STATE TO PROVIDE AFFORDABLE HEALTH CARE FOR ALL CHILDREN

Governor Eliot Spitzer today announced a plan to provide access to health care coverage for currently uninsured children in New York.

As part of his Executive Budget Proposal for Fiscal Year 2007-08, the Governor expands Child Health Plus (CHP), a state health insurance program, providing comprehensive health benefits, including doctor care, hospital care and prescription drugs. Specifically, the Budget increases eligibility for subsidized coverage to families with incomes up to 400 percent of the federal poverty level in order to extend coverage to nearly all of the 400,000 currently uninsured children under 19.

“By getting kids the care they need, we improve their health and keep them out of expensive emergency rooms and hospitals,” Spitzer said. “There’s no more compassionate or intelligent use of state resources.”

In addition to expanding Child Health Plus, the Governor’s budget also streamlines the enrollment process to encourage some 900,000 uninsured adults and children to obtain Medicaid coverage. Once in the Medicaid system, these individuals will have access to primary and preventative care they need and reduce reliance on more expensive hospital care. These two actions are projected to cost the state $34 million in fiscal year 2007-08 and $131 million in 2008-09.

The Budget also makes $58 million in needed investments in 2007-08, valued at $88 million when fully annualized, in public health and aging and long-term care programs, including investments to combat AIDS, fund nutrition programs, improve primary care, and implement preventive strategies. 

To pay for these and other investments, the Budget takes the first steps towards restructuring the State’s health care system and proposes measures that will save the State more than $1.2 billion in 2007-08 – over $1 billion in Medicaid and $220 million in Health Care Reform Act savings.

As a bridge to developing a rational reimbursement system, trend factors in reimbursement rates for hospitals, nursing homes, Child Health Plus, Family Health Plus and managed care plans will be frozen at current levels and reimbursement methodologies for certain hospital funding streams (including Graduate Medical Education and workforce recruitment and retention) will be modified to reflect Medicaid case mix. This approach will mitigate the impact of the inflationary trend freeze on hospitals with high Medicaid patient volumes. Nursing home rates will be adjusted to reflect actual Medicaid case mix by factoring out high cost Medicare patients whose care is paid for by the federal government and eliminating other subsidies to nursing homes that are no longer programmatically justified once the rebasing enacted last year is phased-in. 

The Budget also takes steps to better manage the care of high needs individuals, primarily the elderly, the disabled and those with multiple medical and behavioral conditions. This initiative is critical because 75 percent of New York’s Medicaid costs are generated by 20 percent of the patients. A series of demonstration projects will be undertaken to better manage the care of these individuals and save the State $5 million in 2007-08 and more in future years.

The Budget also provides for $240 million in savings in 2007-08 through reducing State costs for pharmaceuticals in both the Medicaid program and the Elderly Pharmaceutical Insurance Coverage (EPIC) program. Pharmacies will be reimbursed 15 percent below the industry list Average Wholesale Price (AWP) for brand drugs and 30 percent below AWP for generic drugs, changing from current rates of 13.25 percent and 20 percent respectively. The State’s Preferred Drug Program (PDP) will be strengthened, the exemption for anti-depressants will be eliminated, and a PDP will be implemented for EPIC. To ensure Medicaid and EPIC recipients receive the appropriate drugs they need, the Budget maintains the PDP provision that a physician’s decision prevails. EPIC seniors will be enrolled in Medicare Part D, as long as enrollment does not affect their access to the drugs they need, and they will be protected from any increased additional out-of-pocket costs. In addition, the State will obtain greater discounts from drug manufacturers. 

Comprehensive reforms to strengthen the State’s ability to combat fraud, waste and abuse in the Medicaid program are proposed, which are expected to generate approximately $400 million in 2007-08, an increase of $104 million over last year. The Office of Medicaid Inspector General will add 157 new staff, including 100 new auditors and make investments in technology. Collaborative efforts will identify potential abuses by providers serving special populations, and legislation will be enacted to encourage whistleblower actions, strengthen the Attorney General’s authority to investigate and prosecute fraud and strengthen criminal penalties for health care fraud.