FY 2017-18 Executive Budget and Global Cap Update

February 2017

  • Update is also available in Portable Document Format (PDF)

Agenda

  • Global Cap Recap
  • Results through November 2016
  • 2017–18 Global Cap Projections
  • MRT Phase VII Recommendations
  • Minimum Wage Increase
  • Questions

Global Cap for 2016–17 is $18.6 billion

  • Reflects annual growth of $814 million (primarily for price and utilization).
    • Managed Care trends for Mainstream (MMC) and Long Term Care (MLTC) set by Mercer.
    • Various Fee–For–Service (FFS) rate changes (includes increases for case mix, inpatient, and outpatient/clinic rates).
    • Assumes new enrollees from March 2016 (primarily MLTC).
  • Includes $44 million for minimum wage rate adjustments effective January 1, 2017.

Spending Results through November 2016

  • Medicaid expenditures through November 2016 are $26 million above estimates.
Medicaid Spending
(dollars in millions)
Category of Service Estimated Actual Variance
Medicaid Managed Care $9,876 $9,895 $19
          Mainstream Managed Care $6,746 $6,747 $1
          Long Term Managed Care $3,130 $3,148 $18
Total Fee For Service $6,026 $6,089 $63
          Inpatient $1,923 $1,923 $0
          Outpatient/Emergency Room $248 $257 $9
          Clinic $321 $325 $4
          Nursing Homes $2,075 $2,083 $8
          Other Long Term Care $397 $431 $34
          Non–Institutional $1,062 $1,070 $8
Medicaid Administration Costs $295 $295 $0
OHIP Budget / State Operations $194 $188 ($6)
Medicaid Audits ($183) ($184) ($1)
All Other $2,338 $2,289 ($49)
Local Funding Offset ($4,831) ($4,831) $0
TOTAL $13,7156 $13,741 $26

Enrollment Results through November 2016

  • Medicaid enrollment through November 2016 decreased by 54,255 recipients since April 1, 2016. This is comprised of:
    • Converted to Essential Plan (EP): (50,899)
    • New Enrollees: (3,356)
Medicaid Enrollment Summary
SFY 2016–17
  March 2016 Converted to EP New Enrollees November 2016 Net Increase / (Decrease)
Managed Care 4,645,864 (50,899) 60,136 4,655,101 9,237
          New York City 2,804,033 (39,027) 38,641 2,803,647 (386)
          Rest of State 1,841,831 (11,872) 21,495 1,851,454 9,623
Fee–For–Service 1,521,426 0 (63,492) 1,457,934 (63,492)
          New York City 755,513 0 (27,201) 728,312 (27,201)
          Rest of State 765,913 0 (36,291) 729,622 (36,291)
TOTAL 6,167,290 (50,899) (3,356) 6,113,035 (54,255)
          New York City 3,559,546 (39,027) 11,440 3,531,959 (27,587)
          Rest of State 2,607,744 (11,872) (14,796) 2,581,076 (26,668)

2017–18 Global Cap Projections

  • The Global Spending Cap will increase to $19.5 billion in 2017–18, reflects underlying growth of $962 million.
Price (+$783 million)
  • Trend increases for mainstream managed care rates (3.5% or $329 million) and long term managed care rates (3% or $155 million);
  • Various FFS rate packages ($88 million); and
  • Minimum Wage Adjustment ($211 million).
Utilization (+$340 million)
  • Annualization of 2016–17 new enrollment; and
  • New enrollment for 2017–18 (87,300).
MRT/One–Timers/Other (−$161 million)
  • Additional Pharmacy Rebates (−$200 million);
  • ACA enhanced Federal Medical Assistance Percentages (FMAP) (−$107 million);
  • Removal of uncommitted Vital Access Providers (VAP) funds (−$40 million); offset by
  • Lower Accounts Receivable Target ($164 million)

MRT Phase VII Recommendations

Dollars in Millions (State Share) –– Investments / (Savings) 2017–18 2018–19
Federal Actions/Pressures on the Global Cap $32 ($86)
Managed Care Savings Initiatives ($61) ($137)
Pharmacy Savings Initiatives ($93) ($126)
Long Term Care Savings Initiatives ($83) ($63)
Transportation Initiatives ($25) ($33)
Other Savings ($152) ($182)
Investments $0 $245
Net Medicaid Proposals ($382) ($382)

Federal Actions / Pressures on the Global Cap ($32 million in 2017–18)

  • Medicare Part B ($46 million)
    • Premium/cost sharing for physician and outpatient services for dual eligible individuals (Medicaid/Medicare).
    • Premium increase from $122 to $134 effective January 2017 for dual eligible recipients (9.8 percent increase from last year).
  • Medicare Part D ($129 million)
    • Medicare Modernization Act established the Part D prescription drug program and requires states to make cost–sharing payments to the Federal government known as the "clawback."
    • Per–beneficiary monthly clawback charges will increase by 11.9 percent effective January 2017.
  • ACA Overclaim Repayment ($118 million)
    • The State was incorrectly claiming 75% FMAP (due to system limitations) on individuals who were not eligible to receive the enhanced FMAP.
  • Compliance with Covered Outpatient Drug Rule and Copay Provisions ($6 million)
    • Aligns NY State Medicaid with the CMS Covered Outpatient Drug Rule, which requires that states move to a cost based pharmacy reimbursement methodology for Fee–For–Service pharmacy programs.

Managed Care Initiatives (−$61 million in 2017–18)

  • Currently 4.7 million individuals receive care through mainstream or MLTC/FIDA.
  • Patient satisfaction/efficiency metrics are improving while costs are under control.
    • Require Medicare coverage as a condition of Medicaid Eligibility (−$26 million);
    • Reduction in Mainstream Managed Care Quality Bonus (−$20 million);
    • Reduce Payments to Plans for Facilitated Enrollment (−$10 million); and
    • Reduction in Funding of VBP Pilots (−$5 million).

Pharmacy Initiatives (−$93 million in 2017–18)

  • Establish rebates for High Cost Drugs (−$55 million);
  • Reduce Inappropriate Prescribing/Prescriber Prevails (−$21 million);
  • Generic CPI Penalty Adjustment – 75% (−$9 million);
  • Reduce Coverage for OTCs (−$6 million); and
  • Enhanced Program Integrity for Opioids/Controlled Substances (−$1 million).

Long Term Care Savings Initiatives (−$83 million in 2017–18)

  • Balancing Incentive Program to support FLSA (−$35 million);
  • Reduce MLTCP Quality Bonus (−$15 million);
  • Eliminate Bed Hold Payment (−$11 million);
  • Spousal Support (−$10 million);
  • Adjustment of End–of–Life Services for Medicare (−$4 million);
  • Ban MLTC Marketing/Reduce Enrollment Growth (−$3 million);
  • Restrict MLTCP to Only Nursing Home Eligibles (−$3 million); and
  • Implementation of a Plan Fining Mechanism for DLTC (−$2 million).

Transportation Care Savings Initiatives (−$25 million in 2017–18)

  • Transportation Manager Savings (−$8 million);
  • Adult Day Health Care (−$5 million);
  • Carve Out Transportation from MLTCP (−$4 million);
  • Eliminate Rural Transit Assistance (−$4 million); and
  • Reduce 911 "Frequent Flier" Calls (−$4 million).

Other Savings (−$152 million in 2017–18)

  • School Supportive Health Services NYC Expansion (−$50 million);
  • Increase EP Cost Sharing Limits (−$15 million);
  • Reduce Avoidable ER Visits by 25% and Create Reinvestment Pool (−$10 million);
  • Realign Children's SPA and MC Implementation (−$10 million);
  • Continued Medicaid Coverage Review (−$5 million);
  • Enhance Claim Editing for ESO (−$3 million);
  • Increase Penalty for Early Elective Deliveries (−$2 million);
  • Early Intervention Initiatives (−$1 million);
  • OHIP In–sourcing (−$1 million); and
  • Reduce Program Spending (−$57 million).
    • ✓ Supportive Housing;
    • ✓ VAPAP/VBP–QIP;
    • ✓ DOH Global Cap Admin;
    • ✓ PCMH Enhanced Funding;
    • ✓ Hospital Quality Pool; and
    • ✓ BIP Funds (No Wrong Door/NY Connects).

Investments ($245 million in 2018–19)

  • Additional Funding for VBP Implementation/Targeted Provider Rate Increase ($240 million)
  • OPWDD Transition to Managed Care ($5 million)

Minimum Wage

  • The financial impact of the minimum wage adjustment totals $255 million (non–federal) in 2017–18 growing to $579 million in 2018–19.
(dollars in millions) 2017–18 2018–19
Home Care $241 $555
All Other $14 $24
Total $255 $579
  • Funds will be used to support direct salary costs and related fringe benefits.
  • Unused funds will be returned to the State.
  • OMIG/DOL are responsible for enforcement.

Questions