New York Governor Andrew Cuomo accepted a report on February 24 that contains 79 recommendations for redesigning New York’s $52.8 billion Medicaid program. The report was developed by a Medicaid Redesign Team, a distinguished public and private group led by the State’s new Medicaid director, pursuant to an Executive Order that Governor Cuomo announced in his January 5 State of the State address.  The 79 recommendations, supported by statewide public input, are designed to achieve a $982 million reduction in federal, state, and local government expenditures for Medicaid in the state fiscal year that begins on April 1, 2011. The report includes recommendations for payment reforms related to physician, pharmaceutical, nursing facility, home health agency, personal care, dental, therapy, and transportation services.   The home health agency reforms, a top priority for New York, include provider-specific, per-patient spending limits on an annual basis for long term home health agency patients beginning in April 2011 and a prospective payment system (PPS) based on 60 day episodes of care (similar to the Medicare HHA PPS) for short term patients beginning in April 2012. The report also recommends expanding the use of medical/health homes to coordinate care for persons with chronic diseases, building on New York’s Chronic Illness Demonstration Projects and other care coordination initiatives, under requirements of the Affordable Care Act (ACA) that provide 90 percent Federal financial participation (FFP) for medical/health homes for two years after CMS approval of a required state plan amendment. The New York report carefully considers the need for changes in state law, rules, the state plan, and federal waivers, and provides multi-year financial analyses that appropriately show short term impacts of proposed payment changes that can be implemented in 2011-2012 as well as long term impacts of delivery system reforms requiring more complex program and provider capacity development (as in the case of its recommendations to expand the use of medical/health homes, estimated to generate savings of $186.4 million in 2013-14). Other high priority recommendations in the report include reducing payments to hospitals based on incidence rates of hospital acquired conditions (HACs); covering pharmaceutical services and generating rebates through contracts with managed care organizations (MCOs); reducing reimbursement for return on equity capital and marketing components of Medicaid MCO premiums (in recognition of the high degree of market penetration already achieved by Medicaid MCOs in New York); developing behavioral health plans; centralizing Medicaid estate recoveries; and improving coordination of efforts to promote program integrity. The Medicaid Redesign Team report now moves forward to executive and legislative consideration at the highest levels in Albany. 

About Tom Entrikin

A former policy specialist with the U.S. Health Care Financing Administration (now Centers for Medicare & Medicaid Services (CMS)), Tom Entrikin has vast experience providing technical assistance to states on Medicaid eligibility, coverage, and reimbursement; provider certification and enrollment; program integrity; recovery of third party liabilities; Medicaid Management Information System (MMIS) performance specifications and operations; interagency agreements; contracts with managed care organizations; and Medicaid waiver programs.

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