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April 2009

New York Passes Medicaid Reforms in State Budget

New York Governor David Paterson signed a state budget that will slow growth in Medicaid and achieve health care savings, estimated at $2.3 billion, during the budget year.  The budget reallocates Medicaid funding to increase reimbursements for coordinated, community-based care and reduces reimbursement for inpatient hospital and nursing home services.  In addition, it streamlines eligibility and enrollment for state public insurance programs. 

These changes come on the heels of payment reforms in last year’s state budget that updated the outpatient payment system and reallocated funds from inpatient to outpatient clinic, emergency, and surgical services. The new changes are also in response to a report on rationalizing Medicaid reimbursements that was delivered to the legislature in early 2009.  New York’s reforms are remarkable in that the state was able to find funding to pay for improvements in quality and preventive and primary care by reallocating funds within the state’s current spending allotment.

The new budget includes the following components:

  • Reforming Hospital and Primary Care reimbursements
    • Fee-for-service Medicaid rates for hospitals have been based on 1981 rates, with updates and add-ons.  The new rate system more closely aligns with the current costs of providing inpatient services to Medicaid patients.
    • Funding for hospitals to help them transition to the new payment method and reconfigure their capital infrastructure to better fit the state’s health care priorities and patient need.
    • Increased reimbursements for hospital ambulatory services, community clinics and physician fees.  In total, New York will invest $600 million in outpatient services over a two-year period.
    • Additional funds will be available to hospitals and community health centers serving increasing numbers of uninsured patients; additional funds will also be allotted to public hospitals that serve Medicaid and uninsured patients by updating the calculation of disproportionate share (DSH) funding.
  • Advancing Medical Homes and Improving Care Coordination
    • The state will work with stakeholders over the next seven months to finalize Medical Home standards. The budget includes additional funds to support clinics and clinicians meeting these standards.  Payments will also be increased for rural providers who agree to provide Primary Care Case Management services.
    • The budget supports a multi-payer medical home pilot in the Adirondack Park area.
  • Improving Access to Coverage
    • Eligibility rules will be simplified and aligned between public programs for children and adults.  This includes a provision that aligns all programs to use a gross, rather than net, income determination.
    • Administrative barriers to the health insurance program will be reduced.  Strategies include eliminating the face to face interview requirement and the finger imaging requirement for Medicaid and Family Health Plus.
    • The legislature has authorized the Department of Health to seek federal approval and funding to raise the income eligibility of low-income adults to 200 percent FPL from 150 percent FPL for parents and 100 percent FPL for other adults.
  • Other Reimbursement changes
    • The budget contains several long-term care changes, including reform of nursing home reimbursement methodology, a more coordinated approach to home and personal care services. Also outlined in the budget are pharmacy initiatives, including incentives for e-prescribing.

For a full description of the New York reforms, click here.