New York State Executive Chamber | Governor Eliot Spitzer

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STATE PROVIDES ACCESS TO HEALTH COVERAGE FOR ALL CHILDREN

Governor Eliot Spitzer today announced that the enacted budget achieves his goal of significantly expanding health care coverage for currently uninsured children.

The budget also significantly reduces growth in the rate of Medicaid spending, begins to direct more Medicaid dollars to Medicaid patients.

The two initiatives were top budget priorities for the Governor.

The budget enacts into law the Governor’s proposal to expand Child Health Plus (CHPlus) to families with incomes up to 400 percent of the federal poverty level, making coverage accessible to nearly all of the 400,000 currently uninsured children in New York under the age of 19. CHPlus is a state health insurance program that provides comprehensive health benefits, including preventative doctor care, hospital care, and prescription drugs.

Spitzer called the budget an important first step in making New York the healthiest state in the nation.

“Providing all children with access to health care coverage is a momentous achievement that is a tribute to the compassion and good sense of New Yorkers,” Spitzer said. “The budget advances a health care system based on a principle of patient-centered care, while at the same time bringing down the Medicaid growth to its lowest level in years.”

In addition to expanding CHPlus, the new budget streamlines the enrollment process to help some 900,000 uninsured adults and children to obtain and retain Medicaid coverage. Once insured, these individuals will have access to the primary and preventative care they need and reduce reliance on more expensive emergency or hospital care.

The Budget also makes $200 million in needed investments in 2007-08 in a multi-year effort to focus more attention and resources on disease prevention and primary care. The agenda includes investments in public health programs and a comprehensive prevention programs for cancer, diabetes, obesity, asthma and other diseases. It also includes other public health initiatives such as promotion of tobacco cessation treatment, expanded access to cervical cancer vaccine for uninsured young women, implementation of a prenatal/postpartum home visitation program in high risk communities, and expanded prevention of childhood lead poisoning. Finally, the budget provides for a $100 million investment in stem cell research in the first year of a multi-year commitment that will create opportunities to lower health care costs in the future.

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 a projected $30 million annually beginning in 2008-09.

The budget sustains $2.2 billion in funding for home and community based care and increases investments through continued cost of living adjustments for such services, and provides additional investment in vital aging programs like nutrition assistance, long term care information and referral and resources for family caregivers.

To pay for these and other investments, the Budget takes the first steps towards restructuring the State’s health care system and enacts measures that will save the State nearly $1 billion in 2007-08

The budget enacts critical measures to ensure that Medicaid dollars follow Medicaid patients and the providers that serve them. These steps will distribute more than $600 million based on services to Medicaid patients, more than $100 million of which go to hospitals in every region of the state serving the largest numbers of Medicaid patients.

Reform of the hospital reimbursement system is initiated with this budget’s plan to update inpatient payments to reflect current costs. Hospital reimbursement rates for inpatient care will be updated for the first time since 1994 so that these rates reflect current technology and costs and incentivize hospitals to provide care patients actually need, and not just care that drives the most reimbursement dollars to a hospital.

This budget fulfills the Governor’s commitment to bring the unaffordable growth in Medicaid costs under control. The Legislature enacted 73 percent of the reductions the Governor proposed in his Executive Budget, reducing the rate of growth of Medicaid from an average of eight percent a year for the last five years to one percent from year to year. These changes will produce savings in the State’s health care system for the long term.

Savings are achieved in virtually every facet of the health care delivery system. For hospitals and nursing homes, savings and reforms are achieved by reducing trend factors in reimbursement rates, decreasing workforce recruitment funds and redirecting the remaining funds to hospitals with high Medicaid populations, and discontinuing certain grants to nursing homes. The budget reduces Graduate Medical Education costs, which have been the highest in the nation, by basing them on current services rather than historical trends, thereby eliminating payment for “phantom” physicians.

The budget will save taxpayers $197 million by reducing payments for pharmaceuticals in both the Medicaid program and the Elderly Pharmaceutical Insurance Coverage (EPIC) program. Pharmacies will now be reimbursed 14 percent below the industry list Average Wholesale Price (AWP) for brand drugs and 25 percent below AWP for generic drugs, changing from current rates of 13.25 percent and 20 percent respectively.

The implementation of a Preferred Drug Program, similar to that already operating for Medicaid, will be accelerated to January 1, 2008 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 maximize rebates from drug manufacturers.

Savings are achieved in the insurance industry by eliminating the trend factor for managed care plans, increasing the covered lives assessment, and enhancing payer/provider audits.

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 $430 million in 2007-08, an increase of $130 million over last year. The Office of Medicaid Inspector General will add 157 new staff, including 100 new auditors and make investments in technology. The budget includes enactment of the False Claims Act and other provisions regarding fraud penalties and access to wage reporting, vital records and worker’s compensation data.