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April 24, 2008

New York State Medicaid Budget

The 2008-2009 budget recently enacted preserves and enhances New York's health care delivery system. Many threatened reductions in Medicaid reimbursement were averted or eased. Increased funding is provided for primary and preventative care provided by diagnostic and treatment centers and hospital outpatient clinics. COLA rate increases for various OMH, OMRDD and OASAS providers are extended for an additional three years. However, the proposed reductions by 35% of Medicaid rate trend factor (cost-of-living) increases were enacted for hospital, nursing home and home care services reimbursement, with various specific exceptions.

The provisions of the Health Care Reform Act providing pools of funds for financing numerous health care initiatives through surcharges and assessments on providers and payers were extended to 2011. Funding is continued for implementation of the Berger Commission recommendations for rightsizing the hospital and nursing home systems.

A new Medicaid reimbursement methodology will reimburse ambulatory care services based on the complexity of the case and intensity services provided rather than on a fixed fee for each visit regardless of the scope of services. This will encourage the delivery of comprehensive care to patients, rather than multiple visits. Enhanced reimbursement will be provided for expanded services to weekend and evening hours to provide an alternative to emergency room services for non-emergency conditions for patients. In addition, enhanced reimbursement will be provided to clinics and physicians for various outpatient preventive care services.

The Child Health Insurance Program is expanded to increase access by raising the ceiling on family income eligibility from the current 250% to 400% of the Federal Poverty Level. A Doctors Across NY Program will provide financial incentives for physicians to locate in medically underserved rural and poor urban areas.

A complex rebasing of the hospital inpatient reimbursement methodology that had been proposed was deferred until 2009. A commission will be appointed to study the hospital reimbursement methodology and recommend changes. Changes to the methodology for distribution of uncompensated care funds to hospitals will be phased-in over four years. The focus of drug and alcohol detoxification services will change from expensive inpatient care to more cost-effective outpatient care. Changes in reimbursement for inpatient detoxification services will be phased in over a four year period.

For pharmacies, a proposed increase in dispensing fees was rejected, but the money was used to offset, in part, a proposed reduction in payment for the cost of drugs.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact any of the members of the Practice Area.

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