2008-09 NEW YORK STATE EXECUTIVE BUDGET
HEALTH AND MENTAL HYGIENE
ARTICLE VII LEGISLATION
MEMORANDUM IN SUPPORT

CONTENTS

MEMORANDUM IN SUPPORT

A BUDGET BILL submitted by the Governor in

Accordance with Article VII of the Constitution

AN ACT to amend the elder law, in relation to reimbursement to participating provider pharmacies and drug discount cards; to amend the public health law, in relation to a universal vaccine study and certain reimbursements made to the coordinating council for services related to Alzheimer’s disease and other dementia; to amend part X2 of chapter 62 of the laws of 2003, amending the public health law relating to allowing for the use of funds of the office of professional medical conduct for activities of the patient health information and quality improvement act of 2000, in relation to the effectiveness of such part; to amend the public health law and the education law, in relation to clinical laboratory specialists; to amend part B of chapter 57 of the laws of 2006 directing the commissioner of health to develop statewide areas/regional benchmarks regarding racial/ethnic disparities and to develop and implement the public health leaders of tomorrow program, in relation to the public health management leaders of tomorrow program; to amend the public health law and the state finance law, in relation to establishing a patient safety center account; to amend the social services law, in relation to the transfer of adolescent pregnancy prevention and services to the department of health; to amend section 122 of part B of chapter 436 of the laws of 1997, amending the education law and other laws relating to “The Welfare Reform Act of 1997”, in relation to services for pregnant adolescents; to amend the elder law, in relation to establishing targeted, expanded in-home services for the elderly demonstration program and an enriched social adult day services demonstration project; and providing for the repeal of certain provisions upon expiration thereof (Part A); to amend the New York Health Care Reform Act of 1996, in relation to extending certain provisions relating thereto; to amend the New York Health Care Reform Act of 2000, in relation to extending the effectiveness of provisions thereof; to amend the public health law, in relation to the distribution of pool allocations and graduate medical education; to amend the state finance law, in relation to the health care reform act (HCRA) resources fund; to amend chapter 62 of the laws of 2003 amending the general business law and other laws relating to enacting major components necessary to implement the state fiscal plan for the 2003-04 state fiscal year, in relation to the deposit of certain funds; to amend the public authorities law, in relation to the transfer of certain funds; to amend the social services law, in relation to extending payment provisions for general hospitals; to amend chapter 600 of the laws of 1986 amending the public health law relating to the development of pilot reimbursement programs for ambulatory care services, in relation to the effectiveness of such chapter; to amend chapter 753 of the laws of 1989 amending the public health law and other laws relating to general hospital reimbursement for inpatient and ambulatory surgery, in relation to the effectiveness of portions thereof; to amend chapter 520 of the laws of 1978 relating to providing for a comprehensive survey of health care financing, education and illness prevention and creating councils for the conduct thereof, in relation to extending the effectiveness of portions thereof; to amend the public health law, in relation to extending access to community health care services in rural areas; to amend chapter 703 of the laws of 1988 relating to enacting the expanded health care coverage act of nineteen hundred eighty-eight and amending the insurance law and other laws relating to expanded health care and catastrophic health care coverage, in relation to extending certain provisions thereof; to amend the public health law, in relation to continuing the priority restoration adjustment; to amend the social services law, in relation to the personal care services worker recruitment and retention program; to amend chapter 266 of the laws of 1986 amending the civil practice law and rules and other laws relating to malpractice and professional medical conduct, in relation to extending the applicability of certain provisions thereof; to amend the insurance law, in relation to liquidation of domestic insurers; to amend chapter 63 of the laws of 2001 amending chapter 20 of the laws of 2001 amending the military law and other laws relating to making appropriations for the support of government, in relation to extending the applicability of certain provisions thereof; to amend chapter 495 of the laws of 2004 amending the insurance law and the public health law relating to the New York state health insurance continuation assistance demonstration project, in relation to the effectiveness of such provisions; to amend the public health law, in relation to the comprehensive diagnostic and treatment centers indigent care program; to amend the public health law, in relation to certain audits being deemed presumptively correct; and to amend the public health law, in relation to inpatient rate adjustments; and providing for the repeal of certain provisions of the public health law upon expiration thereof (Part B); to amend the social services law and the public health law, in relation to family health care plus, payments of insurance, hospital reimbursements; rates of payment for residential health care facilities, managed long term care plans, prescription drugs, general hospital reimbursements, hospital assessments, rates of payment for residential health care facilities, the long term care demonstration program and the medical assistance program; establishing the home health care technical advisory council; to amend the social services law and the tax law, in relation to theft, embezzlement or misapplication of state health care funds; to amend the social services law, in relation to claims and false statements, and the personal care demonstration project; to amend chapter 109 of the laws of 2006, amending the social services law and other laws relating to certain payments, in relation to prohibiting medical assistance payments for services provided by psychiatrists and federal financial participation; to amend chapter 649 of the laws of 1996 amending the public health law, the mental hygiene law and the social services law relating to authorizing the establishment of special needs plans, in relation to the effectiveness thereof; to amend chapter 904 of the laws of 1984, amending the public health law and the social services law relating to encouraging comprehensive health services, in relation to making certain provisions permanent; to amend chapter 57 of the laws of 2006, amending the social services law relating to medically fragile children, in relation to the effectiveness thereof; to amend chapter 710 of the laws of 1988, amending the social services law and the education law relating to medical assistance eligibility of certain persons and providing for managed medical care demonstration programs, in relation to making certain provisions permanent; to amend chapter 165 of the laws of 1991, amending the public health law and other laws relating to establishing payments for medical assistance, in relation to making certain provisions permanent; to amend chapter 19 of the laws of 1998, amending the social services law relating to limiting the method of payment for prescription drugs under the medical assistance program, in relation to the effectiveness thereof; to amend chapter 535 of the laws of 1983, amending the social services law relating to eligibility of certain enrollees for medical assistance, in relation to the effectiveness thereof; to amend chapter 629 of the laws of 1986, amending the social services law, relating to establishing a demonstration program for the delivery of long term home health care services, in relation to the effectiveness thereof; to repeal paragraph (f) of subdivision 9 of section 367-a of the social services law relating to specialized HIV pharmacies; to repeal paragraph (i) of subdivision 4 of section 132 of the social services law relating to investigation of medical assistance applications; to repeal subdivision 12 of section 246 of chapter 81 of the laws of 1995, amending the public health law and other laws relating to medical reimbursement and welfare reform; to repeal subdivision (x) of section 165 of chapter 41 of the laws of 1992, amending the public health law and other laws relating to health care providers; and providing for the repeal of certain provisions upon expiration thereof (Part C); to amend the tax law, in relation to the posting of signs to assist compulsive gamblers; and to amend part I of chapter 58 of the laws of 2005 amending the mental hygiene law, the state finance law and the racing, pari-mutuel wagering and breeding law relating to compulsive gambling assistance, in relation to the expiration thereof (Part D); to amend the social services law, in relation to reimbursement rates for the Medicaid/Medicare crossover population (Part E); to amend chapter 723 of the laws of 1989 amending the mental hygiene law and other laws relating to comprehensive psychiatric emergency programs, in relation to extending the expiration of certain provisions thereof (Part F); to amend the public health law, in relation to specialty Medicaid rates (Part G); to amend chapter 359 of the laws of 1968, constituting the facilities development corporation act, in relation to including entities receiving financing from the state housing finance agency or the state division of housing and community renewal for integrated housing projects within the definition of the term “voluntary agency” (Part H); and to amend part C of chapter 57 of the laws of 2006, relating to establishing a cost of living adjustment for designated human services programs, in relation to adjustments to certain rates and to extend the effectiveness thereof (Part I)

PURPOSE:

This bill contains provisions needed to implement the Health and Mental Hygiene portions of the 2008-09 Executive Budget

This memorandum describes Parts A through I of the bill which are described wholly within the parts listed below.

Part A – Improve public health services by implementing cost savings measures, advancing programmatic initiatives and consolidating the State’s pregnancy prevention programs.

Purpose:

This bill contains provisions needed to implement selected public health cost savings measures, advance programmatic initiatives, consolidate the State’s pregnancy prevention programs and make technical revisions.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

This bill enacts the provisions necessary to implement the 2008-09 Executive Budget recommendations for the State’s public health programs, including modifying the reimbursement level and generic dispensing fee for the Elderly Pharmaceutical Insurance Coverage (EPIC) program, establishing the EPIC Discount Card Program, implementing various changes regarding clinical laboratories, establishing new demonstration programs administered by the State Office for the Aging (SOFA), authorizing increases in penalties for violations of public health requirements and making technical revisions. This bill would also require the Department of Health (DOH) to assume responsibility for the Adolescent Pregnancy Prevention Services that is currently managed by the Office of Children and Family Services (OCFS).

• Section 1 modifies the Elder Law to reduce pharmacy reimbursement levels for brand name prescription drugs that are provided through the EPIC program – from Average Wholesale Price (AWP) minus 14 percent to AWP minus 17 percent.
• Section 2 amends the Elder Law to increase the EPIC dispensing fee paid to participating pharmacies for generic drugs by $1.00 – from $4.50 to $5.50.
• Section 3 modifies the Elder Law to establish a new EPIC Discount Card Program for financially vulnerable persons of any age.
• Section 3-a amends the Public Health Law to require DOH to conduct a study on the feasibility and cost-effectiveness of a program to make childhood immunizations available for children and adolescents without charge.
• Section 4 modifies the Public Health Law to allow Alzheimer’s Advisory Council members to receive reimbursement for travel expenses as authorized in the Budget.
• Section 5 revises the Public Health Law to clarify what constitutes a municipality for the purpose of reimbursement of state aid through the General Public Health Works Program in response to a public health emergency.
• Section 6 permanently authorizes funding for the Patient Safety Center from the Professional Medical Conduct Special Revenue Account.
• Section 6-a amends the Elder Law to include the maximum allowable cost (SMAC) to EPIC’s options for generic drug reimbursement.
• Sections 7-9 amend the Public Health Law to establish a new limited laboratory registration process for facilities performing only limited tests (e.g., pregnancy, HIV) and propose a $200 biennial fee for limited labs. This proposal would exempt limited labs from Education Law licensure requirements.
• Sections 10-13 amend the Public Health Law to establish a certification program for clinical laboratory specialists to allow Wadsworth Center to continue to recruit specialists and provide on-site training. This program would enable the laboratory technician to be certified as a “clinical laboratory specialist,” which would be an alternative to the “generalist medical technology” license currently issued by the State Education Department. A $120 biennial fee would be charged to individuals to support the program.
• Section 14 amends the Public Health Law to establish a Clinical Laboratory Sciences Educational Training Program, allowing Wadsworth Center to develop an on-site Masters Degree Program for the purpose of hiring non-doctoral testing personnel and training them on-site in viewing clinical laboratory specimens.
• Section 15 amends Chapter 57 of the Laws of 2006 to expand the Public Health Management Leaders of Tomorrow Program to accredited schools of public health and public health programs at public and private universities in New York State in addition to the State University at Albany.
• Sections 16-18 amend the Public Health Law and the State Finance Law to increase maximum penalties from $2,000 to $10,000 for violations of the Public Health Law or its associated regulations. Revenue generated from the increase will be dedicated to support the Patient Safety Center, established in 2000.
• Sections 19-25 amend the Social Services Law to transfer the Adolescent Pregnancy Prevention Services (APPS) program from OCFS to DOH.
• Sections 26-27 amend the Elder Law to establish two new three-year demonstration programs within the SOFA: 1) Targeted Expanded In-home Services for the Elderly and 2) an Adult Day Blended Model.
• Section 28 sets the effective dates.

This bill generates efficiencies and savings to improve the provision of public health services. Specifically, this bill reduces EPIC pharmacy reimbursement for brand name drugs to more closely reflect the wholesale acquisition costs for pharmacies and provides an incentive to encourage the use of lower cost drugs by increasing the generic dispensing fee.

This bill would improve the delivery of pregnancy prevention programs by consolidating such programs within DOH. DOH currently administers the majority of the State’s pregnancy prevention programs, including the Community Based Adolescent Pregnancy Prevention program. Having one agency administer all pregnancy prevention programs will allow the State to provide a more cohesive approach to providing those services and result in improved outcomes for adolescents.

Additionally, this bill establishes new programs to ensure that laboratory employees have sufficient education and training qualifications for the safe and efficient laboratory operations, including a Limited Laboratory Registration Program, a Clinical Laboratory Specialists Certification Program, and an Educational Training Program. In addition, this bill expands the Public Health Management Leaders of Tomorrow program to incorporate students from universities beyond the State University at Albany.

Targeted investments are provided to ensure appropriate community-based care services are provided to persons who are frail and elderly through the establishment of two new demonstration programs within SOFA.

Other technical changes are needed to be consistent with funding as authorized in the Budget. These include allowing for reimbursement for travel expenses for the Alzheimer’s Advisory Council and clarifying which local entities are eligible to receive reimbursement in the event of a public health emergency.

Budget Implications:

Enactment of this bill is necessary to implement the 2008-2009 Executive Budget which recommends net savings of $4.5 million in 2008-09 in the EPIC program. These savings include $7 million from the AWP reimbursement reduction, which is offset by costs of $2 million to increase the generic dispensing fee and $500,000 to establish the EPIC Discount Card Program.

This bill is also necessary to provide $4.7 million in additional resources (including $820,000 supported by new fees) for key public health and aging priorities, including:

• $330,000 to expand the Public Health Management Leaders of Tomorrow Program;
• $3.5 million to establish demonstration programs for EISEP ($2.5 million) and the Adult Day Blended Model ($1 million) within SOFA; and
• $820,000 to establish a Limited Laboratory program ($400,000) and a certification program for clinical laboratory specialists ($420,000) to be generated from new fees.

Funding for the APPS program ($7.3 million) would be transferred from OCFS to DOH. As a result, there is no net Financial Plan impact.

Effective Date:

This bill is effective April 1, 2008 with the following exceptions:

• Sections 1, 2, 6-a, 7-9, and 19-25 take effect on July 1, 2008; and
• Section 3 takes effect April 1, 2009.

Part B – Extend and Modify the Health Care Reform Act (HCRA).

Purpose:

The purpose of this bill is to extend provisions of the Health Care Reform Act (HCRA) governing the financing of certain health care initiatives for three years through March 31, 2011. Currently, HCRA is scheduled to sunset on March 31, 2008.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

In 1996, New York enacted the landmark Health Care Reform Act (HCRA) legislation, which replaced the hospital reimbursement system in existence since 1983 with a deregulated system. HCRA was designed to improve the fiscal health of hospitals and support critical public health programs. It was subsequently extended and modified several times; most recently, Chapter 58 of the Laws of 2007 reauthorized HCRA through March 31, 2008.

This bill extends HCRA for three years through March 31, 2011 and amends provisions in order to maximize the use of available revenue sources, modify programs and secure the fiscal viability of HCRA through its proposed extension period. Specifically:

• Sections 1, 1-a and 2 amend various provisions to extend effective dates through December 31, 2011 and preserve Federal provider tax approvals. These provisions include the continuation of the Medicaid inpatient hospital reimbursement methodology, the collection of surcharges, and the Covered Lives Assessment.
• Section 3 provides funding for various administrative costs of the Department of Health (DOH) associated with HCRA programs including Tobacco Control and Health Care Delivery.
• Sections 4 and 5 amend Public Health Law §§ 2807-l and 2807-v to extend the programmatic allocations for the Health Care Initiatives Pool and the Tobacco Control and Insurance Initiatives Pool.
• Section 6 amends Title 3 of Article 29-D of the Public Health Law to extend the Pay for Performance program.
• Section 7 amends Public Authorities Law § 1680-j to extend and modify the authority to transfer funds from HCRA to the General Fund to support Health Care Efficiency and Affordability Law for New Yorkers (HEAL-NY) capital grants and debt service costs.
• Sections 8 through 11 extend the authorization for certain provisions historically extended with HCRA (i.e., hospital admission billing, uniform fiscal intermediary requirements, the Council on Health Care Financing, cost-based rates for ambulatory surgery, and the Ambulatory Care Pilot Program providing State authority to set reimbursement rates).
• Sections 12 through 15 amend Public Health Law § 2807-s to extend the collection of the Covered Lives Assessment, which is used to fund GME and other HCRA programs, and — effective April 1, 2008 — increase the collection target by $140 million (from $850 million to $990 million) annually.
• Sections 16 through 18-d amend Public Health Law § 2807-m to extend and modify the GME distribution methodology, including supplemental distributions and Area Health Education Centers. In conjunction with recommendations made by the Council on Graduate Medical Education (COGME) and industry representatives, the language includes new standard/quality measures and performance requirements which improve transparency and support training in primary care settings (Doctors Across New York).
• Section 18-e amends State Finance Law § 92-dd to provide that payments from the new GME Innovations Pool will be made directly from the HCRA Resources Fund, rather than by the HCRA Pool Administrator.
• Sections 19 and 19-a amend Public Health Law § 2807-c to continue a $48 million Medicaid payment to high need public and voluntary hospitals.
• Section 20 extends the Individual Subsidy program for those individuals enrolled in the program prior to January 2001.
• Sections 21 and 22 amend Public Health Law §§ 2952 and 2958 to extend funding for the Rural Health Network Development Grant Program and the Rural Health Care Access Development Program.
• Section 22-a amends Public Health Law § 2808 to include provisions concerning nursing home workforce recruitment and retention that were inadvertently dropped in preparing the 2007-08 Enacted Budget.
• Section 22-b amends Public Health Law § 2807-c to extend hospital workforce recruitment and retention payments through July 1, 2008. After this date, funding will be made available through a new inpatient rate methodology.
• Section 22-c amends Public Health Law § 2807 to extend rate adjustments for clinic workforce recruitment and retention through December 31, 2008. After this date, funding will be made available through new ambulatory care methodology.
• Sections 22-d through 22-e amend Social Services Law § 367-q and Public Health Law § 3614 to extend payments for the personal care and home care workforce recruitment and retention programs.
• Sections 23 through 28 extend the Physician’s Excess Medical Malpractice Program through June 31, 2011 (the end of the policy year corresponding with the HCRA sunset).
• Section 28-a amends Public Health Law § 2807-p to extend the clinic bad debt and charity care program.
• Sections 28-b through 28-d amend Public Health Law §§ 2807-k and 2807-w to extend funding for Hospital Indigent Care distributions and the High Need Indigent Care Adjustment. Further, in conjunction with the Indigent Care Workgroup Report, the law is modified so that distributions are based on losses attributed to serving the uninsured.
• Section 29 extends the Health Insurance Continuation Assistance Demonstration Program through July 1, 2011, provided, however, that the Displaced Worker Program shall expire April 1, 2008.
• Sections 29-a through 30 amend Public Health Law §§ 2799-l and 2807-r to make technical adjustments to amounts appropriated for the DOH Center for Community Health’s eating disorder and cancer grant programs.
• Section 30-a amends Public Health Law § 2807-c to extend an annual $38 million Medicaid payment to non-public hospitals in New York City for foreign language translation services.
• Sections 31 through 35 amend Public Health Law §§ 2510 and 2511 to authorize New York to make State-only payments for the Child Health Plus income eligibility expansion to 400 percent of the Federal Poverty Level, modify family contributions to increase enrollee cost sharing, move the rate approval process from the State Insurance Department to DOH, and permit DOH to access tax returns in order to verify enrollee income eligibility for the program and prevent fraud.
• Sections 36 and 37 amend Public Health Law § 2807-j to require health care providers and third party payors to submit Federal tax identification numbers to assist providers and DOH in identifying claims that require surcharges and assessments.
• Sections 38 and 39 amend Public Health Law §§ 2807-j and 2807-t to provide DOH with the flexibility to apply provider or payor audit findings in satisfaction of audit liabilities for certain subsequent periods.
• Sections 40 through 41 amend Public Health Law §§ 2807-c and 2807-j to require that all delinquent surcharge and one percent assessment amounts, which are referred to the Attorney General for collection, are deemed final and not subject to further revision or reconciliation.
• Section 42 amends Public Health Law § 2807-t to allow third party payors to use monthly reporting for the Covered Lives Assessment and to require that if they elect this option, this methodology must be used throughout the entire calendar year.
• Section 43 amends Public Health Law § 2807-k to modify enforcement procedures related to indigent care payments.
• Sections 44 through 47 allow for waiver authority and severability and sets effective dates.

Budget Implications:

Enactment of this bill is necessary to implement the 2008-09 Executive Budget and the State’s multi-year Financial Plan, which reflects continuation of HCRA funding for a number of important health programs and a series of revenue and cost containment actions. In 2008-09, an estimated total of $134 million in HCRA savings will be generated.

Effective Date:

This bill takes effect April 1, 2008, except that selected provisions take effect immediately or on specified dates.

Part C – Reform and Restructure the Medicaid Program to Enhance Access to Health Insurance Coverage and to Authorize Cost Containment Measures.

Purpose:

This bill continues the fundamental reform process of restructuring New York’s health care delivery system by building on successful actions taken last year toward a rational reimbursement system by: (1) emphasizing preventive and primary care; (2) changing and updating reimbursement methodologies applicable to inpatient, ambulatory and nursing home care to ensure that payments advance high quality and cost-effective care and also reflect current costs and practice standards; (3) advancing initiatives to ensure that Medicaid is an efficient and effective purchaser of drugs, such as by modifying the Preferred Drug List (PDL) and carving out pharmacy costs from the Family Health Plus (FHP) program benefit package to enhance State drug rebates; (4) advancing improvements in care coordination for medically complicated and high-cost individuals; (5) continuing efforts to strengthen the State’s anti-fraud capabilities; (6) advancing strategies to maintain people in community settings; and (7) implementing cost containment measures to encourage program efficiencies and to make health care more affordable.

This bill also proposes several actions that seek to reduce the number of uninsured by: (1) simplifying the enrollment process and income standards for the Child Health Plus, Medicaid and FHP programs; (2) expanding Medicaid coverage to foster children up to age 21; and (3) creating greater State enrollment capacity by centralizing the enrollment and renewal application process, which is currently administered by counties.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

• Sections 1 through 10 provide for targeted pharmacy reforms including:
  • Carving out FHP pharmacy costs from the FHP benefit package to allow the State to collect additional drug rebates;
  • Decreasing pharmacy reimbursement for the Medicaid program from average wholesale price (AWP) less 14 percent to AWP less 17 percent for brand name drugs;
  • Creating a specialty pharmacy program to obtain high cost drugs from a limited number of sources at reduced prices;
  • Implementing the Medication Therapy Management pilot program in which Medicaid reimburses specially trained pharmacists for one-on-one counseling with patients to improve compliance with drug therapies;
  • Modifying the PDL to eliminate the exemption for anti-depressants, while maintaining the exemptions for anti-psychotics, anti-retroviral and anti-rejection drugs;
  • Allowing the Commissioner of Health to identify a drug on the PDL for which prior authorization is required according to the provisions of the Clinical Drug Review Program;
  • Increasing the dispensing fees for generic and brand name drugs on the PDL;
  • Reducing copayments for brand name drugs on the PDL from three dollars to one dollar; and
  • Limiting pharmacy reimbursement for generic drugs to the lower of the Federal upper limit, if applicable, the estimated acquisition cost of the drug, the State maximum acquisition cost, or the pharmacy’s usual and customary price.
• Section 11 decreases the 2008 inflationary trend cost increases for hospitals, nursing homes and home health care.
• Sections 12 through 20 propose savings and investments and modify hospital and ambulatory care reimbursement as follows:
  • Section 12 updates the general hospital inpatient reimbursement methodology to reflect 2005 costs, beginning on July 1, 2008, and phasing in over four years. Significant changes to the methodology include: (1) moving to 100 percent group pricing; (2) utilizing Medicaid-only statistics; (3) incorporating an inflation factor based on the Medicare Market Basket for 2006 and 2007 and the Consumer Price Index (CPI) for 2008 and prospective rate years; and (4) excluding physician reimbursement in the inpatient rate (which must be billed separately as fee-for-service).
  • Sections 12 through 14 update inpatient reimbursement methodologies for those services that are currently on a “per diem” rate (including psychiatric, physical rehabilitation, critical access rural hospitals, long term care and children’s hospitals) to reflect 2005 costs, beginning on July 1, 2008 and phasing in over four years. Further, inpatient psychiatric services will move to a pricing system that is similar to what Medicare uses for behavioral health services.
  • Section 15 removes inpatient detoxification and withdrawal services from the Diagnostic Related Groups (DRGs) and sets the new per diem rate at cost.
  • Section 16 clarifies that the itemized hospital bills that must be presented to patients shall include all ancillary charges.
  • Section 17 amends Public Health Law § 2807-c to “de-link” Workers Compensation and No Fault reimbursements, effective July 1, 2008, from Medicaid inpatient rates. The Workers Compensation and No Fault rates will reflect rates that are in effect as of December 31, 2007, adjusted for inflation using the CPI.
  • Section 18 establishes a new reimbursement methodology for ambulatory care, which will be based on the intensity of services provided rather than on a “per visit” basis. Outpatient and ambulatory surgery methodologies will be effective July 1, 2008; community clinics and emergency room services will be effective January 1, 2009.
  • Section 19 amends Public Health Law § 2807 to add a new provision that establishes, effective July 1, 2008, discrete rates of payments for hospital outpatient clinics for individuals enrolled in managed care (including FHP) to reflect costs related to direct and indirect medical education.
  • Section 20 amends Public Health Law § 2807 to add a new paragraph that permits prospective rate adjustments through an alternate rate setting methodologies for clinics identified as Federally Qualified Health Centers.
• Section 21 changes the nursing home rebasing statute by eliminating retroactive payments, while ensuring prospective payments are made effective January 1, 2008.
• Section 22 redistributes and restructures adjustments for nursing homes that qualify as financially disadvantaged.
• Section 23 provides State funding for adult day health care services provided to persons with AIDS or HIV related illnesses if Federal approval has not been obtained.
• Sections 24 through 27 modify the Home and Community-Based Services programs by:
  • Creating a Home Care Advisory Council to recommend reforms to the home care reimbursement system;
  • Modifying reimbursement rates for Certified Home Health Agencies (CHHAs) so that rate ceilings are fixed; and
  • Encouraging administrative efficiencies in home care by reducing administrative costs for CHHAs and the Long Term Home Health Care Program.
• Sections 28 and 30 through 33 promote utilization management and care coordination by:
  • Requiring persons dually eligible for both Medicare and Medicaid, who are in a Medicare managed care plan, to enroll in the same plan for their Medicaid benefits;
  • Modernizing the Medicaid utilization thresholds for Medicaid fee-for-service patients;
  • Reimbursing providers for diabetes and asthma self-management education to improve beneficiary knowledge of self-care and condition outcomes; and
  • Creating a standardized registry of prenatal identification for women who are at high risk of poor birth outcomes to reduce neonatal intensive care hospital admissions.
• Section 29 was intentionally omitted.
• Sections 34 through 36 advance a multifaceted Medicaid integrity plan by:
  • Requiring the Office of the Attorney General to provide the Office of the Medicaid Inspector General (OMIG) with complaints and evidence related to False Claims actions;
  • Allowing civil recoupment of misappropriated Medicaid funds; and
  • Expanding the OMIG’s access to providers’ tax return records.
• Section 37 modifies the current FHP Employer Buy-In to allow benefit flexibility, enabling more employers to access the plan for their employees.
• Section 38 authorizes DOH to assume responsibility for authorization and reimbursement of transportation costs and to contract with a transportation access manager to provide program efficiencies by managing the level of appropriate transportation based on patient need; reviewing, approving and processing transportation orders; and developing lower cost transportation alternatives in high-volume areas.
• Sections 39 through 45-f provide for targeted investments and reforms including:
  • Creating State enrollment capacity to centralize and facilitate enrollment in public health insurance programs;
  • Extending Medicaid coverage to foster children up to age 21;
  • Eliminating the asset test for the Medicare Savings Program;
  • Aligning Medicaid and FHP resources rules;
  • Eliminating Medicaid rules that only apply to single persons which require drug and alcohol screenings as a condition of eligibility; and
  • Allowing the Department of Health (DOH) to access information from the personal income tax returns of applicants for Medicaid, Child Health Plus, and FHP in order to verify eligibility.
• Sections 46 through 55 and section 58 make various technical amendments, including: (1) altering the district of fiscal responsibility for Supplemental Security Income recipients; (2) addressing medically needy income levels; (3) clarifying that individuals in long term care do not receive 12 months of continuous health insurance coverage; (4) stipulating that adults applying for health insurance coverage for children must provide Social Security numbers or other identifying documents; (5) permitting auto-assignment for FHP participants; (6) changing the asset transfer for waiver services to ensure conformity with Federal requirements; (7) addressing Federal conformity issues related to spousal budgeting for Traumatic Brain Injury waiver recipients; (8) changing language relating to medical assistance payments to certain psychiatrists; (9) amending statutory provisions regarding nursing home assessment recoupment collections; and (10) eliminating the need for requiring persons who move among counties to formally reapply for Medicaid or FHP.
• Section 56 permanently extends the Limited Home Care Services Agencies program.
• Section 57 continues prior year cost containment for hospitals.
• Section 59 creates the personal care demonstration project in New York City to ensure that service hours are appropriately linked to need and to promote the efficient provision of services through improved case management.
• Section 60 establishes a single Medicaid eligibility level for singles, childless couples and low-income families.
• Sections 61 and 62 were intentionally omitted.
• Sections 63 through 71 extend various expiring laws including the long term home care services demonstration program; managed care programs; HIV Special Needs Plan certification; prescription drug payments; targeted case management services and other vital programs.
• Section 71-a provides for estate recoveries, personal injury action recoveries and legally responsible relative refusal recoveries by DOH.
• Section 72 relates to equity and transfers of assets by nursing homes.
• Section 73 provides technical changes related to the wage equalization factor (WEF) for necessary payments to nursing homes.
• Section 74 authorizes the Commissioner of Health to enter into agreements with other states to establish multi-state pharmacy purchasing pools for the purposes of bulk purchasing of prescription drugs.
• Section 75 provides contingency language relating to changes in hospital reimbursement and ambulatory care and funding for primary care enhancements.
• Sections 76 through 79 advance the time frames of notice, emergency rule promulgation, severability, and effective dates.

Existing laws related to the proposed provisions are contained in the following sections of State statute. Specifically,

• Social Services Law §§ 367-a and 369-ee pertain to carving out FHP pharmacy from the managed care benefit, and Social Services Law § 367-a pertains to the specialty pharmacy program and the medication therapy management pilot program;
• Public Health Law § 33 relates to OMIG’s access to complaints, Public Health Law § 273 relates to New York’s preferred drug program, and Public Health Law § 2807-(c) relates to hospital reimbursement charges; and
• Tax Law § 697 relates to OMIG’s access to providers’ tax returns.

Currently, New York State taxpayers support a $45 billion Medicaid program that provides an array of services to nearly four million New Yorkers. The 2008-09 Executive Budget builds on reforms enacted last year and advances a series of cost savings measures to make New York’s Medicaid program more cost efficient while maintaining the State’s position as a national leader in providing high quality health care services. This bill continues the reform process by seeking to rationalize reimbursement and drive reforms. It provides transparency and accountability so that it is clear where Medicaid dollars are being spent and for what services. Specifically, the bill provides for measures that include:

• Reforming reimbursement for hospitals, primary and preventive care;
• Beginning the transformation of the Long Term Care System to encourage community and home-based alternatives;
• Improving care coordination and management of persons who are elderly and/or disabled and high-cost individuals to reduce costs and improve treatment outcomes;
• Controlling the cost of pharmaceuticals by improving compliance with drug therapies and creating a specialty pharmacy program to purchase drugs at reduced prices;
• Building on the State’s anti-fraud efforts enacted last year by expanding access to providers’ records and allowing recoupment of misappropriated monies to ensure that taxpayer resources are appropriately being used to further improve quality of health care for all New Yorkers; and
• Implementing various other cost containment measures to encourage program efficiencies and to make health care more affordable.

Absent these measures, total Medicaid program spending — Federal, State and local government combined — would reach $47.3 billion in 2008-09.

This bill also advances reforms to expand access to health insurance coverage for the uninsured by:

• Providing Medicaid coverage for foster care children up to age 21;
• Simplifying eligibility and renewal requirements for the Medicaid, Child Health Plus and FHP programs; and
• Expanding State enrollment capacity by centralizing the enrollment and renewal application process, thereby ensuring consistency.

Budget Implications:

Enactment of this bill is necessary to implement the 2008-09 Executive Budget because it ensures State Financial Plan savings totaling $243 million in 2008-09 and $189 million in 2009-10 as follows:

• $78 million savings in 2008-09 ($53 million in 2009-10) to implement various cost containment measures including instituting pharmacy savings actions and reforming hospital and ambulatory care, reflecting offsetting investments in physician fees and community based clinics; and
• $165 million savings in 2008-09 ($136 million in 2009-10) associated with nursing homes, home care, utilization management and care coordination.

In addition, this bill requires targeted State investments estimated to cost $14.3 million in 2008-09 ($26.5 million in 2009-10) to create expanded State enrollment capacity, provide Medicaid coverage to foster children up to age 21, simplify current Medicaid and FHP rules, remove the asset test from the Medicare Savings Program, and improve quality of care.

Effective Date:

This bill takes effect April 1, 2008 with the following exceptions:

• Reducing pharmacy reimbursement from AWP less 14 percent to AWP less 17 percent (§ 4) will become effective July 1, 2008.
• Creating a specialty pharmacy program to obtain high cost drugs from a limited number of sources at reduced prices (§ 5) will become effective October 1, 2008.
• Modifying the PDL to eliminate the exemption for anti-depressants (§ 6); allowing the Commissioner of Health to place drugs on the Clinical Drug Review Program that are also on the PDL (§ 7); increasing the dispensing fee for generics and brand drugs (§ 8); and reducing co-payments for brand drugs that are on the PDL (§ 9) will become effective July 1, 2008.
• Paying prospective rebasing payments for nursing homes (§ 21) will become effective January 1, 2008.
• Requiring dual eligibles to enroll in Medicare managed care plans to enroll in Medicaid managed care (§§ 28 and 30) will become effective April 1, 2009.
• Improving utilization management (§ 31) will become effective October 1, 2008.
• Reimbursing providers for diabetes and asthma self-management (§ 32) and the prenatal registry (§ 33) will become effective July 1, 2008.
• Establishing a transportation access manager (§ 38) and creating State enrollment capacity (§ 39) will become effective October 1, 2008.
• Extending Medicaid coverage to foster care children (§ 40) will become effective January 1, 2009.
• Altering the district of fiscal responsibility (§ 46) will become effective November 1, 2008.
• Eliminating the requirement that persons reapply for medical assistance if they move (§ 58) will become effective June 1, 2008.
• The personal care demonstration project (§ 59) will sunset after March 31, 2011.

Part D – Make permanent the Office of Alcoholism and Substance Abuse Services responsibility for programs for compulsive gambling.

Purpose:

This bill amends Chapter 58 of the Laws of 2005 to permanently extend to the Office of Alcoholism and Substance Abuse Services (OASAS) the responsibility for the oversight and funding of the State’s compulsive gambling programs.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

Since 2005, OASAS has been responsible for overseeing and funding compulsive gambling prevention, education, and treatment programs. However, this authority is set to expire and revert back to the Office of Mental Health (OMH) on April 1, 2009. Since the clinical processes for treating chemical dependencies are similar to those used for treating compulsive gambling disorders, permanently transferring the responsibility for overseeing and funding such programs to OASAS is appropriate.

This bill also makes a technical amendment to Tax Law § 1604-a, which requires the Division of the Lottery to cooperate in the posting of signs designed to assist compulsive gamblers pursuant to Mental Hygiene Law § 7.09(g). The revision reflects the 2005 transfer of authority over compulsive gambling programs to OASAS and the associated repeal of § 7.09(g).

Budget Implications:

Permanently transferring the authority over compulsive gambling programs to OASAS will not in itself have any immediate fiscal implications, but the reversion of such authority to OMH would impact the operations budgets of both agencies.

Effective Date:

This bill takes effect immediately.

Part E – Enable Medicaid to reimburse providers the higher of the Medicare co-pay or up to the Medicaid rate for outpatient programs licensed by the Office of Mental Health for the Medicaid/Medicare crossover population.

Purpose:

This bill amends Social Services Law § 367-a to allow Medicaid to reimburse providers the higher of the Medicare co-pay or up to the Medicaid rate less the amount paid by Medicare for outpatient programs licensed by the Office of Mental Health for the Medicaid/Medicare crossover population.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

According to Federal guidelines, Medicaid is the payor of last resort and claims are only paid after all other sources of reimbursement have been exhausted. For dual eligible populations, Federal law and State regulations require that providers bill Medicare before submitting claims to Medicaid.

If a Medicaid enrollee is also a Medicare recipient, current State law requires that for most services only Medicare co-pays and deductibles be paid by Medicaid. This leaves a financial gap for several services between the approved Medicaid rate and the Federal Medicare amount providers can receive for dually eligible clients. This bill would enable providers to receive appropriate reimbursement, while ensuring that Medicare contributes its share and that Medicaid is the payor of last resort – consistent with Federal requirements.

Budget Implications:

Enactment of this bill is necessary to implement the 2008-09 Executive Budget and to preserve Federal funding.

Effective Date:

This bill takes effect immediately.

Part F – Extend authorization for the Comprehensive Psychiatric Emergency Program.

Purpose:

To extend the statutory authority for the Comprehensive Psychiatric Emergency Program (CPEP) until July 1, 2012.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

This bill extends until July 1, 2012 the authority of the Commissioner of Mental Health to administer operating certificates for a CPEP. This section also extends to July 1, 2012 sections 1, 2, and 4 through 20 of Chapter 723 of the Laws of 1989, which explain the implementation and operation of the CPEP model.

The statutory authority for the CPEP, as established by Chapter 723 of the Laws of 1989, as amended, currently expires on July 1, 2008.

In response to a host of identified problems including long wait times and poor quality psychiatric emergency care in the mid 1980’s, New York State created the CPEP as a model of acute psychiatric care. A statewide independent evaluation completed in 2004 concluded that the CPEP model has been an important and worthwhile addition to the public mental health system in New York State and should be continued. The program has helped to provide alternatives to inpatient admissions and serves individuals in crisis in their own communities.

Budget Implications:

Enactment of this bill is necessary to continue essential services to at-risk individuals and this Executive Budget provides funding for the continued operation of 19 hospitals in New York State licensed to provide these services in accordance with the CPEP model.

Effective Date:

This bill takes effect immediately.

Part G – Eliminate mental health outpatient services as services that can be considered specialized under section 2807 of the Public Health Law.

Purpose:

This bill clarifies that mental health outpatient services provided by general hospitals that are dually licensed under Article 28 of the Public Health Law and Article 31 of the Mental Hygiene Law do not constitute specialized services under Public Health Law § 2807.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

In general, Medicaid reimbursement rates for services provided by general hospitals are established by the Commissioner of Health under Article 28 of the Public Health Law, while rates for services provided by facilities licensed under Article 31 of the Mental Hygiene Law are established by the Commissioner of Mental Health pursuant to Mental Hygiene Law § 43.02. For mental health outpatient programs operated by general hospitals which are dually licensed under Article 31 of the Mental Hygiene Law and Article 28 of the Public Health Law, rates are set by the Commissioner of Mental Health.

Currently, rates for mental health outpatient programs are established by reference to the methodology set forth in Public Health Law § 2807(2) for general hospital outpatient services, which limits the operating cost component of the rate to $67.50 per outpatient visit. The statute provides that the Commissioner of Health may waive this limit for specialized services under certain circumstances. In the past, before the Commissioner of Mental Health assumed rate-setting responsibilities, some dually licensed hospitals received waivers with regard to the services provided by their mental health outpatient programs, giving them a specialty rate which is not subject to the $67.50 limit.

However, all Article 31 mental health outpatient providers, including those which are not dually licensed, are required to meet the same programmatic standards. This bill amends Public Health Law § 2807(2)(g)(i) to clarify that services which are reimbursed at rates set by the Commissioner of Mental Health are not specialized services, meaning that rates for all mental health outpatient providers will be subject to the $67.50 limit. This will generate some savings to the state but more importantly will address the inequity of having different reimbursement levels for providers who essentially deliver the same services.

This language has been proposed by the Executive in the past but has not been enacted.

Budget Implications:

Enactment of this bill is necessary to implement the 2008-2009 Executive Budget and provide an annual State share savings of approximately $2.1 million.

Effective Date:

This bill takes effect April 1, 2008.

Part H – Expand the definition of voluntary agency to include any entity receiving assistance from the Housing Finance Agency or Division of Housing and Community Renewal for integrated housing projects.

Purpose:

This bill expands the definition of voluntary agency to include any entity receiving assistance from the Housing Finance Agency (HFA) or the Division of Housing and Community Renewal (DHCR) for integrated housing projects.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

Currently, the Facilities Development Corporation Act (Unconsolidated Law § 4401, et seq.) allows the mental hygiene agencies to provide financing for housing for persons with mental disabilities only with the Dormitory Authority of the State of New York.

This legislation grants the Office of Mental Health (OMH), the Office of Mental Retardation and Developmental Disabilities, and the Office of Alcoholism and Substance Abuse Services the authority to participate with HFA or DHCR in financing integrated housing development by voluntary agencies. These changes will allow flexibility in financing, which is needed for housing to be responsive to individual recipient wishes, needs, and system goals. The bill is particularly important for OMH and will provide the agency with an effective tool in the creation of local systems of care that reduce institutionalization, homelessness, over-use of acute care settings, and waste.

Many consumers of mental health services are interested in living in housing that is more integrated into the community rather than living in housing consisting solely of persons who are disabled. Integrated OMH-funded housing blended with affordable generic housing in the community will help to reduce the negative stigma attached to housing for persons with mental illness and will provide opportunities for recovery and rehabilitation.

Budget Implications:

Enactment of this bill is necessary to implement the Executive Budget as this will enable OMH greater ability to site residential community beds under development. Without this action, OMH faces increasing challenges to finding appropriate sites, thereby decreasing its ability to meet the goals established for continued bed development within the Financial Plan.

Effective Date:

This bill takes effect immediately.

Part I – Extend for three years the human services Cost of Living Adjustment and Program Eligibility Updates.

Purpose:

Extends the current Human Services Cost of Living Adjustment (COLA) for eligible Human Services providers until March 31, 2012, and modifies the existing list of programs eligible for the COLA.

Summary of Provisions, Existing Law, Prior Legislative History, and Statement in Support:

This bill extends the three-year annual COLA for designated Human Services programs under the auspices of the Office of Mental Health, Office of Mental Retardation and Developmental Disabilities, the Office of Alcoholism and Substance Abuse Services, the Department of Health, the State Office for the Aging, the Office of Temporary and Disability Assistance and the Office of Children and Family Services. The COLA will continue to be based on an estimate of the Consumer Price Index (CPI) for all urban consumers published in the U.S. Congressional Budget Office Economic and Budget Outlook and will be reconciled to the actual CPI.

Additionally, this bill recognizes new programs eligible for COLA and eliminates the Early Intervention (EI) program from being eligible for COLA. The current reimbursement rates for EI are sufficient and the required Federal COLA approval for Medicaid financed EI services has not been obtained.

Prior to 2006, non-trended Human Services providers intermittently received a COLA — equaling 7.5 percent over an eleven-year period — contrasted with a 29.4 percent trend factor afforded hospitals and nursing homes during the same period. Continuation of the COLA for another three years is intended to address this gap as well as ongoing workforce and operating pressures, regulatory compliance and quality of care issues, and concerns about addressing community expansion needs.

Currently, the COLA is set to expire on April 1, 2009, pursuant to Chapter 57 of the Laws of 2006.

Budget Implications:

Enactment of this bill is necessary to provide a 2.5% COLA to eligible human services programs for a total cost of $87M in 2009-10. The COLA will grow to $181M in 2010-11 and $278M by 2011-12.

Effective Date:

This bill takes effect immediately.

The provisions of this act shall take effect immediately, provided, however, that the applicable effective date of each part of this act shall be as specifically set forth in the last section of such part.