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Empire Justice Center Testimony at the joint legislative hearing on health in the Executive Budget

THE SENATE FINANCE COMMITTEE & THE ASSEMBLY WAYS & MEANS COMMITTEE



February 2, 2009

 

Prepared by:



Presented by:

Trilby de Jung 


 

Good afternoon. My name is Trilby de Jung and I am the Senior Health Law Attorney for Empire Justice Center. I also serve on the Steering Committee of Medicaid Matters, New York.

With offices in Rochester, Albany, White Plains and on Long Island, Empire Justice Center provides backup, training and support for the legal services offices across the state that represent low-income New Yorkers. We also undertake policy analysis, legislative and administrative advocacy, provide legal representation to low income New Yorkers on an individual basis and in select class actions to improve the way the law impacts those we serve. Empire Justice employs staff attorneys specializing in Health and Medicaid, public benefits, Supplemental Security Income (SSI) and Social Security Disability (SSD) benefits, education, public and subsidized housing, legal issues affecting low income immigrants and people living with HIV and AIDS, consumer law, domestic violence and civil rights.

As the Senior Health Law Attorney, it is my job to look for trends in the problems faced by consumers in public health programs statewide, to identify opportunities for systemic improvements, and then work to make those changes possible through administrative and legislative advocacy, utilizing the courts and class-action litigation as a last resort.

From this health consumer perspective, there is no question that the Governor's Health Budget moves us in the right direction. Low-income New Yorkers across New York will see their access to public health coverage improve as a result of proposals to simplify enrollment and align and expand eligibility levels for the various programs and populations. Clinics in underserved neighborhoods and hospitals with a commitment to serving the uninsured will receive increased financial support as a result of much needed reforms to Medicaid reimbursement formulas.

Empire Justice Center fully supports these critically important advances – and applauds the Commissioner and his staff for their creativity in using scarce resources, and their steadfast commitment to putting patients first, along with a renewed commitment to rooting out childhood lead poisoning in the homes of our state's low income and minority children, where we see persistent concentrations of poisoned kids. At the same time, we must register concern about the Governor's cost savings proposals in the area of pharmacy services and managed care. Some of these proposed changes take us in the wrong direction by imposing barriers to medically appropriate services that will disrupt care for some of our most vulnerable populations.

Section I -- Reform Proposals

STREAMLINING AND SIMPLIFICATION

As we all know, New York's public health programs have evolved over time into an extremely complicated patchwork with different eligibility rules for different populations, and income standards and documentation requirements that can vary by county. To cite a statistic that is likely familiar to all of us in this room, the United Hospital Fund estimates that 40% of New York's 2.4 million uninsured are already eligible for an existing public health program. And the picture is only getting worse. Every day the papers have a new story about the devastating impact of the economic downturn on vulnerable families and children, as more jobs are lost, along with whatever health benefits they provided.

The imperative is clear. Even as we applaud you for your continued attention to simplification and streamlining in Medicaid during the last two legislative sessions, we must ask that you take us even further this year. Just as you removed several significant barriers to successful recertification in the Medicaid program, this year's budget provides the opportunity for us to clear major administrative hurdles to initial enrollment by eliminating:

    • the fingerprinting requirement,

    • the requirement for face to face interviews prior to enrollment, and

    • the asset test.

The Budget also proposes to simplify income eligibility by aligning different populations and programs. Just a few comments regarding each of these simplification proposals follow.

Eliminating Fingerprinting

This requirement has never been enforced uniformly across the state, thus adding the apparent variability and complexity of New York's Medicaid program. The requirement does not apply to applicants to Family Health Plus or Child Health Plus, and it does not even uniformly apply to all Medicaid applicants. Those who are required to be finger printed must schedule an additional appointment at a local district office, which means more time off of work, more time navigating transportation in rural areas, and more time invested by county workers who are responsible for scheduling and tracking compliance with the finger printing requirement.1 Ultimately, while studies show that the fraud detection potential for finger printing is small indeed, the very serious criminal stigma associated with finger printing deter many people from seeking health insurance coverage.2

Eliminating Face to Face Interviews

Federal law does not require a face-to-face interview for Medicaid applicants, and New York is one of only three states that require a face-to-face interview for families applying for children's Medicaid coverage and one of only 10 states that require it for adults seeking Medicaid or Family Health Plus.3 While the requirement can be satisfied by meeting with a facilitated enroller or an eligibility worker at a local social services district, the personal interview still represents a barrier for families, particularly working parents and families living in New York's rural areas. Despite facilitated enrollers' best attempts to make home visits and outstation their enrollers in community gathering places in rural areas such as libraries and grocery stores, these families are still very isolated. Compounding their long work hours is the fact that many rural families do not have access to a car or reliable public transportation. This further disconnects these families and makes a personal face-to-face interview nearly impossible.4

Eliminating the Asset Test for Medicaid and Family Health Plus

Adults applying for Medicaid or Family Health Plus in New York must currently show that their savings do not exceed established resource levels in order to be found eligible.5 For Medicaid and Family Health Plus the asset test is $19,800 for a family of three.

Most people applying for public programs do not have assets. Nevertheless, questions about assets make the application and renewal form much more difficult to navigate for applicants and more complicated to administer for local district staff. Across the board, states that have eliminated the asset test report achieving administrative simplicity and a more manageable workload for eligibility workers.6 In Oklahoma, after eliminating the asset test, the state was able to reduce its administrative costs related to verification of assets by two-thirds.7 In general, state officials report that prior to the elimination of asset tests, very few denials were the result of excess assets. No state experienced an increase in error rate after the elimination of the test.8

Simplifying Income Eligibility Levels

The Executive Budget proposes to align the income eligibility levels across different population groups in a series of steps, each of which will significantly simplify and improve the program. First the gradations in income requirements across children's age groups would be eliminated in Medicaid, and all children would be subject to a single gross income test at 160 percent of the federal poverty level (FPL). Many fewer children would lose coverage as a result of a birthday, and children of various ages in the same household could be enrolled in the same insurance programs. The enrollment process would be simplified for county workers and families with a gross rather than net income test, as families would no longer be required to submit documentation of deductions.

The Executive Budget also proposes to raise the Family Health Plus eligibility levels for adults without children, and for 19 and 20 year olds, to 160 percent of the Federal Poverty level, and to seek a federal waiver to expand overall coverage in Family Health Plus for adults who earn up to 200 percent of the FPL. We fully support these incremental expansions that provide more of New York's working adults with the opportunity for health coverage in this challenging economic climate.

At the same time, we caution against funding strategies that envision varying rules by county. Even as we employ creative means of accessing scarce resources, we must guard against the temptation to provide patchwork coverage that will bar participation by needy families across county lines and only complicate eligibility processes. Along these lines, we remain concerned about the fall back plan to fund expansion eligibility for Family Health Plus to 200%, which would be done at county option. Social Services Districts would have the option of giving up a portion for their share of Disproportionate Share Hospital funds to pay for the expansion. To do this both the counties and the local hospitals would have to consent. Should New York be forced to move to this second option, it is highly likely it would result in many regions in the state having disparate eligibility limits for this critical program.

CARE FOR THE UNINSURED

New York's Indigent Care Funding pools (the Pools) represent a critical source of reimbursement for hospitals that provide uncompensated care to uninsured and under-insured patients, distributing some $847 million in Medicaid funding every year. Distributions from these pools have come under fire in recent years for their lack of transparency and accountability. We applaud your courage during last year's budget, in approving a new formula for distribution of 10% of the indigent care pool, based on units of services provided rather than accounting methods of estimating cost.

This new funding methodology, in combination with data that hospitals have reported on their financial assistance programs required under Manny's Law9, provide us with a new, never before available picture of how estimated costs compare to actual units of service. The data tables put together by the Department of Health last week make it clear that while some hospitals' cost estimates align with the units of free or discounted care provided to uninsured New Yorkers, others do not. We cannot continue to distribute these moneys based on accounting method estimates of cost.

While this new data is based on one year's data only and will undoubtedly require some adjustments as discussions proceed, I submit to you that the data present us with a clear imperative. We must maximize opportunities to use a more accurate distribution formula in order to encourage hospitals to utilize the programs Manny's law required them to put into place. There are plenty of uninsured New Yorkers in need of charity care. Only by distributing money in exchange for actually serving these patients will we be able to ensure that the resources the state has for addressing this need go to hospitals that are prepared to meet it.

The Executive Budget contains a brilliant proposal for maximizing accurate distribution of charity care funding, while increasing a federal draw-down to match the expenditures. The Budget would move $282 million in Professional Education Program dollars into the Disproportionate Share Hospital (DSH) indigent care pool. The money would stay with teaching hospitals, but instead of serving it's original purpose, that of ensuring adequate private pay rates for academic hospitals, it would serve to compensate teaching hospitals that are meeting the need for charity care.

As senior health law attorney at Empire Justice, and a steering committee member of Medicaid Matters New York, I was invited to sit on the Technical Advisory Committee charged with examining these funding streams last year. During those meetings we learned, from the academic hospitals, that private payors have stepped up to the plate at teaching hospitals, providing a much more favorable reimbursement rate than Medicaid. Given this negotiating success by the teaching hospitals, it only makes sense to put the Medicaid dollars to use where they are most sorely needed – in the area of charity care. We urge you to support the Governor's proposals in hese areas.

The Executive Budget also authorizes the Department of Health to seek a waiver from the federal government to allow New York to use indigent care pool payments to support care for uninsured patients in diagnostic and treatment centers (D&TC) and mental health outpatient clinics. If a waiver is obtained, federal matching payments would result, and D&TC funding would be doubled from the current $55.5 million to $111 million. Empire Justice Center fully supports this change as well.

PRIMARY CARE INITIATIVES

Creating Medical Homes

The Executive Budget takes a significant step toward ensuring that Medicaid patients can access timely and appropriate primary and preventive care by proposing a Statewide Medical Home Program. The program would provide enhanced Medicaid payments to clinics and clinicians certified by the Commissioner as Health Care Homes and providing additional payments to those clinics or clinicians that meet specific goals. Importantly, providers in fee for service Medicaid as well as Medicaid Managed Care would be eligible to be certified as Health Care Homes and receive the additional funding.

The Budget also proposes a Rural Health Care Access Multipayor Demonstration program for the Adirondack region. Like the statewide program, clinics and clinicians that meet standards would be certified as Health Care Homes and eligible to receive additional payments. In the multipayor program, incentives would include FHPlus and CHPlus as well as Medicaid, and even reach across the traditional boundary between public and private insurance, to provide incentives for care coordination in employer sponsored health care programs.

Empire Justice fully supports these promising models and investments and applauds the Governor's commitment to rebalancing New York's Medicaid system to increase access to high quality primary and preventive care.

Lead Paint Poisoning Prevention

Elimination of childhood lead poisoning is a matter of racial and environmental justice. One in three African American children under age 5 in upstate New York (33%) have been shown to live in zip codes designated as "high risk," as opposed to fewer than 4% of the non-minority population.

As Steering Committee member of the statewide Coalition to Prevent Childhood Lead Poisoning in New York State and the Coalition to Prevent Lead Poisoning in Rochester, Empire Justice has been committed to eliminating lead poisoning in children for years. We are encouraged by the efforts made by Governor Paterson and Commissioner Daines to prevent New York from losing ground in the struggle to create an effective "primary prevention" program to eliminate lead-paint hazards in buildings located in the state's "high risk" areas. Unfortunately, although the fact that geographic disparities in lead poisoning rates were shown by DOH as early as 1998 to be confined primarily to a small number of cities, New York lost well over a decade in getting this important program underway. In fact, the "Primary Prevention Pilot" did not really get underway until last year.

By then the State was already at the advent of the current economic crisis. Caught up in this economic maelstrom was new legislation that would have provided financial assistance to property owners to eliminate lead-paint hazards. That legislation, the Gantt/Robach "Childhood Lead Poisoning Primary Prevention and Safe Housing Act of 2008," passed both houses with a nearly unanimous vote. Governor Paterson reluctantly vetoed that legislation due to the immediate cost implications. In his veto message, however, he committed to make the Primary Prevention Pilot Program permanent. He also committed to include additional funding in his Executive Budget to extend the program to a few additional communities that have been designated as areas of "high risk."

The Governor honored that commitment in his budget request, which holds the funding level for the current Primary Prevention Pilot Program steady and adds another $2.5 million a year for the next two years, effecting a limited expansion of the program. We enthusiastically endorse this funding request.

We note that expenditures for building inspections have been shown under local laws in both the City of Rochester and in New York City to be highly effective in dramatically reducing new incidences of lead poisoning. That reduction ultimately saves the state and local communities from additional expenses in special education, Medicaid outlays, and even costs in the criminal justice system due to youth violence that have been clearly associated with high lead poisoning rates. We look forward to working with the Governor and the Legislature in the coming year to improve access to building inspections for low income New Yorkers.

We urge the Legislature to, at a minimum, support the funding proposed by the Governor for expansion of the Primary Prevention Pilot Program.

Section II -- Deficit Reduction and Cost Savings

PROVIDER CUTS

We are concerned about the across the board nature of cuts to home care providers. Home and community based services, which are preferred by many consumers and are often less costly to provide, have long been inadequately funded in New York. As proposed the cuts to home care will perpetuate the inequity of institutional versus community long-term care.

Similarly we would urge that across the board hospital cuts be rejected in favor of more thoughtful reductions in hospital sector funding. Across the board cuts are not consistent with the goal of brining reimbursement rates more in line with the actual cost of providing care to Medicaid patients, nor do they protect institutions and services that are most needed by Medicaid patients.

PREMIUM INCREASES IN CHPLUS

Child Health Plus premiums - we have worked alongside this administration to expand New York's Child Health Plus program and are therefore very alarmed about the proposed increase in premiums. Increased cost sharing is antithetical to the stated goals of this administration – to assure that every child in New York has health coverage. Evidence shows that cost sharing is a significant deterrent for people seeking health coverage. While the proposed increase in premiums seems small, affordability is a very relative concept. Asking families to pay higher premiums for their children's coverage, even with a proposed monthly cap of $225 per family, has the potential to put coverage out of reach for many.

EXPANSIONS TO MANDATORY MANAGED CARE

While we recognize the potential benefits of managing the care provided to those with complex needs, we continue to have serious concerns about the Department's plans to expand the mandatory Medicaid managed care program. We believe that the threat of disruptions to care presented by the difficulties consumers experience with navigating carve-outs and provider networks, lack of understanding of due process rights within managed care must be addressed.

Personal care services should not be part of the Medicaid managed care benefits package until the problems that beneficiaries are currently experiencing with accessing other long term care services within the benefit package are remedied. Neither should those elderly and disabled clients who have been persuaded to join a Medicare Advantage plan be aggressively pursued for enrollment into Medicaid Advantage until New York has made care coordination requirements clear and put a mechanism for meaningful monitoring in place.

PHARMACY SERVICES

Clearly there is a need to recognize further savings in spending on prescriptions drugs. With this goal in mind, Empire Justice supports some of the Governor's proposals for pharmacy reform, including language that would enhance New York's ability to negotiate directly with drug manufacturers for additional rebates. We are pleased with language that would improve disclosure requirements in the sale and marketing of drugs and medical devices and enhance the accountability of pharmacy benefit managers. We also welcome proposals to reduce cost sharing for low-income Elderly Pharmaceutical Insurance Coverage (EPIC) enrollees and eliminate the program's fees for those under 150% of the federal poverty level. The EPIC program represents an important bridge to coverage for seniors in New York who ultimately qualify for Medicaid's medically needy program. Empire Justice has long endorsed expansion of EPIC to include individuals with disabilities.

However, there are several pharmacy proposals in the Executive Budget that would reduce services for low-income New Yorkers, either by eliminating coverage for prescription drugs or imposing significant barriers to accessing pharmacy services. We urge you to REJECT language in the Executive Budget that would:

    • eliminate EPIC coverage for Medicare eligible enrollees,

    • end the Medicaid wrap for Medicare Part D, and provide sweeping authority for new prior authorization requirements in Medicaid, without consumer protections like prescriber-prevails and anti-depressant exemptions.

Instead of putting patients first and moving forward with reforms that will minimize hospitalizations by managing disease and chronic conditions, these proposals will create new obstacles that busy clinicians serving low-income communities will find impossible to surmount. We will never recognize the savings inherent in providing the right care at the right time if we unduly restrict access to prescription drugs.

Preserve New York's EPIC Program

The Governor's Budget proposes to eliminate prescription drug coverage traditionally provided to enrollees in the EPIC program, once those enrollees qualify for Medicare. EPIC enrollees will be required to enroll in Medicare Part D, even if it is more costly for them to do so, and the program will no longer provide coverage for medications that their Part D plans refuse to pay for.

Last session, in recognition of the importance of maximizing Medicare Part D coverage, the legislature and the Governor negotiated a process for pursuing Part D drug plans that deny payment for drugs needed by EPIC enrollees. Current law envisions a system under which enrollees, pharmacists and EPIC staff work together to pursue coverage determinations and appeals in order to maximize federal funding for prescription drugs and minimize outlays by the EPIC program.

This Medicare maximization system only began formal operation in October, 2008. Since that time, EPIC has pursued 550 appeals; with wins almost double the losses in resolved cases and a total of $170,000 in savings to EPIC.10 From a consumer perspective, the assistance of EPIC staff in deciding upon the right strategy to maximize plan coverage is invaluable. Seniors receive assistance in sorting through why their plan denied payment and help with the forms required to appeal denials or change plans. We need to give the partnership forged last session a chance to work to the benefit of both consumers and the EPIC program.


Preserve New York's Limited Medicaid Wrap-around Coverage for Part D

New York State has a proud tradition and history of caring for those most in need of assistance, which can be traced to the values expressed in our state constitution. When the federal Medicare Part D drug benefit was created, the legislature recognized that those eligible for not just Part D, but Medicaid (dual eligibles – who have more complex health problems and lower incomes) are actually worse off – because the federal Medicare benefit does not match the scope of Medicaid prescription drug coverage in New York. Thus New York initially provided wrap-around Medicaid coverage to dual eligibles with Part D.

State support for dual eligibles has since eroded to the point where currently, only four classes of drugs are provided by Medicaid when Medicare Part D denies coverage -- anti-psychotics, anti-depressants, anti-retrovirals, and anti-rejection drugs -- medications recognized as critical for severe conditions and easily complicated by interruptions in treatment.

The Governor's proposal to eliminate Medicaid coverage for these four critical classes of drugs puts vulnerable populations at risk of therapy interruptions. A recent study funded by the University of California Berkeley School of Public Health found that Medicare Part D subjected dual eligibles in need of anti-psychotic drugs to additional co-payments, prior authorization hurdles and quantity limits. Twenty-one percent of the duals in the study experienced disruptions in medication. Hospital costs associated with disruptions to just this one class of drugs were estimated to total $61.9 million.11

Reject Sweeping New Authority for Prior Authorization

The Governor's Budget also makes dramatic changes to the drug benefit within the Medicaid program. New York clearly needs to do a better job of negotiating prices with drug companies and we have no objection to the reforms the Governor would make to enhance New York's negotiating authority in the Supplemental Rebate Program. However we cannot support an approach to prior authorization that fails to incorporate the consumer protections that were painstakingly integrated into the Preferred Drug Program (PDP) and the Clinical Drug Review Program (CDRP) in prior legislative sessions.

Studies have shown that unduly restrictive prior authorization policies result in low-income patients going without necessary medications, with significant consequences to their health.12 It was in recognition of these dangers to consumers, and the cost of unnecessary hospitalizations, that the current structure for prior authorization was negotiated in New York.

Under current law, the Department of Health has the authority to impose prior authorization on any drugs reviewed within the context of the PDP or the CDRP. Each program contains carefully crafted consumer protections, including physician over-ride, expert review of choices within drug classes with emphasis on clinical benefit as well as cost and specific drug exemptions from prior authorization. Exemptions include the four classes of drugs discussed above under current Medicaid wrap-around coverage for Part D. Neither the PDP nor the CPRP has yet been utilized to its full potential.

The Governor's proposed changes to the Medicaid drug benefit would:

      • do away with physician override in the CDRP

      • take anti-depressants off the list of drugs protected from prior authorization

      • provide sweeping new authority to impose prior authorization on Medicaid drugs outside either the PDP or the CDRP -- authority that would allow the Department of Health to impose prior authorization within any number of frameworks, such as step therapy and/or limits on the frequency, use and duration of a particular medication.


Preserve Funding for MCCAP Agencies

Even as the Governor proposed this pharmacy cut backs for elderly and disabled New Yorkers, funding that has been available to Medicare Part D Consumer Assistance Program (MCCAP) agencies to help this population navigate appeals and denials from drug plans is slated for a 50% cut. Although some have described the funding reduction as justified because of unspent funds, in fact all of the seven agencies that are funded on through this program, including Empire Justice, have fully utilized the dollars made available. In 2008 alone, MCAP agencies provided one-on-one assistance to over 6,500 beneficiaries across the state, and conducted outreach and education through 900 workshops, reaching almost 61,000 beneficiaries and 3,200 advocates. Now is not the time to pull the rug out from under this extremely vulnerable population. While this funding is in the Office for the Aging Budget, it is a critical component of the state's efforts to ensure access to pharmaceutical coverage and clearly impacts the health budget.

We urge the legislature to restore funding to last year's level.

Conclusion

Thank you for the opportunity to present testimony about the Governor's Executive Budget Proposal for FY 2007-2008. Should you have any questions, please do not hesitate to contact Trilby de Jung in our Rochester office at 585-295-5722.
 

Footnotes

1 Sticha, PJ, Thomas, D., Gribben MA. Use of Biometric Identification Technology to Reduce Fraud in the Food Stamp Program: Final Report USDA. December 1999.

2 Bartlett, Sl, Burnstein, N., Hamilton, W. Food Stamp Program Access Study: Final Report. USDA ERS. E-FAN No. 03013-3. November 2004. Cph 8, p. 10.

3 Donna Cohen Ross and Caryn Marks, "Challenges of Providing Health Coverage for Children and Parents in a Recession: A 50 State Update on Eligibility Rules, Enrollment and Renewal Procedures, and Cost-Sharing Practices in Medicaid and SCHIP in 2009. Data based on a national survey conducted by the Center on Budget and Policy Priorities for the Kaiser Commission on Medicaid and the Uninsured," January 2009.

4 Kate Lawler and Anne Marie Costello, "Community-based Facilitated Enrollment: Meeting Uninsured New Yorkers Where They Are," Children's Aid Society and Children's Defense Fund-New York, February 2005.

5 Medicaid: SSL § 366-a(2)(b); Family Health Plus: SSL § 369-ee(2)(c).

6 Supra note 13.

7 Supra note 13.

8 Supra note 13.

9 Patient Financial Aid Law [New York Public Health Law § 2807-k (9-a)].

10 Notes from December meeting of the Medicare Savings Coalition, presentation by EPIC staff.

11 M. Shumway & S. Chung, Impact of Medicare Part D on Access to Antipsychotic Drugs and Hospital Costs among Dual Eligibles in California, March 2008, California Program on Access to Care. Available at: http://www.ucop.edu/cpac/documents/shumway_findings.pdf 

12 T. Johnson, et al., Medicaid Prescription Formulary Restrictions and Arthritis Treatment Costs, AJPH, July 2008, Vo. 98, No. 7. C. Jackevicius, et al., Cardiovascular Outcomes after a Change in Prescription Policy for Clopidogrel, NEJM, October 2008, Vol. 359, No. 17.