Changing Health Care Environment in the Empire State and its Impact on the HIV Community

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Changing Health Care Environment in the Empire State and its Impact on the HIV Community


Medicaid was enacted in 1965 as part of President Lyndon Johnson’s "war on poverty" efforts. Having grown up in one of the poorest, most rural counties in the nation, Lyndon Johnson saw first hand what it was like for whole communities to live in the dark shadow of complete poverty.




Medicaid is a means-tested, joint federal and state program, within individual entitlements depending on a number of factors, including income level. In most states (but not New York) individuals must also meet one or more other qualifying requirements, such as having a severe health condition or disability recognized by the federal government. Medicaid is managed by the states, with federal matching funds for specific services, and it is subject to a wide variety of federal guidelines.




In order for an individual state to participate in the Medicaid program, it must comply with certain minimum guidelines on who is eligible and must provide a core basic set of health care services. Beyond basic requirements, the law offers a great deal of flexibility on the part of each state to expand its own Medicaid program to include additional populations and to have a more generous set of services available. This has resulted in a variety of different and unique program interpretations of Medicaid throughout the 50 states, Washington, D.C., and territories.




Basic services that all Medicaid programs must cover are hospital care (inpatient and outpatient), nursing home care, physician services, laboratory and x-ray services, immunizations and other screening, diagnostic and treatment services for children, family planning services, health center and rural health clinic services, and nurse midwife and nurse practitioner services. Optional services that states may elect to cover are: prescription drugs, institutional care for individuals with mental retardation, home- and community-based care for older adults, personal care and other community-based services for persons with disabilities, dental care, and vision care. Each service that is covered must be "sufficient in amount, duration, and scope to reasonably achieve its purpose." For example, a limit of only one hospital day stay per year per beneficiary would not be sufficient in duration. States may also apply "cost-sharing" arrangements on services (such as a $5 co-pay for a doctor’s visit), with some exceptions where co-pays are not allowed such as for services rendered to children and persons in nursing homes.




New York has long been committed to providing health care for its poor and disabled residents and joined the Medicaid program as soon as it was made available by the federal government. The program has grown dramatically over the past several decades, with the State choosing to gradually expand eligibility over time and opting to offering a rich array of services that far exceeds the program in most states and is well above the federal minimum standard. Nationally, the average Medicaid enrollment as a percentage of the total population is around 20 percent; in New York that number is 25 percent, with almost five million New Yorkers enrolled.




While this commitment has ensured health security for many residents, it has come with a hefty price tag for taxpayers; total Medicaid spending in New York for FY 2010 was $52.1 billion, the largest price tag of any state including California, which has almost double the number of residents. As a result, New York spends far more per person on Medicaid than any other state. In Governor Cuomo’s budget presentation from 2011: "According to the most recent federal data, New York spends more per capita ($2,488) than any other state in the country and more than twice the national average ($1,150)."




In addition, until recently much of the Medicaid program in New York was financed on a fee-for-service basis, which meant that the more services that were provided, the greater the reimbursed for providers. Fee for service offers little incentive for providers to provide better managed, coordinated care. The mantra of the program could be characterized as "bill, baby, bill." This does not mean that services that were provided were not of high quality, but there was little incentive for the medical community to make rational choices about the level of care or to control costs.




Plenty of data exists that demonstrates that the fee for service produces highly fragmented care with often poor care coordination. Health outcomes were often inferior in the fee-for-service system than in a system that requires and incentives the coordination of care. This also holds for individuals with complex health conditions, including HIV. The state Department of Health, which is responsible for administering the Medicaid program, embarked on a series of reforms designed to address the challenge of uncoordinated care and inadequate efforts to control costs.




The election of Andrew Cuomo as Governor marked the beginning of a rapid process of transformation of New York’s Medicaid program. Starting in early 2011, the Governor charged a "Medicaid Redesign Team" (MRT) with finding immediate savings in the Medicaid program to help reduce the state’s hefty $10 billion deficit and also dramatically alter the program to reduce costs in the long run.




The Medicaid Redesign Team vigorously took up the task of reviewing New York’s Medicaid program, held public hearings through the state, accepted thousands of proposals online, and came up with a package of recommendations that were submitted to the Governor. These recommendations were adopted almost in their entirety by the legislature as part of the final negotiated budget for FY 2012. The recommendations included a host of significant changes to Medicaid, including the transition of most beneficiaries into some type of managed care or capitated payment system, major changes to reimbursement for home health care, the movement of the pharmacy benefit into managed care, a major expansion of managed long-term care, and the creation of a global spending cap on the amount the state will pay out on Medicaid in any given year, to name a few. In the first year alone, 79 changes to the Medicaid program were recommended by the MRT and adopted into law.




Through the MRT, the changes that have been enacted in the past year, and the changes that are coming, are staggering and can be confusing. They changing the face of health care in New York for coming generations. While many health care advocates were appalled at the changes, some also believe that the recent changes were not only necessary for the state’s fiscal health, but also critical to improving the health of New Yorkers reliant on this program. The question that is being posed by many health care advocates is whether the "good days" of health care delivery in New York are over, and that we are entering a period of decline. Or is New York merely undergoing a transformation that will prove beneficial. Whatever the opinion, one thing most can agree on is that the changes have been enormous.









New York Medicaid and Persons with HIV




Most HIV and health care advocates across the country have long envied the Medicaid program in New York, with its comprehensive set of benefits (New York covers all the "optional" benefits) and one of the most generous eligibility qualifications in the nation. While many states have adopted a "bare bones" approach to Medicaid, providing only those services and individuals absolutely necessary, New York has taken a far more expansive approach.




As stated earlier, New York covers a larger percentage of its population in Medicaid than most states. A good portion of the difference in enrollment is the State’s long standing policy of allowing single childless adults into the program. This has greatly benefitted individuals living with HIV/AIDS, many of whom are from groups traditionally not automatically included in the program.




While income and assets are essentially the two considerations for coverage in New York, many states also require that individuals have a health condition or have dependent children under 18 in their care. In such states, HIV is not a health condition that is considered valid for coverage and an AIDS diagnosis is required for enrollment. In lieu of treating individuals early in their HIV infection, many state Medicaid policies require individuals to wait until an advanced stage of disease progression before they will allow coverage. Starting in 2014, the Patient Protection and Affordable Care Act will eliminate some of these discriminatory policies, but in the meantime individuals must wait.




New York State also adopted a policy in the 1980s of providing enhanced Medicaid reimbursement rates for some types of HIV-specific care. This included enhanced rates for clinical HIV services, HIV specialty pharmacy services, skilled nursing care and home health care. New York also created a Medicaid targeted case management program focused on individuals with HIV who were falling out of medical care. Providers who accept enhanced HIV rates in turn were contractually required to meet a set of Department of Health determined standards of care. This policy greatly enhanced the number of providers willing to offer care to individuals living with HIV. It also ensured that minimum standards of care were met for this population. This resulted in creation of a robust network for HIV specialty Medicaid medical providers in New York. In addition, for many HIV service providers, the elevated Medicaid reimbursement rates for HIV care allowed them to enter into the delivery of primary medical care, providing a solid financial base and a way to give a needed service for their populations.










Genesis of Managed Care and Special Needs Plans




In 1997, New York successfully secured an 1115 Waiver from the federal government to expand federal coverage of the state’s single childless adults in the Medicaid program. Up until that point the federal government was not offering matching dollars for the cost of their care; the state and counties were solely responsible for the tab for these individuals. The 1115 Waiver guaranteed federal matching dollars for this population, and in return, the state committed to enrolling most of the Medicaid population into managed care and the creation of Medicaid Special Needs Plans for certain populations. Out of this waiver the HIV Special Needs Plans were created.




An important component of the 1115 Waiver was the commitment from the state to carefully nurture specialized Medicaid managed care plans for persons living with HIV. The HIV SNPs were given significantly higher capitation rates from the state compared to mainstream managed care plans. The SNPs were contractually obligated to a far more rigorous set of standards, including minimum network capacity requirements, a set of HIV qualifications for all providers within the plan networks, maximum wait times for certain types of medical care, expanded commitment to care coordination teams, and an overall healthy and robust network for care for persons living with HIV. Persons living with HIV benefitted in greater care coordination and a much higher qualify of care than was often experienced by individuals in mainstream plans or in fee for service.




Press releases from the Department of Health indicated that individuals in HIV Special Needs Plans had considerably better measures of quality of care than those in either fee-for-service or mainstream managed care plans. These included better monitoring of viral loads, greater access to antiviral therapy, and less use of hospital emergency rooms or hospital inpatient admissions. Another study also indicated that individuals in the HIV SNPs had fewer interruptions in care and greater access to specialty care. As of June 2012, 17,008 individuals were enrolled in one of the three HIV Special Needs Plans.




For those individuals who rely on the program to ensure access to high quality and often life-saving medical treatment, there are concerns about the future continued access to health care. Will the state’s health care changes be for the better of Medicaid beneficiaries, or will individuals perhaps lose access to critical care? For individuals living with HIV/AIDS, these questions are more than academic – Medicaid is their lifeline to access HIV care and treatment.




New York’s Medicaid Transformation




While the pace of change in the past year has been dramatic, well before the election of Governor Andrew Cuomo, New York State was on a long and arduous path to alter its Medicaid program. Going back to the late 1990s, the state was beginning to make dramatic changes to the delivery of health care. Most of these changes were designed to alter the fiscal course of the Medicaid program, which was slowly becoming a larger and larger burden on the state and county governments. Even so, both enrollment and spending per person has grown dramatically in the in the years since. Overall, Medicaid spending between 2000 – 2009, for example, grew by a staggering $19.4 billion.




The plan to push Medicaid beneficiaries into managed care was a major component of the 1997 waiver. For much of the next decade, the State began, on a county-by-county basis, mandatory enrollment for certain segments of the Medicaid population into mainstream managed care plans. For persons living with HIV, for a long time they were exempt from the requirements to enroll in a managed care plan. A careful reading of the original 1997 Medicaid waiver, however, makes it clear that this special exempt status was not here to stay. Eventually persons living with HIV would join the ranks of the rest of the state’s Medicaid population into managed care.




Even with the expansion of managed care, many services remained outside of the managed care plans capitation rate and were billed directly to Medicaid as fee for service . These services included pharmaceuticals, case management, home health care, day treatment, physical therapy and nursing home care. This meant that many programs were not subject to the same utilization and price controls that are typical of managed care.




Starting in 2012 many of the services that had been carved out of managed care were wrapped into the plan benefit. These included personal care and prescription drugs.




In Comes the MRT




Governor Andrew Cuomo, when assembling his first Executive Budget for New York State, experienced some significant sticker shocker when attempting to assemble a balanced budget. In announcing his first budget, the Governor stated that Medicaid "institutionally assumes an exorbitant growth rate disconnected from fiscal reality" and that state law "institutionalizes unsustainable spending and growth" in Medicaid. The Governor sought and secured a permanent change in state policy that put a halt to the ever growing Medicaid pot, which the year before he became Governor had grown by 13.2%.




But unlike what had been done in other states -- where advocates had seen governor after governor across the country address the Medicaid challenge by either slashing provider reimbursement, limiting access to services or reducing eligibility -- New York was determined that the system could be changed for the better for Medicaid beneficiaries and reduce costs. And eligibility wasn’t reduced. It was a much harder task than merely taking the easy road of going after beneficiaries.




Modeled on what was adopted in Wisconsin to make major changes to Medicaid, Governor Cuomo established a Medicaid Redesign Team, composed of providers, local government, elected officials, union officials and one consumer representative to propose both short-term and long-term restructuring to the Medicaid program. Significant savings were required as part of what the MRT must adopt. In the end 79 proposals were adopted by the Medicaid Redesign Team and brought to the Governor for consideration.




The Governor then pretty much brought forward all these proposals to the legislature, with modifications, for consideration. With the exception of a small handful of proposals, the legislature adopted almost the entire MRT platform. Of 79 proposals, only four were rejected in the final adopted budget. What had changed? With both the hospitals and health care union at the MRT table, the Governor was able to guarantee that no commercials would air on television or radio voicing opposition to any proposed Medicaid cuts or changes. Unlike in the past, there would be no commercials of sick families rushing to emergency rooms that were closed. The Governor had essentially co-opted the opposition or "special interests" as he liked to label the health care community.




The major changes proposed by the Medicaid Redesign Team and adopted into law can be summarized as follows (please note that some of these proposals are still pending approval by CMS):



Creation of a global spending cap that limits the growth in Medicaid to medical inflation.

Transition of Medicaid population into managed care and elimination of virtually all exemptions.

Bundle pharmacy benefit into managed care and elimination of prescriber prevails and other protections.

Home care worker parity – establishes minimum pay for home care workers.

Establishes performance based system for hospital reimbursement .

Creation of regional behavioral health organizations.

Creation of Medicaid-funded supportive housing.

Review of Medicaid basic benefit based on medical science, limiting access to some services where research questions value for cost (such as Cesarean deliveries).

Allow for creation of Accountable Care Organizations.

Wholesale restructuring of home health care reimbursement to provider specific caps, followed later by episodic pricing.

Mandatory enrollment of individuals needing over 120 days of community-based long-term care into managed long term care plans.

Creation of health homes for Medicaid beneficiaries with certain chronic conditions.

Phase in of state takeover of Medicaid administration by counties.



The impact of many of the above changes, while not HIV specific, did have a direct impact on HIV services and reimbursement. The exemptions, exclusions and/or enhanced rates for HIV services were swept into the Medicaid Redesign changes. No longer were persons living with HIV/AIDS exempt from provisions nor were HIV-specific services treated any differently than any other comparable service. In addition, HIV-targeted case management was morphed into health homes, which serves a much broader constituency than just the HIV population. The Medicaid program chose to start treating HIV services just as they would any other complex chronic condition. The HIV exceptionalism in the state Medicaid program was virtually eliminated overnight with these sweeping set of reforms. Below is a summary of changes in the HIV service delivery brought about through Medicaid reforms:



Enhanced HIV primary medical care rates – eliminated with enrollment of most PLWHAs into Medicaid managed care.

Enhanced HIV home health care rates – eliminated with episodic pricing and made irrelevant with enrollment of clients into MLTC.

HIV targeted case management – wrapped into health homes.

AIDS Day Treatment – soon to be wrapped into MLTC benefit package.

HIV pharmacy benefit – wrapped into managed care benefit package.

AIDS skilled nursing – fully expect enhanced HIV rates will be eliminated.



Fortunately, HIV Special Needs Plans still exist and these plans are still getting enhanced rates for HIV care. There does not appear (so far) to be any movement from Albany to eliminate this seeming one HIV-specific provision left in the Medicaid program.




What has happened to the HIV service delivery system as a result of these changes? Providers have experienced some significant transition challenges, especially in 2011-2012. Many of the changes are fairly new, so the long-term effect on the HIV service system is not entirely clear yet. One possible benefit of the changes may be that HIV services providers will now have the opportunity to compete for other Medicaid beneficiaries with chronic health conditions, not just those living with HIV. If the lessons and skills learned from the HIV care model can be duplicated across the Medicaid system for other chronic populations while not deteriorating health care for those with HIV, then this could be a win for everyone.




Next edition – Medicaid 1115 Waiver Summary