April 2008  
Volume 24, Number 4  

New York State

Special Edition Medicaid Update 2008-09 Budget Highlights

The official newsletter of the New York Medicaid Program

David A. Paterson, Governor
State of New York

Richard F. Daines, M.D. Commissioner
New York State Department of Health

Deborah Bachrach, Deputy Commissioner
Office of Health Insurance Programs



On April 1, 2008, the NYS Legislature approved the State Fiscal Year 2008-09 Health Budget. This six-part Special Edition of the Medicaid Update provides the highlights of that Budget. Many of the provisions are subject to approval by the federal Centers for Medicare and Medicaid Services. Additional information about the implementation of these provisions will be included in future issues of the Medicaid Update.

Part 1 - Reallocation of Health Care Spending: Focus on Ambulatory Care

Increased Payment Rates for Hospital Outpatient Clinics, Ambulatory Surgery, Emergency Departments & Diagnostic and Treatment Centers

Increases in Physician Fees and Payment Enhancements

Increases for Other Practitioners

Part 2 - Expansion of Benefits and Improving Outcomes

Diabetes and Asthma Education

Individual Psychotherapy Services Provided by Licensed Social Workers

Prenatal Care Special Services

Nurse Family Partnership

Medicaid Therapy Management

"Never Events"

Selective Contracting

Changes in the Medicaid Utilization Thresholds

Part 3 - Changes in Pharmacy Benefits for Medicaid and Family Health Plus

Pharmacy Benefits for Persons Enrolled in Family Health Plus

Change in Reimbursement for Brand and Generic Drugs

Specialty Pharmacy

Expanded Clinical Review

Prescriber Education

Part 4 - Expansion of Coverage and Simplification of Enrollment and Renewal in Public Health Insurance Programs

Child Health Plus Expansion

Expanded Coverage for Foster Care Children

Streamlining Eligibility Rules

New State Enrollment Center

Part 5 - Changes in Reimbursement for Mental Health Services

Minimum Reimbursement for Mental Health Clinics Licensed Solely Under Mental Hygiene Law

Elimination of COPS Volume Rebasing and the COPS Threshold

Medicare/Medicaid Crossover

Part 6 - Other Initiatives of Interest

Doctors Across New York

Indigent Care Reform

Prescription Drug Discount Card

Enhanced Program Integrity

Public Health Investments


Part 1 - Reallocation of Health Care Spending: Focus on Ambulatory Care

The 2008-09 Budget begins a multi-year process of transitioning funding from inpatient to outpatient services to support quality care in outpatient settings and address the problem of avoidable hospitalizations. The following inpatient reductions and outpatient investments will begin in 2008-09.

Hospital inpatient rates will be rebased from 1981 base year costs to 2005 base year costs by no later than December 31, 2012, with first year annual reductions in inpatient rates totaling $154 million. The budget rebases and reforms inpatient detoxification services, reducing rates of payment for inpatient detoxification by more than $70 million, over four years, and replacing the per case reimbursement methodology with a per diem rate to facilitate more appropriate care as of December 1, 2008.

Over $300 million will be invested in outpatient services in year one, including hospital and community clinics, ambulatory surgery, and physician services. This investment is an essential first step to address a decade-long freeze on all clinic rates and physician fees that are among the lowest in the country. Additional information on these historic investments follows.

Increased Payment Rates for Hospital Outpatient Clinics, Ambulatory Surgery, Emergency Departments and Diagnostic and Treatment Centers
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Concurrent with the outpatient investment, a new rate setting methodology, called Ambulatory Patient Groups or APGs, will replace the current flat "per-visit" outpatient payment methodology for providers licensed and services provided under Article 28 of Public Health Law. Under APGs, the amount that is paid for a visit will vary depending on the intensity of the services provided during the visit. Implementation of APGs will be phased in as described below to allow for a transition period. The chart below shows, by service type, the start date for implementing APGs and the phase-in schedule. The Department will conduct training on APGs and providers will continue to use the same HIPAA compliant claim forms as they do now to submit claims to eMedNY.

Service TypePhase-In
Ambulatory SurgeryBeginning December 1, 2008, 100% of payment will be based on APGs.
Outpatient ClinicStarting December 1, 2008, 25% of the payment will be based on APGs. The percentage will increase to 50% effective January 1, 2010, 75% effective January 1, 2011 and 100% effective January 1, 2012.
Emergency DepartmentStarting January 1, 2009, 100% of payment will be based on APGs
Diagnostic and Treatment CentersStarting March 1, 2009, 25% of payment will be based on APGs. The percentage will increase to 50% on January 1, 2010; 75% on January 1, 2011 and 100% on January 1, 2012.

Increases in Physician Fees and Payment Enhancements
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Effective January 1, 2009, physician fees will be increased by almost 35% above their current levels. The chart below shows increases for frequently billed services.

DescriptionCurrent FeeFee Effective
January 1, 2009
Office Visit-New Patient$30$55
Office Visit-Existing Patient$30$35
Hospital Clinic-New Patient$14$32
Hospital Clinic-Existing Patient$9$20
Inpatient Visit-New Patient$22$71
Inpatient Visit-Existing Patient$14$37

In addition, effective January 1, 2009, Medicaid will pay an $8 add-on for weekend and after-hour appointments in clinics and office based settings. There will also be a 10% payment add-on to the fees paid to office-based physicians in Health Professional Shortage Areas (HPSAs).

Increases for Other Practitioners
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Effective January 1, 2009, fees paid for nurse practitioners, midwifes, psychologists, occupation and physical therapists and eyeglass dispensing will also be increased. The following chart shows sample increases for commonly billed services.

DescriptionCurrent FeeFee Effective
January 1, 2009
Nurse Practitioners-New Patient$30$47
Midwifes--New Patient$30$36

Psychologists
Individual Therapy$35$53
Group Therapy$9$18
Occupational & Physical Therapists$11$17
Eyeglass Dispensing Fees
Single Vision$10$15
Bifocal/Multi-focal$15$20
Repair/Replacement$4$7

Part 2 - Expansion of Benefits and Improving Outcomes

The 2008-09 Budget provides funding to expand the services covered by Medicaid. It also advances Medicaid's commitment to using its purchasing power to buy high-quality, cost-effective care.

Diabetes and Asthma Education
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Starting on January 1, 2009, Medicaid will cover diabetes and asthma self-management training services when ordered by a physician, registered physician's assistant, registered nurse practitioner or licensed midwife and provided by a health care professional who is certified by the National Certification Board for Diabetes Educators or the National Certification Board for Asthma Educators.

Individual Psychotherapy Services Provided by Licensed Social Workers
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Starting on January 1, 2009, Medicaid will cover individual psychotherapy services provided to beneficiaries under age 19 and to persons requiring such services as a result of or related to pregnancy or giving birth.

Prenatal Care Special Services
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Medicaid will implement a new Prenatal Care Special Services program for women enrolled in Medicaid, Medicaid Managed Care and FHPlus. The goal of the program is to prevent complications during pregnancy and childbirth and to reduce neonatal intensive care admissions. Providers, with the consent of the patient, will complete a standardized health status form and submit it to the Department where it will be referred to the women's health plan or a community organization for triage and care management, if appropriate. Providers will be reimbursed for submitting completed forms to the Department. This program will be rolled out initially in select regions of the State.

Nurse Family Partnership
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Medicaid will also implement the Nurse Family Partnership (NFP) in select counties in the State. The NFP is a nurse home visiting program in which a nurse family partnership provider provides case management and nursing services beginning in the first trimester to a pregnant woman who will be a first-time mother and her newborn either or both of which is at risk for poor outcomes.

Medicaid Therapy Management
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During 2008-09, the Department will establish a Medication Therapy Management (MTM) pilot in one or more regions of the State to improve patient compliance with drug therapies. Medicaid patients who meet established criteria will be offered one-on-one counseling services with a specially trained pharmacist. Pharmacies will be reimbursed for counseling services. The areas for the pilot are yet to be determined.

"Never Events"
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Beginning in October 2008, Medicaid will stop paying for hospital care that results from hospital system failures, such as objects left in the patient during surgery and incompatible blood transfusions. Effective July 1, 2008, hospitals are required to complete the "present on admission" field on all claims submitted.

Selective Contracting
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Starting in 2008-09, Medicaid will use its contracting authority to limit the hospitals with which it will contract for bariatric surgery and breast cancer surgery. Access and quality will be the drivers in making these decisions. Selective contracting decisions for bariatric surgery will be made through a Request for Proposal (RFP) that will be issued this summer.

Changes in the Medicaid Utilization Thresholds (MUTs)
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Starting in 2008-09, the Department will revise MUTs to establish patient specific thresholds based on diagnosis and burden of illness. These patient-specific thresholds will replace the current standard 10 visit limit. This will reduce paperwork and simplify the process for physicians. Also, for the first time, behavioral health services will be included in the MUTs program.


Part 3 - Changes in Pharmacy Benefits for Medicaid and Family Health Plus

Pharmacy Benefits for Persons Enrolled in Family Health Plus (FHPlus)
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Effective October 1, 2008, prescription drugs for persons eligible for FHPlus will be carved-out of the health plan benefit package and will instead by paid through eMedNY. This change allows the FHPlus program to achieve greater rebates while continuing to assure members access to prescription and covered over-the-counter drugs. The Medicaid mandatory generic substitution program and the Preferred Drug List will apply to FHPlus enrollees. Co-payments for FHPlus members will remain at $3 for generics and $6 for brand name drugs.

Change in Reimbursement for Brand and Generic Drugs
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Effective July 1, 2008, reimbursement for brand name drugs will decrease to Average Wholesale Price (AWP) less 16.25%. The Medicaid co-payment for brand name drugs on the Preferred Drug List will decrease to $1 from $3. The 2008-09 Budget also authorizes generic drugs to be reimbursed at the lowest of the Federal Upper Limit (FUL). Maximum Allowable Cost (SMAC), AWP less 25% or Usual and Customary (U&C).

Specialty Pharmacy
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The 2008-09 Budget authorizes the Department to implement a Specialty Pharmacy program in order to purchase certain high cost drugs administered in a physician's office or at the patient's home at reduced costs. Specialty drugs include, but are not limited to, chemotherapy agents; hydration agents; pain therapy agents; intravenous antibiotics; and total parenternal nutrition. Physicians participating in Medicaid will be able to obtain medications that they administer in their offices through this program without needing to pay for the drugs and wait for reimbursement from Medicaid.

Expanded Clinical Review
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The Pharmacy and Therapeutics (P&T) Committee will continue to review classes of drugs for inclusion on the Preferred Drug List and the Clinical Drug Review program. The 2008-09 Budget now allows a drug to be on both the Preferred Drug List and the Clinical Drug Review program. The agenda for the P&T Committee is posted in the Department's web site 30 days in advance of the meeting.

Prescriber Education
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Under a new Prescriber Education program, the Department will partner with an academic institution to provide prescribers in the Medicaid program with the latest objective information about pharmaceuticals through printed material, websites and in-person visits by health care professionals.


Part 4 - Expansion of Coverage and Simplification of Enrollment and Renewal in Public Health Insurance Programs

The 2008-09 Budget expands the number of people who will be eligible for insurance, and streamlines eligibility and renewal procedures.

Child Health Plus Expansion
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After being denied by the federal government, the 2008-09 Budget expands eligibility for Child Health Plus (CHP) to 400% of the federal poverty level using State dollars. This will make coverage available to an additional 70,000 uninsured children.

Expanded Coverage for Foster Care Children
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Children aging out of foster care will remain eligible for Medicaid to age 21. Today, about 335 foster care kids lose coverage each year when they turn 18.

Streamlining Eligibility Rules
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Changes in eligibility rules will make it easier to qualify for and remain eligible for public health insurance programs. These changes include aligning county specific eligibility levels; aligning resource levels across programs; establishing statewide eligibility levels; and making coverage seamless when the beneficiary moves from one county to another, just to name a few.

State Enrollment Center
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To make applying for and renewing public health insurance programs easier, the Budget authorizes the creation of a State Enrollment Center. A Request for Proposal will be released by the Department later this year. The Budget also increases funding for community based facilitated enrollers.


Part 5 - Changes in Reimbursement for Mental Health Services

Minimum Reimbursement for Mental Health Clinics Licensed Solely Under Mental Hygiene Law
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The 2008-09 Budget establishes minimum mental health clinic reimbursement rates. In New York City, providers participating in the Quality Improvement initiative will receive a minimum rate of approximately $100 per visit. Providers in other geographic regions and those without the quality initiative will receive minimum rates adjusted proportionally.

Elimination of COPS Volume Rebasing and the COPS Threshold
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Mental health clinic providers who generate COPS revenues over their current COPS threshold will be rebased one last time using their latest prior year paid Medicaid visit volume. Providers below their thresholds will be rebased one last time subject to the current regulations. After re-basing, COPS payments will be available for all Medicaid mental health clinic visits until COPS phases out.

Medicare/Medicaid Crossover
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Legislation clarifies that Medicaid can make Medicare crossover payments up to the higher of the Medicaid rate or Medicare approved amount for ACT, Partial Hospital, PROS, and CDT. It also specifies that crossover payments to psychiatrists will be 20% of unpaid Medicare copayments instead of the full amount.


Part 6 - Other Initiatives of Interest

Doctors Across New York
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This landmark program addresses critical shortages of primary and specialty care physicians in certain areas of the State. Doctors Across NY will provide financial assistance, including loan repayments and start-up grants, to physicians who make a commitment to practice in a medically underserved community; doctors who establish or join practices or clinics in medically underserved areas and resident training in non-hospital ambulatory care settings.

Indigent Care Reform
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The 2008-09 Budget takes a significant step in making certain that hospital Indigent Care funding is used to pay for services provided to uninsured patients, rather than to cover accounting losses. Starting in 2008-09, 10% of the $847 million Indigent Care Pool will be distributed based on the number of services provided to uninsured patients.

Prescription Drug Discount Card
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A new prescription drug discount card, scheduled for implementation in April 2009, will allow low-income, uninsured persons age 50-64 and persons determined disabled under federal law to buy drugs at discounted prices at participating pharmacies.

Enhanced Program Integrity
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The 2008-09 Budget funds 75 additional positions at the Office of the Medicaid Inspector General and projects a State savings of $665 million. The Budget allows an upgrade to OMIG's data mining technology and software, as well as an expansion of its Card Swipe/Post & Clear Program. Card Swipe devices identify Medicaid card users and are currently utilized by 1,200 providers. The enacted budget would allow an increase of up to an additional 4,000 providers.

Public Health Investments
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The 2008-09 Budget maintains last year's historic investment in public health programs and adds new funding for several public health programs, including childhood lead poisoning prevention; comprehensive Hepatitis C program; HIV/AIDS risk reduction; comprehensive sex education; obesity prevention coalitions; and tobacco control. The Budget also includes a study to determine how to implement universal purchase of childhood vaccines. Finally, the Budget increases cigarette taxes by $1.25 per pack. Raising this tax is the single best step New York can take to both motivate adults to quit smoking and prevent kids from starting in the first place.


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