Savings Initiatives – Health Care

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The 2007-08 savings plan includes the first step in a multi-year plan to reform the State's health care system. Savings are projected to total more than $1 billion in the aggregate. The plan reduces the growth in reimbursement rates paid to most providers to strengthen statewide anti-fraud activities; reduces costs of prescription drugs; and enhances management of high-cost beneficiaries. The following table itemizes the savings from these initiatives.

Medicaid/HCRA/Health/Mental Hygiene Savings Plan
(millions of dollars)
	2007-08		2008-09
	Executive Proposal	Enacted Budget	Executive Proposal	Enacted Budget
Change 2007 Reimbursement Rates	350	143	389	154
Redirect Subsidies to High-Need Medicaid Hospitals	81	81	105	105
Pharmaceutical Savings	240	199	301	247
Enhance Management of High-Cost Beneficiaries	5	5	43	43
Strengthen Anti-Fraud Capabilities	104	134	109	139
Other General Fund Medicaid Savings (net of avails)	215	183	95	57
Other HCRA Savings	219	201	544	510
Public Health	39	39	33	33
Mental Hygiene	195	192	111	108

Total Medicaid/HCRA/Health/Mental Hygiene Savings	1,448	1,177	1,730	1,396

HCRA Savings in Other State Funds	(147)	(120)	(776)	(729)

Net General Fund Savings	1,301	1,057	954	667

Specific savings initiatives include:

Reduce Rates/Redirect Subsidies: The Enacted Budget reduces the automatic inflationary rate increases for hospitals and nursing homes by 25 percent, freezes managed care premium payments, and revises subsidy payments to redirect funding to high-need facilities.
Reduced the Cost Medicaid Pays for Drugs: Reduces reimbursement rates for pharmacies; increases enrollment in the Medicare Part D program; and expands the applicability of the Preferred Drug Program to the Elderly Pharmaceutical Insurance Coverage (EPIC) program.
Enhanced Management of High-Cost Beneficiaries: Implements a series of new demonstration projects to help provide cost-effective and coordinated care to high-cost beneficiaries.
Anti-Fraud: Enactment of a False Claims Act covering Medicaid, audit staffing increases, greater use of technology, and stepped-up audit procedures will be put into place to generate overall financial savings.
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Other savings include maximizing Federal aid, an increase in the covered lives assessment paid by insurance carriers, and additional health care conversion proceeds. The Enacted Budget does not continue the 0.35 percent assessment on hospital revenues beyond March 31, 2007.

Other Savings

Revenue Loophole Closers

NOTE: The information on this page is taken from the 2007-2008 Financial Plan.

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