The cost of caring for frail elderly and disabled people at home had more than doubled from 2003 to 2010, to $1.3 billion, even though fewer people were being served. And that huge cost increase had been driven by just a half-dozen certified home health agencies out of 140, most located in Brooklyn.
Two names stood out: Excellent Home Care and Extended Home Care. During a broad investigation of Medicaid fraud he conducted as attorney general, Gov. Andrew M. Cuomo had showcased his role in reclaiming $3.7 million from Excellent and $9.5 million from Extended in a settlement of false-claims suits against them. The agencies admitted no wrongdoing.
Now a transformation of the state's long-term care system is in high gear, as the state has extended invitations to agencies to be a part of the new system. Among those chosen: Excellent and Extended.
"I don't know what an organization would have to do to be disqualified," said Susan Regan, a longtime member of the state's public health planning council who was outraged to discover, on Page 221 of a meeting agenda, that the Health Department had endorsed Excellent for an expanded license.
State officials view the new system as a national model for permanently curbing Medicaid costs. They said Excellent and Extended had both improved and had been approved to take on bigger roles through a standard application process.
But both companies' ties to policy makers run deep. Excellent's owners have contributed and raised money for both parties, and its lawyer has been a fund-raiser for Mr. Cuomo, a Democrat.
As for Extended, which paid $150,000 to the lobbying firm of former Senator Alfonse M. D'Amato of New York last year, and whose owners until recently included Joseph Zappala, a longstanding Republican fund-raiser, it was recommended for a new, potentially more lucrative role in the revamped system by Dean G. Skelos, the Republican leader in the State Senate. Under state law, the leaders of the Legislature can each nominate four agencies for such roles.
Extended was seeking a coveted role as a managed long-term care plan, and three months ago, the health commissioner awarded that H.M.O. status to the company after a yearlong review, according to its chief executive, Vincent Achilarre, who donated $10,000 last year to the Senate Republican Campaign Committee of New York.
"We earned this approval, and the support we received for our application, on the merits," Mr. Achilarre said in an e-mail that cited "high-quality care, delivered with compassion and understanding for our patients' needs."
In his nominating letter, Mr. Skelos cited Extended's "unique experience in working with a diverse home care population." A spokesman for the senator said, "As always, the decision was made on the merits."
Richard Azzopardi, a spokesman for Governor Cuomo, said: "As attorney general, the governor commenced action against these and other companies that also happened to contribute to his past campaigns, clearly demonstrating that there is no relationship between donations and government action."
Just who is involved in the other applications is hard to discern, because the Cuomo administration would not release the applications that have been approved, or those that are still pending.
Home care was originally promoted as a cheaper alternative to hospitals and nursing homes, but as agencies proliferated in the 1990s their billings soared, and government auditors were overwhelmed. Gov. Mario M. Cuomo imposed a moratorium on licensing new agencies in 1994, as President Bill Clinton did nationwide in 1997.
The administration of Gov. George E. Pataki soon opened a loophole: limited licenses for the care of groups with special needs. Extended and Excellent each secured one, contingent on their limiting service to people with developmental disabilities. The Health Department was supposed to monitor their compliance.
"It isn't like this is going to grow into thousands and thousands of cases," a member of the state's health planning council said in 1998, when Excellent's special license was granted. But by 2010, when the state finally took a look, Excellent did have thousands of patients, only 5 percent of whom had developmental disabilities, and was collecting $93 million from Medicaid.
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