2014-15 State Budget: Initial Summary

Today Gov. Cuomo presented a $137.2 billion state budget, allowing 1.7% growth in total spending and 3.8% growth in Medicaid spending and advancing a $489 million tax cut package. The Budget also proposes significant new capital initiatives, including a Smart Schools bond act ($2 billion) and a capital program to modernize health care facilities ($1.2 billion). The plan includes significant investments in affordable housing and health care and key long term care provisions, including: restores the 2% across the board cut to Medicaid providers, provides nursing home rate protection and provides relief for wage parity.

Following is an initial summary of some key provisions in the governor’s proposal that would impact LeadingAge New York members. LeadingAge New York staff will be thoroughly reviewing the budget bills over the coming days and will provide a more complete analysis of these proposals to members early next week.

All the budget documents can be reviewed at the following link: http://publications.budget.ny.gov/eBudget1415/1415_budgetLegislation.html

Medicaid Global Cap

Global Cap: Extends the Medicaid global cap for one year to March 31, 2016 along with the authority of the Commissioner of Health and State Budget Director to make spending reductions if Medicaid expenditures are exceeding projections.

Global cap shared savings: Authorizes distribution of savings accruing form the Medicaid global cap to be distributed proportionately to Medicaid providers and Medicaid managed care plans. Earmarks a portion for financially distressed and critically needed providers.

Two percent cut restoration: Restores the across-the-board two percent cut to Medicaid rates effective April 1, 2014 while maintaining the authority to continue cost containment arrangements that were made in lieu of the two percent cut.

Joint Medicaid savings reinvested
The proposed budget includes spending authorization for a pending waiver with the federal government that will allow the state to reinvest up to $10 billion in savings. The investments will:

Expand the Availability of Capital: a new $1.2 billion capital program to support projects that improve financial stability and increase efficiency through greater provider collaboration. In addition, the Budget expands access to other forms of capital by encouraging private equity investments and expanding the availability of Health Facility Restructuring Program loans to nursing homes and clinics.
Establish Regional Health Improvement Collaboratives (RHICs): $7 million in 2014-15, growing to $16 million in 2015-16 to support 11 RHICs, including support for Finger Lakes Health Systems Agency to share their experience and provide technical assistance to the other regions.
Improve Health Information Technology: $65 million in 2014-15 from covered lives assessment revenues associated with additional insured individuals to continue operational support for the State Health Information Network of New York (SHIN-NY), establish a statewide electronic medical record system, and an All Payer Claims Database (APCD). This investment will leverage up to $30 million of Federal Medicaid funds for these projects for a total of up to $95 million.

Critical health care investments

Capital Investment in Health Care: $1.2 billion investment in capital projects that improve financial stability and efficiency of health care providers through greater provider collaboration. The Capital Restructuring Financing Program would be established under the joint direction of the Department of Health and the Dormitory Authority to make capital grants to hospitals, nursing homes and diagnostic and treatment centers. The existing Health Facility Restructuring Program would also be expanded to permit loans to not-for-profit nursing homes, not-for-profit diagnostic and treatment centers and any other not-for-profit health care facility licensed by the Department of Health. In addition, the Budget authorizes private equity investment in up to five business corporations to be established as operators of health care facilities under Article 28 of the Public Health Law.

Regional Health Improvement Collaboratives: $7 million investment in regional planning through collaboratives, like the Finger Lakes Health Systems Agency, that would convene stakeholders to address regional health care challenges. The investment would increase to $16 million in 2015-16.

Health Information Technology: Allocates up to $65 million from the covered lives assessment revenues attributable to newly insured individuals to provide operational support for the State Health Information Network of New York (SHIN-NY) and to “establish a statewide electronic medical record system and an All Payer Claims Database.” This funding is expected to leverage an additional $30 million in federal Medicaid funds.

Health Planning Reform

Certificate of Need: Revives CON streamlining proposals that were included last year’s Executive Budget, but were not enacted. These include the elimination of public need review for certain primary care projects, a reduction of the character and competence “look-back period” from 10 years to 7 years, and a modest relaxation of the prohibition on approving the establishment of an proposed operator with “recurrent” violations.

Retail Clinics and Urgent Care Centers: Permits the establishment of “limited services” or retail clinics that operated by publicly-traded corporations or other entities whose owners are not natural persons and create a regulatory framework for such clinics. It would also impose new regulations on urgent care centers.

Housing

Expand Affordable Housing Opportunities: $100 million, in federal storm recovery funds, will be invested to create and preserve 3,000 affordable housing units in multi-family developments.

House NY program investments: $40 million in new capital resources, supplementing the House NY program that was initiated last year, which invests $1 billion over five years to preserve or create 14,300 affordable housing units. The multi-year plan includes $706 million to revitalize 44 Mitchell Lama projects and $231 million to create or preserve over 5,000 affordable housing units.

Neighborhood and Rural Preservation Programs: Continues the utilization of $32 million in excess reserves from the Mortgage Insurance Fund (MIF) to support the Neighborhood and Rural Preservation Programs (NPP/RPP) and the Rural Rental Assistance Program (RRAP) through the Housing Trust Fund Corporation.

Expand the Low Income Housing Credit: Authorizes the Division of Housing and Community Renewal to allocate an additional $8 million for the program in 2014-15, and an additional $16 million in 2015-16. Credits are given in equal installments for a ten-year period. The total amount of credits to be awarded from this new authorization will be $160 million over a multi-year period.

Naturally Occurring Retirement Community/Neighborhood NORC: Maintains 2013-14 funding level of $2.027 million for each program.

Adult Care/ Assisted Living

EQUAL Program: Maintains 2013-14 funding level of $6.5 million.

SSI Enriched Housing Subsidy: Maintains 2013-14 funding level of $475,000.

ALP expansion: Extends the “deadline” for DOH to award 6,000 new ALP beds by two years, through 2016.
Respite stays: Increases the maximum respite stays for non-residents within Adult Care Facilities (ACF) from six weeks to 120 days during a twelve month period.

Expedited review: Creates an expedited review process for EALRs and SNALRs to get approval to operate an up to nine additional beds. DOH currently allows such a process for up to five additional beds

Character and Competence: Reduces the look-back period for character and competence review from 10 to 7 years for ACFs and ALRs.

Home Care

LTHHCP program slots: Eliminates the cap on Long Term Home Health Care Program slots allotted to each program.
LHCSA relief: Authorizes the Commissioner to make periodic lump sum Medicaid payments to LHCSAs principally engaged in providing home health services to Medicaid beneficiaries, including providers undergoing closure, impacted by another agency’s closure, subject to a merger or restructuring, impacted by a merger or restructuring, or seeking to ensure access to care.

Wage Parity: Provides for Medicaid payments to address cost increases arising from wage parity.

Nursing Homes

VAP program: Proposes $366 million for the vital access provider program, representing a significant increase to the VAP program and continuing the multi-year commitment made last year. In addition, VAP funding is allocated for behavior health services.

Nursing home rate protection: Requires managed care and MLTC plans to reimburse nursing homes for permanently placed Medicaid residents based on Medicaid fee-for-service rates in effect at the time the service was provided. Allows exceptions for negotiated agreements between a plan and provider.

Nursing home CMI cap: Caps the growth of a nursing home’s case mix index at two percent for any six month period until January 2016 or until an earlier date determined by the commissioner.

Standard compensation for nursing home employees: Mandates that managed care plans, including MLTC plans, include a provision in any contract with a nursing home that requires the nursing home to pay standard rates of compensation to employees providing inpatient services. These include nurses, aides, orderlies, attendants, therapists and any others determined to be covered by the commissioner. Standard compensation rates will be calculated annually by the State Health and Labor Departments, distributed to all nursing homes and deemed to be part of any contract with a managed care plan. The commissioner of health will prohibit new admissions to a nursing home that is found to be materially out of compliance. The home will also be subject to enforcement processes set forth in labor law and regulations.

IGT payments: Extends authority for the state to make IGT payments to public nursing homes through state fiscal year 2016-17.

Managed Long Term Care

Managed Care Consumer Advisory Review Panel: Expands the Managed Care Consumer Advisory Review Panel to include consumer representatives of dual eligible beneficiaries and individuals with behavioral health needs.

Wage Parity: Provides for Medicaid payments to address cost increases arising from wage parity.

Adult Day Services

Social adult day renewal of state aid grants: $1, 072,000, this is level funded from last year.

For services and expenses of NYADSA, including statewide training: $122,500, this is level funded from last year.

Miscellaneous Provisions

Pay for Success/Social Impact Bonds: Increases the appropriation for this initiative from $30 million in 2013/14 to $125 million and will invest in new initiatives including health care.

Health Care Reform Act: Extends HCRA until December 31, 2017.

Medicaid Coverage of Prescription Drugs: Includes new limits on prescription drug coverage under Medicaid. For example, it would create an exemption from the requirement that managed care plans cover certain brand name drugs, when there is a multi-source therapeutically and generically equivalent drug. It would also expand prior authorization requirements for certain refills and off-label uses of prescription drugs.

Again, we are currently reviewing all the budget documents and will provide you with a more thorough analysis on all of these items, as well as other items not listed, next week. In the meantime, do not hesitate to contact Ami Schnauber or Alyssa Lovelace if you have any questions at 518-867-8383.