managed long-term care plan (MLTC) enrollees.

The New York State Department of Health has cut funding due to a state Medicaid shortfall of over $6 billion. Nascentia was made aware of these cuts in early January; the enrollment loss will be effective on March 1.

The MLTC provides care for chronically ill patients who want to receive assistance inside their homes. The plan offers a range of services under Nascentia Health Options, including skilled nursing, home health aides, social work and transportation, among others. Nascentia will still maintain the 35% of plans that were not impacted by the cuts. 

Newsroom Syracuse.com first broke the news on Tuesday. Home Health Care News confirmed the layoff figures on Wednesday.

New York’s home care providers and representatives have been cognizant of the poor trends that the state’s cuts might offset in the industry, especially for specific plans, since January.

“New York’s Medicaid long-term care delivery infrastructure is predominantly covered by MLTC plans,” Roger Noyes, spokesman for the Home Care Association of New York State (HCA-NYS), told HHCN. “The state has implemented a policy to carve-out longer-term nursing facility care from this benefit structure. The decision affects the operation of MLTC plans differently throughout the state depending upon the mix of services that are needed and provided to the plan’s Medicaid enrollees.”

In essence, the layoffs are indicative of a larger problem in the state, which is the difficult reimbursement climate. It’s especially hard on home-based care providers and skilled nursing operators.

“MLTCs and their network providers are under-reimbursed for services amid growing demand for long-term care and a general trend of increasing coverage responsibilities under state policy,” Noyes said.

The HCA-NYS’s 2020 State of the Industry Report showed that half of MLTC plans are dealing with negative premium incomes. That negative value comes from a plan’s premium receipts from the state and its expenses for services and other functions.

The state’s initial cut was a trimming of 1%, or $124 million, but Governor Andrew Cuomo and his administration may seek to cut nearly $500 million in each state fiscal year moving forward, according to a public notice published in the New York State Register.

“After vigorous analysis, the unfortunate reality is there is no alternative but to restructure our organization,” Kate Rolf, Nascentia’s president and CEO, said in a release. “We are not alone in feeling the impact of New York State’s ‘carve out’ of nursing home members from the managed long-term care.”