Executive Budget and Global Cap Update February 5, 2014

Agenda o Global Cap Recap o Global Cap Projections o MRT Phase IV Recommendations o Other Programs/Proposals in the Global Cap o Article VII Highlights 2

Global Cap Recap

o Reflects annual growth of $512 million (primarily for price and utilization). o $730 million in resources will be transferred from the Global Cap to stabilize Mental Hygiene funding:  Part of the $1.1 billion revenue shortfall for developmental disability services. o Health care coverage will be provided to an additional 127,000 fragile and low income recipients; excludes impact of the ACA. o Monthly Global Cap Report was expanded:  4

Global Cap Recap o Through November spending under the Global Cap was $59 million below estimates; primarily due to:  Lower category of service spending ($80 million), administrative costs ($27 million), and State operations ($9 million); offset by  Higher accounts receivable balances ($25 million) and an advanced SUNY IGT payment ($23 million). o Health care coverage was provided to an additional 102,000 fragile and low income recipients through November:  Medicaid Managed Care enrollment increased by 120,000 recipients.  Fee for Service enrollment decreased by 18,000 recipients. 5

Global Cap Recap o Medicaid expenditures through November 2013 are $59 million or 0.5% below projections. Medicaid Spending November 2013 (dollars in millions) Category of ServiceEstimatedActualVariance Total Fee For Service $6,892$6,762($130) Inpatient $1,946$1,924($22) Outpatient/Emergency Room $336$303($33) Clinic $416$463$47 Nursing Homes $2,259$2,271$12 Other Long Term Care $826$770($56) Non-Institutional $1,109$1,031($78) Medicaid Managed Care $7,431$7,494$63 Family Health Plus $655$642($13) Medicaid Administration Costs $349$322($27) Medicaid Audits ($391)($378)$13 OHIP Budget / State Operations $87$78($9) All Other $1,214$1,258$44 Local Funding Offset ($5,042) $0 TOTAL $11,195$11,136($59) 6

Global Cap Recap SFY March 2013November 2013 Increase / (Decrease) % Change Managed Care 3,936,431 4,056, ,7893.0% New York City 2,574,775 2,611,167 36,3921.4% Rest of State 1,361,656 1,445,053 83,3976.1% Fee-For-Service 1,314,647 1,296,926(17,721)-1.3% New York City 626, ,902 3,9220.6% Rest of State 687, ,025(21,642)-3.1% TOTAL 5,251,078 5,353, ,0681.9% New York City 3,201,755 3,242,069 40,3141.3% Rest of State 2,049,323 2,111,078 61,7553.0% o Medicaid enrollment through November 2013 increased by 102,068 recipients since April 1,

Global Cap Recap o Global Cap spending is projected to be under target by $75 million in and $225 million in the MRT is working. (dollars in millions) TOTAL Lower Utilization/Costs in various COS(125)(165)(290) Lower Medicaid Administration/State Operations costs (50)(60)(110) Reestimate of ACA Savings1000 TOTAL

Global Cap Projections

State Funds$21,383$21,996$23,042$23,592 DOH State Funds$16,421$16,962$17,741$18,329 OSA State Funds$4,962$5,034$5,301$5,263 Federal Funds$25,445$27,653$30,546$32,428 Local Funds $8,780$8,544$8,419$8,334 All Funds$55,608$58,193$62,007$64,354 Medicaid All Funds Spending ($ Millions) 10

Global Cap Projections Price (+$365 million) 3% increase in mainstream managed care premiums; QI increase for FHP migration to MC; 2% increase for managed long term care premiums; fee-for-service rate adjustments; and 1.5% for ACA MCO tax. Utilization (+$700 million) annualization of FY 2014 net enrollment growth; new enrollment for FY 2015, including the ACA “woodwork”. MRT/One-Timers/Other (-$525 million) enhanced FFP with the ACA (-$962 million); decrease in the MH Stabilization funding (-$285 million); Implementation of administrative savings (-$45 million); offset by funding for financial plan relief (+$300 million) restoration of the 2% ATB reductions (+$237 million); funding for wage parity (+$175 million); various other changes, net (+$55 million). o The Global Spending Cap is projected to grow $540 million in ; highlights include: 11

MRT Phase IV Recommendations

Fiscally Neutral Package of Savings and Investments Dollars in Millions -- Investments (Savings) Gross State Gross State Start-up Investment for BHOs/HARPs Supportive Housing18 85 Increased VAP Funding Nursing Home Case Mix Cap(43)(22)(32)(16) Pharmacy Initiatives(33)(16)(62)(31) Additional Federal/Other Revenues(91)(66)(93)(57) Basic Health Program00(300) All Other Investments (Savings) Medicaid Re-estimate(600)(300)(450)(225) Financial Plan Relief300 Net Medicaid Proposals(237)0(40)0 13

Start-up Investment for BHOs/HARPs o Dedicates $120 million to successfully transform the Behavioral Health System as the State transitions to Managed Care:  Targeted VAP program to preserve critical access to behavioral health inpatient and other services ($40M);  Funding new 1915(i) – like services ($30M).  Facilitating the transition of Behavioral Health services for adults and kids into Managed Care ($20M);  Integration of Behavioral and Physical Health ($15M);  Health Homes Plus for Assisted Outpatient Treatment (AOT) ($10M); and  OASAS Residential Restructuring ($5M); 14

Supportive Housing o Dedicates $100 million in SFY to expand access to supportive housing services:  Continue $75 million in MRT dollars to fund various supportive housing initiatives;  Allocate $18 million in new supportive housing dollars; and  Designate $7 million to fund new supportive housing initiatives associated with Medicaid savings derived from the closure of hospital and nursing home beds. 15

VAP/Safety Net Program o Enacted Budget allocated $152 million for VAP/Safety Net Programs and $30 million for Financially Disadvantage Nursing Homes. o Executive Budget includes $194 million for VAP of which $30 million continues to be set aside for Financially Disadvantage Nursing Homes. o funding was expanded to include provider payments linked to performance. o Over 180 applications, with a total estimated request of $1.2 billion (excluding capital), have been received to date. (dollars in millions) VAP I (announced 9/12) VAP II (announced 12/13) VAP II (announced 1/14) Total Awarded Total Funding Enacted/Recommended Total Funding Available

NH Cap and Pharmacy Initiatives o Nursing Home Case Mix Cap ($43 million):  Addresses program integrity issues related to potential up-coding of rehabilitation services by limiting the case mix to a maximum of 2% every six months. o Pharmacy Initiatives ($33 million):  Prior Authorization for Non-Medically Acceptable Indicators for prescription drugs ($20 million);  Reduce Inappropriate Prescribing and Align Point of Sale editing ($7 million);  Require Minimum Supplemental Rebates for Brand Drugs ($3 million); and  Eliminate e-Prescribing Incentive Payment ($3 million). 17

Additional Federal/Other Revenues o Additional Federal/Other Revenues ($91 million):  OMIG Fraud and Abuse Integrity Initiative ($30 million);  Community First Choice Option ($28 million);  Spousal Support ($20 million); and  CHIPRA Performance Bonus Award ($13 million); 18

Basic Health Plan o Basic Health Plan ($300 million in ):  BHP is an option for states under the ACA; it is funded by 95% of the value of the tax credits available to individuals who would have otherwise enrolled in the Marketplace.  BHP would be available to individuals under age 65 with income between % of FPL who are not eligible for Medicaid or CHIP and individuals with incomes below 138% of FPL who are ineligible for Medicaid due to immigration status.  Enrollment in BHP would begin April 2015; requires CMS approval. 19

All Other Investments (Savings) 20 Dollars in Millions -- Investments (Savings) Gross All Payer Database/SHIN-NY30 Conditions of Participation (CoP) Investment17 Regional Health Planning7 Various MRT Investments7 MRT Waiver Implementation6 Health Home Criminal Justice Initiative5 Transition of Foster Care to Managed Care5 Reduce/Eliminate A/R Balances (within 2 to 3 years)(16) Basic Benefit Initiatives(5) Program Integrity Initiatives(4) Net All Other Investments (Savings)52

Other Programs/Proposals in the Global Cap

A/R Balance – January 2014 o A/R balances are projected to be reduced to $100 million on March 31, o The A/R reduction proposal:  Negotiates equitable repayment arrangements with providers owing significant liabilities.  Revises collection enforcement policies for providers below the standard recoupment percentage. 22

2% ATB Restoration Category of Service Target Restoration Inpatient$58.5$43.3 Outpatient/Emergency Room$6.3 Clinic$3.3 Nursing Homes$72.9$67.6 Other Long Term Care$46.7$24.4 Managed Care$78.2$0.0 Long Term Managed Care$13.1$12.6 Family Health Plus$10.8$.0 Non-Institutional$67.3$79.0 Totals$357.1$236.5 o $120 million of the 2% ATB cut was partially restored in :  MMC/FHP ($87 million).  Various FFS categories ($33 million). o The balance ($237 million) of the 2% ATB will be restored effective April 1,

Wage Parity o Effective March 1, 2014, Home Care Worker Wage Parity requires compensation be:  “no less than the prevailing rate of total compensation as of 1/1/11 or the total compensation mandated by the living wage law, whichever is greater.” o DOH and DOL collaborated on developing the worker prevailing wage for managed long term care and fee-for-service providers ($20.95):  Rate accommodates wage parity for NYC ($14.09) and Westchester, Nassau and Suffolk counties ($10.93) plus additional costs such as taxes, worker’s compensation, overtime as well as 30% in administration costs. o The Global Cap set aside $350 million (gross) to accommodate this expense. o VAP funding ($20 million) is available to assist Licensed Home Care Service Agencies with consolidation and transition costs. 24

Article VII Highlights

o Extends Global Cap through March o Repeals 2% Across the Board payment reduction effective April 1,  Provides flexibility in restoring alternate savings measures. o Creates a Global Cap Dividend payment. 26

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