Winner: Cap On Local Medicaid Costs Highlight Of 2005-06 State Budget

George Winner

April 05, 2005

Albany, N.Y.-- The State Legislature’s action last week to complete work on the 2005-06 New York State budget includes the adoption of a Medicaid reform package that State Senator George H. Winner, Jr. (R-C, Elmira) calls the "highlight of this year’s budget."

"These Medicaid reform actions stand in tribute to the efforts of county leaders and local property taxpayers who kept up the drumbeat for local Medicaid relief," Winner said.

Winner identified a cap on local Medicaid costs as the cornerstone of the reform package. Under the plan, beginning in 2006, county Medicaid costs will be capped at a maximum growth rate of 3.5 percent, which would be permanently lowered to 3 percent by 2008. In 2008, a county would be given the option of remitting to the state an amount equal to the capped spending plus three-percent annual growth, or a fixed percentage of sales tax revenue equal to the county’s 2006-07 capped contribution, whichever benefits the county more.

"The cap on local Medicaid costs is the cornerstone. It means we will take a significant step toward a future system of financing Medicaid that removes the current burden from counties and local property taxpayers," Winner said.

Along with the cap, the Legislature will also accelerate the state’s takeover of all local costs for the Family Health Plus program. A full state takeover was scheduled to commence on January 1, 2006. It will begin this October under the accelerated takeover agreement.

Winner estimated that once the plan is fully effective, the counties he represents will realize at least the following savings from the combined Medicaid cap and state takeover of the local costs of the Family Health Plus program: Chemung County ($11.7 million); Schuyler County ($1.9 million); Steuben County ($16.6 million); Tompkins County ($5.7 million); and Yates County ($6.8 million).

Winner said that the Medicaid reform plan will also:

> establish a Preferred Drug List (PDL) and prior authorization requirement similar to those offered by most insurance companies and other state Medicaid programs nationally. Winner said that such a PDL will help control the cost of prescription drugs in the Medicaid program, one of the program’s fastest-growing expenses. Also under the Legislature’s action, physicians are provided with the final determination for prescribing drugs;

> require the state to increase its Medicaid fraud detection and prevention activities;

> direct the state Health Department to aggressively pursue all pharmaceutical rebates owed to New York State. Recent federal studies have revealed that many states are owed money from pharmaceutical rebates, with one report indicating that New York is owed as much as $175 million; and

> establish local accountability measures.

"There’s no overnight cure for out-of-control local Medicaid costs, and it was important for us to recognize state-level fiscal constraints," Winner said. "But a phased-in cap that saves counties meaningful dollars, combined with a real commitment to controlling future costs, will set us on a promising and realistic course for additional local relief in the future."