3/10/09: Unshackle Unveils Medicaid Reform Plan
Unshackle Upstate Medicaid Policy and Healthcare Policy Statement
According to the NYS Division of Budget, combined federal, state and county Medicaid spending is expected to total approximately $48 billion in 2009-10. Considering the magnitude of this expense, it is necessary to subject Medicaid to the same cost-saving scrutiny as other parts of the state budget during this period of economic crisis. At the same time, it is important to recognize that upstate hospitals and other providers like nursing homes occupy a unique place in the Medicaid debate and a "one size fits all" approach to Medicaid cuts does not reflect the economic realities of Upstate New York or its health systems.
Hospitals, in particular, are some of the largest employers in Upstate New York, and cuts to Medicaid impact their ability to provide high-quality services, limit access, and further erode the financial well-being of New York's health care system that is still reeling from previous cuts. Broad-based Medicaid cuts also affect hospitals' ability to grow and create jobs, resulting in a ripple effect in the economy.
Based on input from Unshackle Upstate metro partners, practitioners, recipients and key community stakeholders, Unshackle Upstate will focus its Medicaid policy and advocacy efforts with New York State in the following manner:
1.) Reform is essential to long-term savings. In order to realize meaningful long-term
cost-savings, New York must examine its health policy for the entire state to determine
who receives what coverage and at what level.
Longer-term actions should include:
a. Centralized eligibility/eligibility determination/administration.
b. Consideration of Preferred Provider Network approach.
c. Increase private LTC insurance credit.
d. Health policy/coverage limits reflecting overall affordability.
2.) Avoid broad-based cuts. Reimbursement rates should not be cut to providers who are
already compensated below cost. Cuts in reimbursement rates to providers also fall
disproportionately on health care institutions that provide care to the greatest number of
Medicaid recipients. Broad-based cuts will result in greater pressure to shift costs to
commercial payers and self-insured businesses through higher premiums, resulting in a
community-wide impact.
3.) Targeted cost cuts are necessary. Across-the-board cuts cause hospitals serving the
most vulnerable in our communities to be the hardest hit. However, budget savings in this
period of economic crisis will not be realized without enacting cuts. Several specific
suggestions include:
a. Cutting long-term care benefits to those who are not impoverished.
b. Eliminating the spousal refusal loop hole and implementing eligibility criteria to
disallow spousal refusal. A review of eligibility criteria in benchmark states should
be conducted with the objective of leveling NY to the norm.
c. Introducing incentives such as a tax credit to encourage the purchase of long-term
care insurance.
d. Reducing excessive use of some services (such as personal care) and improving
management of care for high-cost populations. Freeze the enrollment in the personal
care program and cap the costs. Bringing use of personal care services (i.e.,
housekeeping, shopping) more in line with national norms would save almost $1.5
billion annually. It is estimated that 25% of Medicaid enrollees account for 65% of
program expense. A "managed care" approach would help reduce the expense for
this population. Medicaid managed care should be provided for high cost
beneficiaries including dual eligibles - disabled/aged/special needs populations.
Benefit reductions should be enacted to match benefit offerings in benchmark
states.
e. Cutting coverage for optional services (i.e., chiropractor, etc.)
f. Increasing efforts to combat fraud and abuse. Potential savings estimated
conservatively at 5% of the overall Medicaid budget would amount to over $1.5
billion. Medicaid fraud management should be enhanced, recognizing findings of
recent NYS Controller's Report.
g. Medicaid (Safety Net) prescription benefit management parity should be established
through review of the current program with typical commercial insurance health
plans and similar programs in benchmark states.
h. Demonstration projects should be invited including expanded pay for performance
and global episodic payments.
4.) Support Graduate Medical Education (GME). New York's 97 teaching hospitals
provide the most comprehensive and advanced medical care in the nation. They also help
train tomorrow's doctors. New York trains about 16,000 physician residents per year,
more than twice as many as any other state. Current budget proposals call for a drastic
redistribution of GME funding from many Upstate institutions to downstate hospitals. This
reduction in reimbursement will only further exacerbate the current physician shortage by
constricting the pipeline of new physicians into the region. Many of the physicians that are
trained here tend to remain in the region. It will also make it difficult to recruit and retain
world-class faculty and would reduce the number of medical students many Upstate
medical centers are able to train. Strong consideration must be given to identifying a
mechanism that will incent physicians to remain in New York for a fixed amount of time
once they enter the field as a registered doctor. New York should also consider
increasing the number of J-1 Visa opportunities for foreign born doctors that are trained in
the state to remain once they become a registered doctor.
5.) There should be no cost shifting. Cost shifting is a hidden tax adding to the
unaffordability of private health insurance. At the margin, it creates either more bad debt
and charity care or more people receiving coverage from public programs.
6.) Like many other areas of New York state government, the Medicaid system is the
most expensive in the country. It continues to grow annually at an unsustainable rate
for the state, the counties and taxpayers. In order to realize meaningful long-term cost-
savings, New York must examine its health policy for the entire state to determine who
receives what coverage and at what level. The vast majority of Medicaid spending
increases represent policy assumptions and choices resulting in the growth of coverage as
well as an increase in utilization. New York State should review its Medicaid program
design, eligibility criteria and resource allocation across the state and in comparison to
what other states provide in order to achieve long-term savings and efficiencies. At the
same time, New York must improve access, while focusing on wellness, quality
improvements, health IT, coordinated care, strengthening the workforce and ensuring fair
payments.
The problems of the current Medicaid system are akin to the old Workers' Compensation
system in New York. It is a high cost program to administer and is not meeting the core
needs of any of the participants. That includes hospitals, nursing homes, practitioners and
the people that utilize the service. In effect, the system is broken and in desperate need of
reform. We must act now and utilize the new federal funds as a bridge to get us through a
restructuring process.
Based in large part on the advocacy efforts of Governor Paterson and Senator Charles
Schumer, New York stands to receive roughly $11B from the federal government to
offset the growing expense of Medicaid. However, this influx of money will be short lived
and will be gone by 2011. Unless we achieve significant reforms in the reimbursement,
service and delivery systems, the budget for this program will grow to an even larger
burden on taxpayers.
As a result, we call on the Governor and Legislature to create a Commission (similar to
the Berger Commission of 2006) that will utilize the roughly $11B from the federal
government as a bridge to reform our Medicaid system.
The Commission must be a broad-based, non-partisan panel created to undertake a
rational, independent review of the services offered in our Medicaid system and how they
are delivered. The purpose of the Commission will be to recommend systematic Medicaid
reforms in New York that appropriately respond to individual needs for high-quality,
affordable and accessible care, but with meaningful efficiencies in delivery and financing
that promote long-term affordability and cost containment. The commission will be
charged to identify Medicaid reforms that will keep state spending on Medicaid, including
Federal stimulus funding, flat over the next five years. The Commissions recommended
changes to New York's Medicaid system will be a necessary first step toward controlling
an unsustainable spending pattern. And much like Berger, when the Legislature creates the
Commission, it must agree to adopt the commission's recommendations to keep Medicaid
spending flat (or adopt alternatives to keep Medicaid spending flat) in order to
appropriate and spend Federal Stimulus funding for Medicaid in Fiscal Year 2010-11.
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