Governor Spitzer’s Health Care Budget

A Breath of Fresh Air for Consumers

February 1, 2007

Author: Trilby de Jung

As promised, Governor Eliot Spitzer has proposed a dramatically redefined health care budget; one that focuses on health care consumers and puts the patients front and center.   In the health care area, the Executive Budget is a breath of fresh air, both in tone and in the specific actions the Governor proposes to take.

This article will outline the Executive Budget on Health from a consumer perspective.  Major topics include the Governor’s exciting proposals to expand Child Health Plus eligibility and simplify Medicaid recertification, as well as steps he would take to tighten the Preferred Drug List and increase the efficiency of long term care services.  We highlight an area of particular concern to advocates, the continuation of the prior administration’s rapid march toward expanding mandatory managed care to include previously exempt Medicaid recipients: those with mental illness and those receiving Supplemental Security Income (SSI).  In closing, we list several issues we wish had been addressed in this year’s budget – issues of particular importance to the disability community that we hope to see on the Governor’s agenda in the near future.

“People on Medicaid are not the Problem”

Governor Spitzer has publicly announced that although New York’s Medicaid system is in need of reform, people on Medicaid are not the problem.  Consistent with that welcomed philosophy, his budget announces a shift toward a “patient-focused system of care.”  Funds from large state pools, such as Indigent Care Pool and the Workforce Recruitment and Retention Pool would be continued at existing funding but restructured to target funds to those providers serving higher numbers of Medicaid beneficiaries.

And, for the first time in many years, the Executive Budget contains almost no cuts that would directly hit consumers by reducing program eligibility levels or eliminating services.  Instead, his budget includes several specific action steps that would operate to increase public health coverage for low-income New Yorkers, by expanding eligibility levels for Child Health Plus B (CHP B) and simplifying recertification requirements for adults.

Expanding Child Health Plus B Eligibility

Currently, subsidized coverage under Child Health Plus B is available to families with income up to 250% of the federal poverty level (FPL), provided the children are not already eligible for Child Health Plus A (Children’s Medicaid).  After 250%, subsidized coverage ends and premiums jump from either $9 or $15 per child per month to the full price for buy in to the program, $89 to $180 a month.  The Executive Budget largely eliminates this cliff effect by continuing eligibility for subsidized coverage on a sliding scale basis up to $400 % of FPL, effective September 1, 2007, based on the following guidelines:

The Executive Budget does introduce a waiting period of six month for CHP B coverage for those children with income between 251 and 400% of FPL who relinquish private insurance.  For children with income below 250% of FPL, the waiting period would be triggered only if “crowd-out” rises above 8% of new enrollees, a trigger that exists under current law.  The Governor’s proposal retains existing exceptions to the waiting period requirement and adds several new exceptions as follows:

• No waiting period if the cost of employer-based insurance is more than 5% of the family’s income;
• No waiting period if the applicant is pregnant;
• No waiting period if the applicant is less than two years of age.

(The term crowd-out describes the dynamic which occurs when individuals enrolled in employer coverage opt to drop their insurance in order to enroll in more affordable public health insurance.  Crowd-out in CHP B have ranged between two and six percent historically.)

Simplifying Recertification Requirements

Long an area of concern for consumer advocates, the current re-certification process creates tremendous barriers to on-going coverage.  Recognizing the importance of continuous coverage, Gov. Spitzer proposes a number of changes aimed at improving the process.

Currently, children found eligible for Medicaid and CHP B are provided with 12 months of continuous eligibility.  The Governor’s budget would bring much need stability and continuity to the entire family by providing 12 months of guaranteed continuous coverage for Medicaid and Family Health Plus (FHP) adults as well, unless the beneficiary moves out of state.  This measure is contingent upon approval from the federal government as it would represent a departure from federal Medicaid law.

In addition, the Executive Budget would eliminate a significant portion of the documentation requirements that are currently applied during recertification for Child Health Plus A, Medicaid and Family Health Plus by allowing for self-attestation of income and residency.  Local districts would be required to use existing data systems such as the wage reporting system to verify eligibility without documentation.

Part D/Preferred Drug Program

Dual eligibles who are currently required to accept Part D prescription drug coverage as a condition of ongoing Medicaid coverage for other health care needs, will not find a continuation of Medicaid wrap-around protection in the Executive Budget.  Medicaid coverage for prescription drugs ended for this group on January 1, 2007, after which date pharmacies can no longer bill Medicaid when a Part D plan refuses payment.  Advocates will be pressing for restoration of these services to guard against any inappropriate denial of or disruption in needed medication.

The Governor’s Budget requires all eligible EPIC enrollees to enroll in a Medicare Part D plan during the first possible enrollment opportunity, unless such enrollment would result in a significant financial hardship or the loss of other coverage.  This group will have wrap-around protection from EPIC if Part D plans deny drug coverage.

The Executive Budget amends provisions of the Preferred Drug Program and the Clinical Drug Review Program to provide that (1) costs be considered in selecting drugs that require prior authorization; (2) time frames for public notice of drug status changes be shortened, and; (3) the Department be authorized to include anti-depressants in the preferred drug program, in consultation with the Office of Mental Health.  The Budget also implements the Preferred Drug Program in EPIC, a step that is currently authorized but has not yet been implemented.

Long Term Care

Action steps in the Executive Budget relevant to long term care are largely consistent with the Governor’s expressed intention to shift resources from expensive institutional care to community-based alternatives.  While nursing homes are subject to the same rate freezes proposed for hospitals, home care and other community-based long-term care services are spared significant cuts in reimbursement.

Also consistent with more community based long term care, the Governor increases reimbursement rates for the traumatic brain injury waiver program and allocates $8 million for demonstration programs to develop and evaluate programs for Medicaid beneficiaries with chronic illness or complex conditions that otherwise complicate their care.  Allocations for workforce recruitment and retention in long term care are reconfigured based on each agency’s hours of service to Medicaid beneficiaries, consistent with the Governor’s promise to spend Medicaid dollars on Medicaid patients.

However, the long term care provisions of the budget also include proposals intended to reduce Medicaid spending on long term care services.  Counties are directed to increase efforts to recover Medicaid expenses from spouses who refuse to contribute to the medical costs of Medicaid beneficiaries; second-year funding for the rural home care workforce and technology initiative is eliminated.

Personal Care Level I Services

The Governor’s initial budget submission called for the elimination of funding for Personal Care Level I services.  Level I services include household and nutritional assistance that are often essential supports for elderly or disabled people living at home.  According to the Department of Health, these services are provided to about 13,000 people in New York, primarily in New York City. 

Listening and responding to consumers’ concerns, Gov. Spitzer amended his budget on February 21 to restore these services.

Expanding Medicaid Managed Care

Governor Spitzer’s Budget continues to recognize savings from the expansion of mandatory managed care for Medicaid beneficiaries.  In New York City, mandatory enrollment of SSI eligible beneficiaries began in November of 2005.  Mentally ill beneficiaries (referred to as SPMI for Serious and Persistently Mentally Ill) have been exempt from mandatory enrollment, but will now be required to enroll beginning in March of 2007.                    

While behavioral health services will be carved out of managed care for this group, all other health services must be received in their plan’s network.

Upstate counties that are required to begin mandatory enrollment of SSI eligibles will also be required to enroll the SPMI population, but the Department has indicated that enrollment of these groups will not be likely to proceed outside of New York City until the summer or possibly the fall of 2007.  Nassau, Suffolk, Westchester, Onondaga and Oswego will be among the first counties outside of New York City required to begin enrolling these groups.

Advocates remain concerned about how well managed care plans will be able to meet the needs of disabled Medicaid recipients receiving SSI, particularly the SPMI group, which uses outpatient specialty care at twice the rate of the general population and emergency care at seven times the rate of the general population.  Advocates in New York City report that clients have had problems obtaining services when plans maintain they are part of the carve out but fee for service providers are denied Medicaid payment.

To further complicate matters, two of the not-for-profit managed care plans serving NYC Medicaid recipients are poised to merge and undergo conversion to for-profit status.  Governor Spitzer’s Executive Budget authorizes the conversion and continues the Pataki Administration’s practice of claiming 95% of the proceeds for state coffers, without providing any process for assessing how these changes will affect plan members or other Medicaid beneficiaries who are no longer exempt from mandatory managed care.

Advocates are urging the new Administration to slow the pace and to conduct more outreach and education, while ensuring continuity of care to these vulnerable groups of Medicaid beneficiaries by providing navigational assistance and meaningful choices among plans. 

It will be important for low-income consumer advocates across the state to monitor the impact of mandatory Medicaid managed care on their clients and help us bring problems to the attention of the new Administration.  If your clients are experiencing problems with Medicaid managed care, contact Trilby de Jung at the Empire Justice Center’s Rochester office, 1-800-724-0490 or send an email to tdejung@empirejustice.org.

For more information on mandatory managed care and ways in which some Medicaid beneficiaries can still apply for exemptions, see “New York Expands Mandatory Medicaid Managed Care to Include SSI Recipients” in the October 2006 edition of the Legal Services Journal.

In Closing – Missing Initiatives

While the Executive Budget represents a breath of fresh air for low-income consumers, there are important initiatives that should have been included and were not, particularly with regard to the disabled community.  As mentioned above, the Budget does not continue Medicaid wrap-around protection for dual eligibles who have been required to receive their prescription drug coverage through Medicare’s Part D program, and there is no provision to limit the co-pays this population will be subjected to under Medicare Part D. 

The Budget also fails to provide for expansion of the EPIC program to include disabled New Yorker’s under the age of 65.  And nowhere in the Budget are funds set aside for the housing needs of the disabled community under the new Nursing Home Transition and Diversion Waiver.  Each of these issues should have been embraced under a philosophy of expanding coverage, particularly for populations with serious medical needs.  Each warrants immediate attention from the new Administration. 

We appreciate the bold steps this new Administration has taken to address the health needs of low-income New Yorkers in this budget.  We hope that the Governor will continue to move us forward in the direction of expanded coverage and more efficient administration of our public health programs.