FULTON COUNTY — Fulton County is now eligible for an additional $7.1 million in federal Medicaid funding for its Residential Health Care Facility, but the catch is the county will have to put up about $3.6 million to get the cash.

The New York State Association of Counties told the Fulton County Board of Supervisors’ Finance Committee last week that a recently negotiated settlement between New York state and the federal government has led to an amendment of the states’ Medicaid plan. The change enables a Medicaid Intergovernmental Transfer payment for the benefit of county-operated nursing facilities totaling $450 million. The additional money was made possible when the federal government changed the base year in its Medicare reimbursement formula from 1982 to 2002.

“States have a lot of flexibility with how they design their Medicaid programs. But the one absolute rule … is you cannot reimburse county nursing homes under Medicaid more than those same homes would have been reimbursed under the Medicare program,” NYSAC Legislative Director Kenneth Crannell told the Supervisors.

Crannell said after the Medicare formula was changed more money flowed into that program and the federal government decided to make the difference between the new Medicare funding formula and New York’s Medicaid funding levels available to counties based on three $150 million installments applied retroactively to 2008, 2007 and 2006.

“You can draw almost all of these funds in November or you can delay this altogether until March of 2011,” Crannell said. “For every [county] dollar, you can produce two dollars from the federal match. You can reduce the tax-levy requirement to satisfy [your nursing home] by half.”

Perth Supervisor Gregory Fagan, a member of the Board of Supervisors’ finance committee, said Fulton County subsidized its Residential Health Care Facility with about $500,000 plus a state grant of about $114,000 in the 2008 budget. He said because the new funding program allows counties to draw down funding based on past spending, the 2008 expenditure should earn about $1 million of federal money for the facility.

Capturing the remaining $6.1 million will be the tricky part for Fulton County because it will require new spending because the county did not earn any credit for subsidizing the facility in 2006 or 2007.

Fagan said Fulton County could choose to try to capture all of it in a big expenditure this year but doing so would require the county to transfer money from its surplus into spending for the facility to grab the federal dollars.

“At this juncture, with the financial uncertainty and not knowing what the state is going to do to us, that’s probably not a smart move,” he said. “What I think we’re looking at is getting what we can get for 2008 based on what we’ve already done. Get that amount, and then use the next three years to try to [draw down] the rest.”

Broadalbin Supervisor Lee Hollenbeck, chairman of the county finance committee, said the first priority for using the federal money should be maintaining the solvency of the Residential Healthcare Facility.

Fulton County Administrative Officer Jon Stead said the county should be wary of using the federal money for anything beyond maintaining the facility and lessening the ongoing burden of the property taxpayer.

“There may be a temptation to use this money to fund more programs, to reach out to more people. We need to resist that,” he said.