January
26, 2007
GOVERNOR
SPITZER OUTLINES INTENTIONS FOR REFORMING HEALTHCARE IN NYS:
Today, in a speech in Albany, Governor Spitzer laid out his intentions
for reforming healthcare in New York State, much of which will
be included in his complete Executive Budget Proposal expected
on Wednesday of next week. In this, he outlines an aggressive
agenda to improve access to healthcare for those in need, including
those with little or no access to healthcare. This appears consistent
with a statement in his State of the State address in which he
stated, “Expanding access to health care will reduce state
spending significantly in the long run, because seeing a primary
care doctor costs far less than providing charity care for the
same patient in an emergency room – and it leads to far
better care.”
While
we await the details expected next week, much of what Governor
Spitzer has articulated thus far about a “Patients First”
approach to healthcare appears to greatly improve the provision
and availability of healthcare, including those with psychiatric
disabilities. One area that we will watch carefully concerns possible
changes to the Medicaid Preferred Drug Program which could negatively
impact people living with psychiatric disabilities.
Until
next week…
Following
below is Governor Spitzer’s speech:
“Patients
First”
An
Agenda to Fundamentally Reform New York’s Health Care System
In
my State of the State Message, I pledged to reform our health
care system to make health care affordable for each person, family,
business, and for government.
Today,
I will outline an agenda that begins to do just that. My Executive
Budget will propose fundamental changes to reform and restructure
our health care system – decreasing costs while increasing
coverage. Our reforms will not only save taxpayers billions of
dollars, but, most importantly, will lower the cost of health
care while improving patient outcomes.
Our
agenda is based on a single premise: patients, not institutions,
must be at the center of our health care system. That means that
every decision, every initiative and every investment we make
must be designed to suit the needs of patients first. The result
will be a high-quality health care system at a price we can all
afford.
This
guiding principle stands in stark contrast to the principle that
has guided health care policy for the last decade. Instead of
a “patient-centered” approach to health care policy
driven by the needs and demands of New Yorkers, we have an “institution-centered”
system.
I
am not saying that these other actors in the system are unimportant
or irrelevant. Quite the contrary. They all have vital roles to
play. But it is government’s job to make sure that the first
need we consider is that of our patients.
For
too long, government has ignored the inevitable changes in health
care delivery, technology, financing and planning. For too long,
we have stared at the opportunities posed by progress, and made
poor choices or simply no choices at all. For too long, we have
financed the health care system we have, not the health care system
we need. So we’re left pumping billions of dollars into
a broken system with no deliverables and no accountability.
This
upcoming budget is designed to change all that. It is time, indeed
the time is long overdue, to examine what went wrong and fix it.
The
Status Quo: An Institution-First System
What
went wrong is that health care decision-making became co-opted
by every interest other than the patient’s interest. Government
abdicated its responsibility to set standards, demand results
and hold institutions receiving billions in state tax dollars
accountable to the State and to the people those institutions
serve.
Let
me give you a few examples:
Take
the Berger Commission. This was a process that should never have
been necessary in the first place. In most industries, when the
demand for a specific service falls permanently, as has the demand
for long stays in hospitals, supply inevitably follows. Yet because
of wasteful State subsides and the State’s failure to make
strategic choices, tax dollars have been spent on empty hospital
and nursing home beds instead of insuring our 400,000 uninsured
children. Now we face dramatic instead of gradual change to rationalize
a system in desperate need of reform.
These
changes are painful – and we will use every effort to implement
them in a way that is sensitive to patients, communities and workers.
But because of the State’s inability to confront the status
quo, these are the kinds of hard choices we must now make to increase
health care quality and decrease health care costs.
Another
example of institutions driving the system is the way the State
pays for graduate medical education. New York’s Medicaid
program has spent more than $8 billion over the last five years
on graduate medical education – $77,000 per graduate resident
in 2005 compared to similar states like California that spent
just $21,000 per resident.
This
education is critically important, but we’re currently funding
it in an excessive and irrational way that isn’t directly
correlated to the actual students being taught – thus costing
the State exorbitant amounts of money in what amounts to general
subsidies to teaching hospitals. In fact, when we looked closer
at this broken formula, we discovered that many of those dollars
are going to pay for phantom residents and doctors who don’t
even exist.
The
same lack of accountability has also been evident in the special
subsidies the State gives hospitals to underwrite labor costs.
In January 2002, with hundreds of millions in new revenue on the
table for health care, the time was ripe for a debate on how best
to invest this money. But instead of a public debate, the State
committed billions of dollars in new spending to underwrite a
portion of the increased costs of the hospitals’ pending
labor agreement.
As
a result of this deal, well over $3 billion alone was pumped into
the health care delivery system with little to no accountability.
Don’t get me wrong: labor costs are real, and the need for
training is real. What made this a poor choice instead of a wise
investment is that the money was not based on the number of patients
served and it didn’t create a robust system of accountability
for institutions that were growing out of control.
And
take prescription drugs: Despite years of scare tactics used by
drug companies to block progress, New York finally implemented
a Preferred Drug List for our Medicaid program, a commonsense
reform other states and the private sector have used for years
to save money. Each year we didn’t do this, it cost us $200
million from what we could have saved.
Even
still, we must summon the will to do more to lower drug costs.
With the actions we will take in our upcoming budget to enhance
the Preferred Drug List and ratchet down prescription drug costs,
we will save an additional $200 million each year.
All
of these examples have one thing in common: Whether it was spending
on unused hospital and nursing home beds, excessive levels of
Graduate Medical Education, subsidized labor agreements, or soaring
pharmaceutical drugs, no one asked the essential questions: is
this the best use of this money for the patients in the health
care system? And do these expenditures help transform the health
care system from the one we have into the one we need?
Given
that our health care policy decisions have been driven by institutions
instead of patients, it cannot be surprising that New York spends
more money on Medicaid per capita than any state in the nation
– $2,215, over double the national average. Our Medicaid
budget costs taxpayers over $45 billion each year, with more money
going to hospitals and nursing homes than any state in the country.
And
for all this money, what are we getting? The answer is far too
little.
Despite
leading the nation in health care spending, we are not leading
the nation in results:
2.6
million New Yorkers, including 400,000 children, are uninsured.
New
York has a higher percent of deaths due to chronic disease than
any other state in the nation.
New
York’s nursing homes rank among the nation’s worst
in citations for placing their residents at immediate risk for
serious injury or death.
Statewide,
one in every twelve of our children is afflicted with asthma.
And almost one in four are obese.
All
of this money and this is what we’re getting in return.
Let
me be very clear: the problem with our health care system is not
our dedicated doctors, nurses, aides and other health care professionals.
It is certainly not people on Medicaid, all of whom are low-income
and many of whom are the most medically vulnerable residents of
our State – these are our children, our disabled, our frail
elderly and our chronically ill. The problem is a system –
co-opted by entrenched interests – that resists making hard
choices to change the status quo.
I
was elected to change that. Here’s how we will do it.
A
Patient-First System
My
first Executive Budget will begin to implement a new Patient-First
Agenda to lower the cost of health care while improving patient
outcomes. To do this, we will shift money away from the institution-centered
health care system of our past, towards a more effective patient-centered
system for our future. In the process, this paradigm shift will
save taxpayers billions of dollars in efficiencies. But it is
our desire to lower the cost of health care and increase quality
that drives our agenda, not some arbitrary savings figure to close
a budget gap. From now on, health policy, not health politics,
will guide us.
Let
me outline the main features of our plan:
HEALTH
INSURANCE COVERAGE
First, we will provide access to health insurance to all 400,000
of our uninsured children, making our first investment in the
health care system to people, not to institutions. To do this,
we will expand Child Health Plus to cover kids in families up
to 400 percent of the federal poverty level, so that every family
in New York will be able to provide their children with the health
insurance they need.
And
we will remove the bureaucratic hurdles that prevent vulnerable
New Yorkers from getting on and staying on Medicaid. While implementing
measures to guard against fraud, we will no longer require that
families produce documents for continued eligibility of coverage,
when the State can simply confirm that information from its own
data.
These
two steps will not only save the State hundreds of millions from
reduced charity care in emergency rooms, but it will enable us
to cut New York’s uninsured population in half over the
next four years.
But
we won’t stop there. As we achieve this goal, we will develop
a plan for affordable, universal health insurance for all New
Yorkers. To be clear, we cannot achieve this goal unless we first
restructure our health care delivery system to lower health care
costs. Otherwise, we will force an undue burden on families, businesses
and government to cover the cost of universal coverage.
As
more New Yorkers become insured and more health insurers play
by the rules, hospitals and other health care providers will see
increased revenue as well.
As
we do all of this, we will demand that private HMOs and other
health insurance companies also contribute to this effort. Our
State Department of Insurance will demand a heightened level of
transparency and accountability by reviewing regulations concerning
provider contracting requirements, the pre-certification process
and technical denials. We will not tolerate gamesmanship that
results in denial of care or delay in payment for care.
MEDICAID
REFORM
Second, as we expand coverage, we must reform Medicaid and the
delivery system it supports. If we truly want to move toward universal
health care coverage, we cannot continue to fully subsidize the
old system while we build the new one. That’s why we must
intelligently redirect and reinvest our Medicaid dollars to further
reform.
While
we cannot complete the overhaul of our delivery system or fully
rationalize our reimbursement system in the first year, we will
start the process. We will impose a freeze on the Medicaid rates
paid to nursing homes and hospitals and a partial freeze on managed
care plans. New York spends more on hospitals and nursing home
care than any State in the nation. This spending is unsustainable
and unwise. We need to stop, evaluate and reallocate funds to
more effective community-based settings instead of continuing
to pour more money into a broken system. These freezes will be
strategic. Because we want to move the system toward a patient-centered
model of care, we will not freeze rates to home care providers.
But
our reform effort must extend well beyond our reimbursement system.
My upcoming budget will take the following steps to accomplish
this patient-first Medicaid reform:
First,
we will no longer pay for graduate medical residents who don’t
exist, freeing up money for uninsured New Yorkers who actually
do exist. And while we will continue to invest in graduate-medical
education at our academic medical centers and teaching hospitals,
we will ensure that the GME system provides us with the value
we want for the funds we invest.
Second,
we will no longer use Medicaid dollars to bail out institutions
for poor management decisions or pay for unrealistic labor deals
or to underwrite inadequate reimbursement paid by Medicare and
private health insurance companies. Medicaid will no longer cross-subsidize
commercial insurers. We will not let health insurance companies
get away with deep discounts that don’t support the hospital
services their members use.
Instead,
the State will pay a fair reimbursement that reflects the true
costs of providing high-quality care through a workforce whose
needs are met fairly. And we will begin to redirect Medicaid money
to those facilities that serve the bulk of Medicaid patients,
which is where Medicaid dollars belong.
Third,
we will no longer pay for out-of-control pharmaceutical costs.
To do that, we must ensure that Medicare Part D plans cover the
drugs needed by people on Medicare: seniors and people with disabilities.
Once again, the State can’t be the path of least resistance
– allowing Medicare to shirk its responsibility. For example,
EPIC, a vital program whose resources must be protected, should
be the insurer of last resort when identical coverage exists elsewhere
that is not funded by New York’s taxpayers.
We
will also strengthen the State’s Preferred Drug List. It
has already saved the state millions of dollars without harming
patients’ access to medications. Increasing the use of clinical
equivalents and other strategies already widely used by other
states and commercial health plans will allow us to promote best
practices among doctors and save money. Let me be clear on this
last point: under our proposed system, physicians will always
be able to ensure patients get the drugs they need. Beyond these
changes in the budget, we will look at other ways to save costs,
like bulk purchasing and the federal 340B drug discount program.
Fourth,
we will buy health care in the right settings, at the highest
standards and at the best price. We will start by addressing the
way care is delivered for vulnerable patients with multiple medical
needs, who require care across different systems. These are the
people whose mental illnesses, substance abuse problems and diabetes
or pulmonary diseases require coordinated care.
While
there is much we can and will do administratively, we will also
seek legislative authority to fund additional initiatives that
zero in on this vulnerable population. It is the right thing to
do clinically, and it is certainly the right thing to do financially.
Medically complicated Medicaid patients make up 20% of beneficiaries
but account for 75% of all Medicaid spending. With coordinated
care, medically complicated patients get better care, their diseases
are better managed – and, we estimate, taxpayers will save
tens of millions of dollars from greater efficiencies over the
next four years.
Fifth,
we will expand the managed long term care program which has proven
so successful in managing and coordinating long term care needs.
As we know, the vast majority – our grandparents, parents,
children or neighbors – want to live in their community
and in their home. Yet this is another example where the demand
for health care services has changed, yet the supply has remained
the same. This successful program reaches less than 20 percent
of the 100,000 people who could potentially benefit. Our actions
will realize the potential – both in savings and in quality
of care – of coordinated long term care.
Sixth,
we will drive the implementation of health information technology,
vital to improving quality, reducing bureaucratic barriers and
saving money. We will invest in electronic health records, electronic
prescribing, telemedicine and other innovative approaches. And,
we will make certain that commercial insurers fully participate
in reform of the delivery system.
Seventh,
we will increase our efforts to ferret out Medicaid fraud, an
insidious parasite that saps precious resources and hurts quality
of care. We will increase our efforts in this area by not only
devoting more resources to the Medicaid Inspector General, but
will augment these resources by proposing to the Legislature a
Martin Act for Medicaid and a State False Claims Act – legislation
that has saved the federal government billions of dollars since
inception.
Finally,
no patient-first health care strategy can be complete without
a comprehensive effort to address public health. I will arm Dr.
Daines and the Department of Health with the resources and the
mandate to implement a strategy that targets primary and preventive
care – resources that will go to support programs that decrease
obesity rates and increase healthy eating and physical exercise,
prevent childhood lead poisoning, expand access to cervical cancer
vaccines, prenatal and postpartum home visits, and education regarding
public health concerns from the quality of mammograms to green
cleaning products.
To
meet these challenges, we need a Department of Health that is
organized to implement a patient-first agenda. We have already
established an Office of Health Insurance Programs to bring together
all of all our public insurance programs in order to coordinate,
streamline and simplify these programs so they reach the maximum
number of eligible people. And we will establish an Office of
Long Term Care to zero in on efforts to expand options for long
term care in the least restrictive, most integrated settings possible.
We will continue to take these kinds of steps to remake our Department
of Health into the preeminent health agency in the nation.
This
is an ambitious agenda and I know that change, especially such
fundamental change, will not be easy. But its time has come.
I
want us to work together for a real solution, the main components
of which I have outlined here today in this Patient-First Agenda.
We will need partners to get this big job done – from individual
New Yorkers whose paychecks are consumed by soaring health care
costs, to businesses that want to lower New York’s cost
structure, to health care workers who are a vital component to
high-quality care and to taxpayers who are paying too much for
a broken system of care.
Because
for us to successfully transform our broken health care system,
we will have to come together as One New York. I know that those
who have benefited from the status quo will fight hard to resist
these necessary reforms. I hope we can convince them to become
part of the solution. But, if we can’t, then I will do what
the people elected me to do and fight for what I believe is right
and for the good of all New Yorkers.
IN THE NEWS:
Spitzer
to Outline Plans for Cuts in Health Spending
The New York Times, January 26, 2007
By Danny Hakim
ALBANY,
Jan. 25 — Gov. Eliot Spitzer will preview his first executive
budget in a speech on Friday afternoon, laying out his plan to
rein in Medicaid and other health care spending, setting the stage
for a battle with politically powerful health care providers and
unions.
The
governor’s budget is widely expected to offer a sharp break
from Albany’s spending practices of recent years, and Medicaid,
at roughly $46 billion, is by far the largest part of the budget
and the one many believe is most in need of rethinking.
The
full details of the governor’s proposal will be disclosed
on Wednesday when he presents his executive budget to the Legislature,
but among his proposals, according to people who have been briefed
on the plan, will be revamping the way hospitals and nursing homes
receive nearly $500 million a year for workforce recruitment and
retention.
Those
changes would address a formula that was worked out several years
ago as part of a deal that involved Gov. George E. Pataki and
S.E.I.U./1199, the powerful health care workers’ union,
in what some have criticized as a backdoor maneuver to grant raises
to union workers. The overall amount is likely to be cut and the
way the money is allocated revised. The Spitzer administration
is seeking to ensure that Medicaid dollars are used for Medicaid
patients and are not used as a general subsidy for health care
providers.
The
governor will also seek to cut or eliminate the annual inflation
adjustment to Medicaid payments to hospitals and nursing homes,
which costs more than $300 million a year, a step Mr. Pataki attempted
unsuccessfully in the past.
Mr.
Spitzer will also continue to reorganize the Department of Health,
in part by creating a new office of long-term care, as the administration
looks for ways to drive down the cost of long-term care and chronic
illness, and is likely to centralize the department’s information
technology efforts. Both plans were reported by Crain’s
New York Business on Thursday and confirmed by someone who has
been briefed on the plan.
The
governor will also continue efforts to get cheaper prices when
the state buys drugs, possibly by centralizing purchasing in a
single entity and also by seeking to change the way prices are
negotiated with drug companies.
His
proposals are likely to be received with hostility by health care
providers and unions, coming on the heels of a state plan to close
hospitals and the Bush administration’s proposal for new
cuts in health care.
“It’s
going to be a battle in Washington on trying not to lose that
money, and a battle in Albany not to lose that money,” said
Kenneth E. Raske, president of the Greater New York Hospital Association.
“Hospitals by and large break even in New York, so any money
that is extracted is like pulling teeth.”
“We’ve
extended our hand to the executive branch,” he added. “We’ll
see how it goes.”
Mr.
Spitzer also wants to push through a package of proposals to fight
health care fraud that he supported as attorney general. One of
the changes would expand the Martin Act to encompass health care,
a statute he used to great effect to pursue securities fraud.
Such proposals are likely to be taken up outside the budget process,
however.
Mr.
Spitzer’s first budget is expected to demonstrate that he
will try to take a more fiscally conservative tack than did George
E. Pataki in the later years of his Republican administration,
though Mr. Spitzer, a Democrat, will be dealing with the same
legislative leaders.
Paul
Francis, the new budget director, said in a recent interview that
he was struck that many subsidies were “not directly related
to patient care,” adding, “At the end of the day,
the government can only afford to do so many of those without
raising taxes.”
The
new deputy secretary for public safety, Michael A. L. Balboni,
a former state senator, said in a recent interview that Mr. Francis
told him the budget would be “tighter than you’ve
ever seen.”
Steep
cuts to health care could set up a fight pitting the governor
against the Legislature, hospitals and powerful unions like S.E.I.U./1199.
A spokeswoman for 1199 declined to comment, but the union could
be a troublesome foe for the Spitzer administration because of
its considerable political contributions and close ties to the
Republicans who control the Senate. The union has endorsed a Republican,
Maureen O’Connell, in her bid to fill Mr. Balboni’s
Long Island Senate seat in a special election next month.
The
Senate majority leader, Joseph L. Bruno, has said “the Senate
will not support gratuitous cuts to health care.”
Mr.
Spitzer’s team is likely to need the health care cuts as
it struggles with a number of competing agendas — reining
in overall spending while substantially increasing funds for education
and lowering property taxes, and also extending health care coverage
to all children in the state.
“Historically,
the first year of a governor’s term is the year where you
make the toughest decisions, so everyone’s preparing themselves
for what will be a very tight budget,” said Blair Horner,
the legislative director for the New York Public Interest Research
Group. “Look at his promises. He’s not going to raise
taxes but spend billions of dollars more on programs. That has
to come from the existing budget. People understand this.”
Insurers Have No Room to Complain About the Advent of
Timothy's Law
The Journal News, Editorial, January 26, 2007
It's
hard to muster sympathy for insurance companies complaining they
can't get their act together quickly enough to comply with Timothy's
Law, a modest first step in required mental-health coverage that
took effect in New York Jan. 1.
The
industry fought such a "mental health parity" law for
almost two decades. Prior to final approval last year, the measure
frequently came tantalizingly close to passage. Grass-roots lobbying
finally got the job done in December, over the phalanx of business
and health-care lobbyists arrayed against it. Perhaps some of
those workers could be redeployed to help insurers get Timothy's
Law off the ground.
The
law provides every insured person a minimum of 20 outpatient visits
for mental illness and 30 inpatient treatment days a year. The
state will pick up the extra cost of providing coverage for businesses
with 50 or fewer employees. Larger employers must provide some
additional coverage for serious psychiatric disorders in adults.
Insurance
officials told Albany reporter Cara Matthews that passage of the
bill Dec. 13, its signing by then-Gov. George Pataki Dec. 22 and
a leadership change in many state agencies, including the Insurance
Department, has made implementing the law difficult. There are
"thousands of man hours'' involved in changing computer systems
and training staff, said Jim Redmond, a spokesman for an upstate
division of Blue Cross Blue Shield. Normally, he said, insurers
would get six months to a year to put such a complex mandate into
effect. "It's a little like trying to tune the motor on a
car while the engine's running,'' he said.
So
is trying to function with a mental or emotional illness and worrying
about how to pay for treatment - or foregoing care altogether.
That has long been the fate of millions of New Yorkers. Insurers
are now obligated to cover their care. They need to get the word
out now to their members that they are up for the fight.
