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Fundamental Changes to NYS Medicaid in 2011 State Budget

01 Apr, 2011

The Health Budget passed this week makes fundamental and far-reaching changes to New York’s Medicaid program, with savings reported at $2.8 billion. The proposals that were presented to the legislature in the Governor’s 30 day amendments represented a package submitted by the Medicaid Redesign Team (MRT), a group of stakeholders convened by Jason Helgerson, New York’s new Medicaid Director.


Three way negotiations resulted in some adjustments to the MRT proposals, but the vast majority of what was finally adopted reflect the recommendations of the MRT.  Notably, the MRT included only one consumer seat, occupied by Lara Kassel, the coordinator of Medicaid Matters New York. Medicaid Matters abstained from voting on the MRT’s final package, which was presented to the full committee with virtually no time for discussion or revision.  For more information on the MRT proposals as submitted, read the article
Devastating Cuts to NYS Medicaid Program Proposed.


The sheer volume of changes proposed to the Medicaid program made lobbying efforts particularly challenging. Consumer advocates fought against proposals for co-payment increases, limits on critical services such as personal care and occupational therapy, and restrictions on eligibility such as the proposed elimination of spousal refusal . We lobbied against elimination of the prescriber prevails protection in prior authorization procedures for prescription drugs and the proposed expansion in mandatory managed care, urging expanded monitoring of managed care plans and district enrollment practices. Advocates also mounted a campaign against the drastic reductions in services for enrollees in New York’s drug assistance program, EPIC, proposing an alternative savings strategy that would expand enrollment in federal drug assistance subsidies.


At the end of the day, the negotiated Budget represents victory in several areas, but contains many changes to the Medicaid program that we fear will present significant barriers to accessing care. For a detail on the changes made by the Article VII bill, including cross references to legislation and amended statute, consult the
2011-2012 Health Article VII Summary Chart.


Victories in the Budget


The final Budget rejected several proposals that would have restricted access to care, including:

  • Increases in co-payments for Medicaid, Family Health Plus and Child Health Plus
  • Elimination of spousal refusal
  • Elimination of the prescriber prevail protection in the prior authorization procedures for prescription drugs*

* The final Budget retains prescriber prevails protections in fee for service Medicaid.  However, the Budget does eliminate the pharmacy "carve-out" to managed care, which means very few Medicaid enrollees will be accessing prescription drugs on a fee for service basis.  Managed care plans will undoubtedly be applying utilization controls to prescription drugs going forward (see expansions to Medicaid managed care, below).


The final Budget accepted several provisions that should be beneficial to Medicaid consumers:

  • Enhanced authority and reimbursement rates for patient centered models of care that hold promise for improving care coordination and quality, including Medical Homes, Accountable Care Organizations and Health Homes
  • A new disregard for retirement assets for participants in the Medicaid Buy-in Program for Working People with Disabilities
  • Enhanced transparency for changes to New York’s Medicaid plan. A new section 363-e of the Social Services Law will require the Commissioner of Health to post New York’s Medicaid plan, along with every amendment and change, every application or draft application for a federal waiver or state plan amendment, and current information of the status of waiver applications or proposed plan amendments.


New Challenges to Accessing Care


Limits on Services. Medicaid beneficiaries will face new limits on services as a result of this year’s budget. Occupational Therapy, Physical Therapy and Speech Therapy/Pathology are limited to 20 visits per year. This is a flat limit on services – the final Budget did not include the Assembly proposal to impose the limts as “utilization thresholds,” which allow for increases according to requests by physicians. The new limits do not apply to people with developmental disabilities. Enteral formula therapy is limited to cover nasogastric jejunostomy, or gastrostomy tube feeding; nutritional or dietary supplements are not covered; prescription footwear and inserts are only allowed for part of a lower limb orthotic appliance as part of a diabetic treatment plan; compression stockings only for pregnancy or treatment of venous stasis ulcers. The Commissioner is authorized to require prior authorization of prescription opiod analgesics in excess of four prescriptions in a 30 day period.

Four classes of prescription drugs, anti-psychotics, anti-depressants, anti-retrovirals, and anti-rejection drugs, will no longer be exempt from prior authorization requirements or available through Medicaid as "wrap around coverage" for dual eligibles who are unable to obtain the drugs through their Medicare Part D plans.

Nursing homes will no longer be paid for days that residents are temporarily hospitalized ("bedhold") unles 50% of all residents who have Medicare are in a Medicare Advantage plan.


Changes to the Home Care Program. The Budget makes significant changes to New York’s home care program by limiting level 1 personal care services to 8 hours per week and authorizing the Commissioner to set standards for “high-intensity” high-hour personal care services users, pursuant to emergency regulation. Changes in the definition of estate will increase liens and Medicaid recovery actions.


The Budget also mandates enrollment in
Managed Long Term Care (or program models that “may” include long term home health care programs) for anyone over age 21 who needs home and community based services ( “as specified by the Commissioner) for more than 120  days. This is likely to be everyone receiving personal care (home attendant), certified home health agency (CHHA) services, and Consumer-Directed Personal Assistance Program services.  Before it becomes mandatory, a federal waiver must be applied for and approved - which is unlikely before the end of 2011 at least.

Persons subject to mandatory enrollment will be assigned to a plan if don’t select one within 30 days of the date on which they are given the choice of plans. Plans are to contract directly with the State Department of Health and perform assessments for their members’ care needs every six months. The role of local districts in assessing and providing long term care is thus significantly reduced.


Only Native Americans are exempt from the enrollment mandatory requirements. Persons with the following characteristics are excluded:


• Those not expected to be eligible for Medicaid for more than 6 months because of spend down
• Those with Medicaid only for TB treatment
• Persons in Hospice
• Persons with Medicaid under the Cancer Treatment Program
• Those with Medicaid as secondary coverage and primary coverage for which payment of the premium by Medicaid is cost-effective
• Those with Medicaid’s family planning coverage


In addition, persons in regular Medicaid managed care, assisted living, or one of three specified waiver programs (Traumatic Brain Injury, Nursing Home Transition & Diversion, Office of People with Developmental Disabilities) are excluded only until “program features and reimbursement rates” are approved by the State Department of Health and the Office for People with Developmental Disabilities


Negotiations did result in one important change to the MRT proposal for managed long term care – plans will be required to offer Consumer Directed Personal Assistance services. Plans are also required to provide “transitional care” to current recipients of long term care services, by continuing existing services until assessments are complete (assessments are to be completed within 30 days of enrollment).


The final Budget requires the Health Commissioner to seek input from representatives of home and community-based long term care services providers, recipients, and the Medicaid managed care advisory review panel, among others, to further evaluate and promote the transition to managed long and other care coordination models, and to develop guidelines for such care coordination models. The final Budget provides that guidelines shall be finalized and posted on the department's website no later than November 15, 2011.


Expansion of Mandatory Managed Care. The Budget also accepts the recommendations of the MRT for dramatic expansion of mandatory managed care for the Medicaid recipients not utilizing long term care services – accomplishing this expansion in two ways.


First, the Budget expands the number of services that will be included under the capitated rate paid to managed care plans. Under current law, managed care plans are responsible for providing most medically necessary health care services to their enrollees, with three notable exceptions. Prescription drugs, home care and behavioral health services are carved out of the managed care package currently, meaning that providers are reimbursed for these services on a fee for service basis. This year’s budget eliminates the carve-outs for prescription drugs and home care. Behavioral health services are to be covered by Regional Behavioral Health Organizations.


Second, the Budget increases the reach of managed care by subjecting more populations to mandatory enrollment. Last year the State Health Department brought virtually all of the state’s SSI-related population, as well as New York City residents living with HIV, into the mandatory program. The final Budget continues the expansion by narrowing the remaining exemptions and exclusions from mandatory enrollment. The only populations that will remain exempt from mandatory enrollment after this year’s budget takes effect are:


• Individuals with a chronic medical condition who are being treated by a specialist physician that is not associated with a managed care provider in the individual's social services district may defer participation in the managed care program for six months or until the course of treatment is complete, whichever occurs first;
• Native Americans


Excluded categories will be limited to:


• Dual eligibles in “capitated demonstration for long-term care” or dual eligible not enrolled in a Medicare Advantage plan
• Infants living with a mother in jail;
• Those who will receive Medicaid for less than 6 months (for example, Emergency Medicaid or Spend Down);
• Those only use Medicaid for tuberculosis (T.B.) related services;
• Persons receiving hospice services;
• Persons with other cost-effective 3rd party insurance
• Those receiving only family planning services
• Those eligible for Medicaid under the Cancer Treatment Program


New mandatory categories (when rates are approved by the Office for Mental Health, The Office for People with Developmental Disabilities, the Office on Alcohol and Substances Abuse Services, and the Offices on Children and Families), will include persons who:


• are in residential alcohol or substance abuse program or facility for the mentally retarded;
• are in ICF for the mentally retarded or who has characteristics and needs similar to such persons;
• have a developmental or physical disability and receive home and community-based services or care-at-home services through existing 1915(c) HCBS waivers or who has characteristics and needs similar to such persons;
• are eligible for Medicaid under 366, subd. 1(a)(12-13)(Medicaid Buy in for Working People with Disabilities)
• are in Lombardi program or inpatient services in a state-operated psychiatric facility or a residential treatment facility for children and youth;
• are certified blind or disabled children living or expected to be living separate and apart from the parent > 30 days
• are residents of nursing homes,
• are foster child in the placement of a voluntary agency or in the direct care of the local social services district;
• are HOMELESS persons or family ; and
• Individuals for whom a managed care provider is not geographically accessible so as to reasonably provide services to the person

Reductions to the EPIC Program. The EPIC program will undergo sweeping change when this year’s budget goes into effect. The distinctions between the fee and the deductible program are eliminated and all members are required to enroll in Medicare Part D. Assistance with Part D premiums is limited to enrollees with income below $23,000 annually (singles) and $29,000 annually (couples). Assistance with excluded drugs or drug co-pays is limited to the coverage gap or donut hole in Part D coverage.


Global Cap on Medicaid Spending.
Budget language creates a global cap on Medicaid spending, subject to federal approval. The cap is to be based on the 10 year rolling average of increases in the Consumer Price Index. When the cap is exceeded, reductions are triggered. The Budget requires that these reductions be uniform among categories of services and geographic regions to the extent possible, but does provide grounds for non-uniformity which include “the need to maintain safety net services in underserved communities.”


Negotiations on this provision, which has greatly alarmed both providers and consumer advocates, resulted in new language that calls for the Department of Health to produce monthly reports of spending by region and health care sector during 2011-2013.  The Director of Budget, in consultation with the Department of Health is to determine the extent to which actual spending is likely to exceed the cap and then develop a Medicaid Savings Allocation Plan to close the gap.  The new language requires the Budget Director and the Health Commissioner to consult with the Legislature and health care stakeholders, including consumers, to develop the plan.  The plan must comply with all federal laws and regulations, and should not impose an undue administrative burden on Medicaid applicants and recipients or on health care providers.   The plans are to be posted on the web and distributed to legislative committees.

For specific page references to all of the changes referenced above, as well as cross references to existing law that has been amended, consult the 2011-2012 Health Article VII Summary Chart.

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For More Information

For specific page references to all of the changes referenced above, as well as cross references to existing law that has been amended, consult the 2011-2012 Health Article VII Summary Chart.

This article was authored by Trilby de Jung, Empire Justice Center


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