[NYAPRS Enews] NYT: Albany Lawmakers Pass Big Cuts in Health Care

[Harvey Rosenthal]

Albany Lawmakers Pass Big Cuts in Health Care

By Nicholas Confessore   New York Times   June 8, 2010

 

ALBANY - State lawmakers approved $775 million in cuts and other savings
from New York's health care budget on Monday after Gov. David A.
Paterson inserted the reductions into emergency spending legislation
submitted to the Legislature to keep the state government from shutting
down.

 

The cuts will affect hospitals, nursing homes and a lengthy list of
other health-related programs, and marked the first significant step in
weeks toward an agreement on the state's annual budget, now more than
two months overdue. The legislation also requires the state to save an
additional $300 million a year by cracking down on Medicaid fraud, waste
and abuse.

 

In the Senate, the emergency budget bill including the health care cuts
passed along party lines, with all 32 Democrats voting for it and all
Republicans present voting against. In the Assembly, according to the
unofficial tally, the package passed with the support of most Democrats,
while some joined Republicans in voting against it.

 

Because cutting the state's health care spending means forgoing some
federal matching subsidies, the cuts are likely to have an even deeper
impact than the stated total.

 

The Greater New York Hospital Association, which represents many
institutions in the New York City region, estimated that the state cuts
would cost hospitals and other providers an additional $250 million or
so in federal money.

 

The Bronx-Lebanon Hospital Center, for example, would lose about $8.8
million in federal and state subsidies, according to the association,
while Jamaica Hospital Medical Center in Queens would lose $4.5 million.
Because of cuts to graduate medical education financing, some major
teaching hospitals would lose even more: Montefiore Medical Center in
the Bronx, for example, would lose about $13.9 million.

 

"We feel like we have a gun to our head," said Kenneth E. Raske, the
association's president. "We're on the precipice of a major disaster for
the health care community."

 

Mr. Paterson and the Legislature have been unable to agree on a broader
deal to close a budget deficit of over $9 billion, largely because many
Democratic lawmakers are unwilling to make cuts as steep as those that
the governor is demanding.

 

Mr. Paterson appeared to have won a partial agreement by inserting a
significant portion of his health care cuts into the latest in a series
of short-term emergency spending bills, which are difficult to amend.

 

The cuts approved on Monday night, however, were not as expansive as the
reductions of $1 billion in health care spending Mr. Paterson had
originally sought. Some cuts, like those to tobacco cessation programs,
were reduced; others, like cuts to programs for the elderly and for
prescription drug coverage, were eliminated entirely.

 

Supporters of the measure in the Senate, where the vote was expected to
be closer than in the Assembly, were still busy on Monday night
recruiting enough backers to assure passage.

 

Mr. Paterson also did not seek the adoption of proposals that would
raise money to offset health care cuts, like higher taxes on cigarettes
and a new excise tax on sugared beverages.

 

Though roundly denounced by hospitals and health care workers, who
staged demonstrations inside the Capitol on Monday, the vote was not
necessarily a difficult one for lawmakers: the total dollar figure was
one that the State Senate and Assembly had already agreed to in
principle during continuing negotiations over the state budget. The
package was further adjusted during negotiations with the Senate and
Assembly over the weekend, after Mr. Paterson announced on Friday his
intention to include long-term health care cuts in the emergency bill.

 

Among other major provisions, the legislation cuts $72.2 million in
health care for the poor and $37.4 million in subsidies for graduate
medical education. The revised proposal also cuts $6 million in state
financing for stem cell research, a program that has been a priority for
Mr. Paterson.

 

A separate bill that was passed with the new legislation also requires
insurance companies to obtain approval from state officials before
raising rates, a step that the industry had vigorously opposed.
Lawmakers contend that the provision will save the state $70 million a
year because fewer people will be forced off of private insurance and
into public programs.

 

"For too long, New York families and small businesses have been faced
with the nightmare of choosing between out-of-control premiums or
forgoing health insurance," said Senator Neil D. Breslin, an Albany
Democrat who has championed the issue. "By restoring prior approval, we
will be bringing smart and responsible regulation to the health
insurance industry."

 

On Monday, some lawmakers seemed relieved at Mr. Paterson's unusual
gambit, which tied their hands - but only to make those cuts that they
were prepared to vote for anyway.

 

"Most of the health care budget is the Assembly budget that we passed in
March, so that's where the governor takes most of it from," said Sheldon
Silver, the Assembly speaker.

 

But more turmoil lies ahead. Mr. Paterson has signaled that he will seek
to enact further portions of his executive budget in future emergency
bills, which would inevitably include cuts to areas where Mr. Paterson
and one or both houses of the Legislature remain far apart, like school
aid.

-----------------

                                                                HEALTH
CARE SAVINGS PLAN - 10th Emergency Bill

* Eliminate 2010 Trend Factor. The remaining share of the calendar year
2010 trend factor (1.7 percent) would be eliminated for hospitals,
nursing homes (excluding pediatric nursing homes) and home and personal
care providers. (2010-11 Savings: $99.1million)

* Reduce Indigent Care Reimbursement. Total payments for indigent care
will be reduced. (2010-11 Savings: $72.2 million)

* Limit Payments for Preventable Readmissions. State would establish
readmission benchmarks for non-mental health care services and reduce
reimbursement to hospitals that have a higher than expected level of
preventable readmissions for the same condition. (2010-11 Savings: $10.0
million)

* Limit Rate Appeals and Authorize Settlements. A statutory cap would be
established on the processing of nursing home rate appeals and DOH would
be authorized to negotiate settlements where appropriate. (2010-11
Savings: $16.5 million)

* Reduce Reimbursement for Bed Hold Days. Payments to nursing homes for
holding beds vacant would be reduced to 95 percent of operating rates
and reimbursement would be limited to 14 days annually for
hospitalization and ten days annually for therapeutic leaves. (2010-11
Savings: $6.9 million)

* Remove Drug Costs from Nursing Home Rate. Remaining prescription drug
costs would be excluded from nursing home rates and reimbursed on a
fee-for-service basis. This would allow the State to collect rebates on
these drug costs. (2010-11 Savings: $2.4 million)

* Authorize Additional Home Care Efficiencies. Statutory requirements
would be modified to extend the time period for long-term home health
care program reassessments from 120 to 180 days, allow these programs to
provide joint case management services to avoid duplication and
participate in a demonstration program to serve dual-eligible population
(e.g., individuals that are eligible for both Medicare and Medicaid
services). (2010-11 Savings: $0.6 million)

* Reduce Managed Care Premiums. Premiums for Medicaid Managed Care and
Family Health Plus plans would be reduced by 1.7 percent. (2010-11
Savings: $61.4 million)

* Eliminate Medicare Part D Drug Wrap. Medicaid coverage for
anti-depressants, atypical anti-psychotics, anti-retroviral and
anti-rejection drugs for dual eligible enrollees is discontinued, as
these drugs are already covered through Medicare. Wrap-around coverage
will continue for drugs not covered by Medicare Part D (e.g.,
barbiturates, benzodiazephines). (2010-11 Savings: $4.3 million).

* Discontinue Exemptions under Preferred Drug Program. The Preferred
Drug Program exemption for anti-depressants, atypical anti-psychotics,
anti-retroviral and anti-rejection drugs will be discontinued in order
to collect supplemental drug rebates for these drug classes. However,
these drug classes will not be subject to prior authorization. (2010-11
Savings: $2.1 million)

* Expanding the List of Physician Administered Drugs. The State would be
allowed to collect rebates on all drugs administered in physicians'
offices. (2010-11 Savings: $2.9 million)

* Enhancing Dispute Resolution Services. Additional resources would be
dedicated to shorten the timeframe for pharmacy dispute resolution to
increase rebate collections. (2010-11 Savings: $1.2 million).

* Accelerate Pharmacy and Therapeutics Committee Notice Requirements.
The time period before final recommendations of the Pharmacy and
Therapeutics Committee can be implemented is reduced from 30 days to 5
days to allow for the accelerated collection of supplemental rebates.
(2010-11 Savings: $0.8 million)

* Discontinue Special Pharmacy Reimbursement. The higher special
pharmacy reimbursement for HIV pharmacies will be discontinued. (2010-11
Savings: $0.6 million)

* Reinstitute Prior Approval of Health Premium Increases. Since prior
approval of health insurance premiums was phased out, health insurance
premiums have grown by double-digits, increasing nearly 14 percent
annually in HMO small group market. While many legitimate factors
contributed to this growth, the Insurance Department will again be
authorized to review health insurance premiums to protect consumers from
unnecessary increases. Medical loss ratios will also be increased to
ensure that a greater percentage of premium revenues are used to pay
medical claims. Savings is expected to result by reducing the number of
consumers with employer-based coverage that transfer to public health
insurance programs. (2010-11 Savings: $70 million)

* Combat Medicaid Fraud. The Medicaid Fraud Target is increased from
$870 million to $1.17 billion. (2010-11 Savings: $300 million)

* Establish Transportation Managers. The Department will contract with
an external organization to manage non-emergency transportation service.
(2010-11 Savings: $8.3 million)

* Control Physical and Occupational Therapy Spending. Prior approval of
certain physical therapy and occupational therapy services will be
required. (2010-11 Savings: $3.5 million)

* Apply Additional Utilization Review Controls. Additional controls will
be placed on the utilization of medical supplies, including incontinence
supplies; wheeled mobility products and accessories; shoes; diabetic
needle supplies; hearing aids; and oxygen delivery systems. (2010-11
Savings: $1.9 million) 

* Discontinue Spending for Selected HCRA Programs. Funding for Graduate
Medical Education Innovations ($37.4 million), Long Term Care Education
and Outreach ($1.3 million), disease management demonstrations ($1.8
million) and anti-tobacco funding for Roswell research ($13.6 million)
will be eliminated. (2010-11 Savings: $54.1 million) 

* Consolidate Poison Control Centers. Currently, there are five Poison
Control Centers operating in the State. The operations of these centers
will be consolidated into two centers. (2010-11 Savings: $2.5 million,
2011-12 Savings: $2.5 million).

* Require All Pre-Need Funeral Accounts to be Irrevocable. Require
pre-need funeral accounts established for consideration in a Medicaid
eligibility determination, including those for a spouse or family
members, to be irrevocable. (2010-11 Savings: $1.0 million).

* Require EPIC Participants to Exhaust Medicare Part D Appeal Process
prior to Accessing EPIC Drug Coverage. EPIC will not automatically
provide drug coverage when Medicare denies a prescription. Instead, the
prescriber will be notified to either begin an appeals process or change
the prescription to a covered drug. During the appeals process, patients
will receive up to a 90 day supply of the drug, and if the appeal is
ultimately denied, the patient will continue to receive drug coverage
through EPIC. (2010-11 Savings: $11.9 million)

* Require Early Intervention Preferred Assessment Tools. Evaluators for
the program would be required to use assessment instruments from a DOH
list of preferred instruments to determine eligibility. The current lack
of standards has created wide variation in diagnosis and associated
services. (2010-11 Savings: $0.8 million) 

* Modify Early Intervention Speech Standards. Evidenced-based criteria
would be used to determine a child's eligibility for speech and language
services. (2010-11 Savings: $1.4 million) 

* Allow Paraprofessional Behavioral Aides for Children with Severe
Disabilities. Paraprofessional behavioral aides would be allowed to
deliver applied behavioral analysis intervention programs to children
with autism spectrum disorders and other severe disabilities. (2010-11
Savings: $1.5 million) 

* Revise Early Intervention Home and Facility-based Rates. Rates for
home-based visits would be decreased and the rates for facility or
clinical-based services would be increased to ensure more appropriate
delivery of services. (2010-11 Savings: $2.4 million) 

* Audit Early Intervention Providers. Audits of certain providers would
be conducted to ensure appropriate payment. (2010-11 Savings: $0.5
million) 

* Restructure General Public Health Work. The General Public Health Work
program would be restructured by discontinuing reimbursement for certain
optional services, including laboratories, home health care programs,
and hospice and Early Intervention administration. In addition, the
budget transfers Medical Examiner responsibilities to the Division of
Criminal Justice Services. (2010-11 Savings: $6.7 million) 

* Consolidate Cancer and Obesity Programs. This proposal would
consolidate cancer services to focus on evidence-based practices, and
also consolidate obesity/diabetes programs. These consolidations would
provide DOH with flexibility in managing these funds to respond to
changes in affected populations and advances in treatment and prevention
services. It would also enable administrative efficiencies for both DOH
and providers. (2010-11 Savings: $1.1 million) 

* Reduce or Eliminate Public Health Programs. Spending on the
Infertility Program would be reduced by 50 percent ($1.5 million) and
Red Cross emergency preparedness would be reduced by 25 percent ($0.45
million) and transferred to the State Emergency Management Office, while
contracts for spinal cord research ($6.7 million) would be phased out.
Funding for the following programs that are less central to DOH's core
mission would be eliminated: Eating Disorders ($1.1 million); Maternal
and Early Childhood Foundation ($0.9 million); Arthritis Foundation
($0.2 million); Interim Lead Safe Housing ($0.1 million); and various
education and outreach programs ($1.7 million). (2010-11 Savings: $12.65
million) 

* Reduce Spending for Senior Services. Spending would be eliminated for
the Patients' Rights and Advocacy Hotline Project ($0.1 million) and
Congregate Services Initiative ($0.6 million). (2010-11 Savings: $0.7
million)

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