GNYHA Testifies Before NYS Finance and Assembly Ways and Means Committee
On February 12, New York Governor Eliot Spitzer issued amendments to his proposed Executive budget in  the so-called 21-day amendments. As a result of a worsening economy since the release of the State fiscal year (SFY) 2008-09 Executive budget in January, the Division of Budget has downsized its original revenue forecast of $124.3 billion by $384 million. In response, the Governor is seeking further savings from the health care community, as follows:

• Increase the Medicaid inflation, or "trend factor," reduction to 35% from 25% for all providers, including hospitals, nursing homes, and home care agencies, for an additional SFY 2008-09 savings of $36 million.

• Increase projected savings from the implementation of the Berger Commission recommendations. In the Governor's original budget, he projected savings of $43 million in the State Medicaid program in hospital spending and $10 million in nursing home spending. He is now proposing an additional $10 million for hospital savings.

• The Governor proposed $20 million for the Health Care Reform Act's (HCRA's) health care facility restructuring pool. This pool is designed to help financially struggling hospitals and nursing homes restructure their operations.

• Raise the proposed increase in the covered lives tax from $140 million to $190 million.

• Require prior authorization of prescriptions not covered by Medicare Part D and increase the use of generic drugs in EPIC, the Elderly Pharmaceutical Insurance Program (the physician's decision about which drug is prescribed will prevail), for an SFY 2008-09 savings of $19 million.

• Provide funds for several public health programs including cervical cancer vaccination, lead poisoning prevention, immunization, and childhood obesity prevention through assessments on insurance companies, for an SFY 2008-09 savings of $25 million.

GNYHA will continue to work diligently on analyzing and modeling the impact of the budget proposals on hospitals and will continue to work with the Executive and Legislature to replace many of the cuts in the budget with meaningful reform and to decelerate the timeline for implementing many of the objectionable proposals.

GNYHA Testimony: Meanwhile, on February 6—before the Governor released his proposed budget amendments—GNYHA President Kenneth Raske testified on the original Executive budget proposal for SFY 2008-09 before the NYS Finance and Assembly Ways and Means Committee. Mr. Raske noted that he was pleased that the Executive branch has engaged GNYHA in discussions on good-faith reform efforts but he expressed GNYHA's concern about the complexity of this year's budget and its reimbursement rate cuts. He also stressed that, unless and until the full impact of the proposals on hospitals and patients can be clarified, legislators should not be asked to approve them. He did, however, note several budget proposals that deserve support, such as the expansion of the Child Health Plus program, initiatives to better manage the care of the chronically ill, investments in ambulatory care, and increased assessments on health plans.  
     
The hospital proposals and respective hospital losses in the Executive budget that are of major concern to GNYHA include Medicaid inpatient rebasing ($104 million), which would change the way hospitals are reimbursed for Medicaid inpatient services, reducing payments for some hospitals, increasing payments for others, and redistributing funds in ways that cannot be modeled at this time, as well as eliminating workforce recruitment and retention funds; restructuring outpatient reimbursement rates ($120 million); reducing reimbursement for detoxification services ($70 million) by phasing in a much lower per diem rate based on 2006 costs; eliminating outpatient behavioral health day-night rates ($4.2 million), which represents significant cuts to hospitals that receive specialty rates for certain behavioral health outpatient programs; reducing the Medicaid trend factor; shifting funding from the HCRA Graduate Medical Education Pool to other uses ($15.6 million); and phasing in changes to the bad debt and charity care pool allocation methodology (impact unknown).  
     
Mr. Raske acknowledged current economic difficulties both nationally and statewide, but he emphasized the need for relief measures that reduce hospital costs, such as a reduction in medical malpractice premiums for both hospitals and physicians. GNYHA looks forward to working with the Executive and Legislature on crafting a proposal that will provide "scoreable" savings for hospitals and doctors that will be included in the final enacted budget for SFY 2008-09.