Approved State Budget Makes Investments, but Avoids Looming Issues

As far as state budgets go, the 2018-2019 one passed by the state March 31, 2018 was not really remarkable, but rather a mixture of some good stuff and not so good stuff for New York’s hospitals and patients.  The $168 billion 2018-2019 state budget enables hospitals to maintain their level of programming and servicing, at least for now.  This is good news for the millions of New Yorkers served by these hospitals.  Provisions in the budget include a variety of funding streams and policy decisions that allow hospitals to build upon quality prevention and treatment programs, to upgrade decades-old buildings, and to invest in new technologies.  However, the devil is always in the details.

The approved budget lays out more specific guidelines about safety net hospitals.  These hospitals often face financial distress because of the high-volume of uninsured, underinsured, and Medicaid patients they serve.  Budget language expands the definition of safety net hospitals to include not only hospitals with a high volume of Medicaid and uninsured patients, but public hospitals operated by a county, municipality, public benefit corporation, or the State University of New York.  It also includes Critical Access Hospitals (CAH) and Sole Community Hospitals (SCH). The budget offers $100 million in new funding for these enhanced safety net providers, ensuring access to care for all.   However, there are several other hospitals that serve high numbers of poor and indigent patients in the nine counties east and north of New York City that do not meet the new definition.

The budget also provides $525 million in new funding for the Statewide Healthcare Facility Transformation program, which awards grants for capital projects and debt retirement.  Hospitals will be eligible for $400 million of this amount.  This is significant because New York’s hospital buildings and physical plants are some of the oldest in the nation.  Money to assist in modernization projects allows hospitals to devote more of their financial resources toward designing innovative treatment programs/services, staffing needs, and building upon community-based programs that link patients to such services as housing, transportation, and food access.

On the downside, $425 million for the Transformation program comes from a reduction in the Medicaid Global Spending Cap allowance.  The global Medicaid cap was instituted in 2011 and is intended to limit all Medicaid spending growth to the Consumer Price Index.  Only a limited number of providers will be awarded capital grants through the $525 million in funds allotted in this budget, but all providers will be impacted by the ongoing limitation of Medicaid spending imposed by an even lower cap.  New York providers have come dangerously close to piercing the cap and, now that it is lowered, that possibility becomes more real.  If the cap is pierced, the state departments of health and budget are authorized to cut providers even more.  Medicaid spending continues to rise due to increased enrollment, not provider payments.

Finally, the budget missed an opportunity to buffer New York State against the loss of federal funds for the Essential Health Plan, Cost Sharing Reduction (CSR) payments, as well as sharp cuts in the  Medicaid Disproportionate Share hospital (DSH) payments that will kick in late in 2019.   The Essential Health Plan is low-cost insurance available on New York’s marketplace to those with modest incomes, but earn too much to qualify for Medicaid.  CSRs are payments made by the federal government to health insurers to help low-income Americans afford their co-payments and deductibles. DSH payments are supplementary payments to hospitals that care for high numbers of uninsured and indigent patients.  Given the uncertainly in federal politics, these may not be the only cuts our state will face.

Governor Cuomo had proposed a Healthcare Shortfall Fund to address federal losses.  Instead, the final budget agreement calls for $2 billion to be distributed over a multi-year period through a new Healthcare Transformation Fund that can be used for a variety of healthcare investments, but is no longer linked to federal cuts.  This fund will best serve all residents of the state as long as it is equitably distributed throughout different regions, taking into account the unique challenges that urban, suburban, and rural hospitals face.  This fund is under the control of the executive branch, with no input from the Legislature, and therefore, it limits transparency.   The Suburban Hospital Alliance will be advocating for regional parity, both for this fund and the capital grants, so that the Hudson Valley and Long Island get their fair share of funding

Capital funding and other investments in the transformation of the delivery system are welcome, but at some point we must address that provider’s costs are rising while Medicaid reimbursements are standing still.  It has been a decade since healthcare providers have received what is known as the trend factor increase, an annual adjustment tied to the rate of inflation that’s supposed to take effect automatically.  For 10 years, state budgets have blocked the annual increase. This equates to a 15 percent cut in reimbursement when adjusted for inflation.  According to economic analyses offered by the Healthcare Association of New York State, Medicaid pays about 74 cents on the dollar, resulting in a shortfall for hospitals.  Failing to increase reimbursements in line with inflation while at the same time expecting hospitals to take on more and more responsibility for patients’ non-healthcare needs is unsustainable.  These needs are known as the social determinants of health – transportation, housing, education- and these have been shown to greatly influence health outcomes.

We can be glad that the 2018-2019 budget arrived on-time, before the start of the next state fiscal year on April 1st.  We thank our state legislators for their hard work during this budget process: Senators Jamaal Bailey, Didi Barrett, John Bonacic, Philip Boyle, John Brooks, David Carlucci, Thomas Croci, John Flanagan, Kemp Hannon, Todd Kaminsky, Jeffrey Klein, William Larkin, Kenneth LaValle, Carl Marcellino, Terence Murphy, Elaine Phillips, Susan Serino, and Andrea Stewart-Cousins.  Assembly Members: Thomas Abinanti, Karl Brabenec, David Buchwald, Kevin Byrne, Kevin Cahill, Brian Curran, Anthony D’Urso, Steven Englebright, Michael Fitzpatrick, Sandra Galef, Andrew Garbarino, Aileen Gunther, Earlene Hooper, Ellen Jaffee, Kimberly Jean-Pierre, Kiernan Lalor, Charles Lavine, Shelley Mayer, David McDonough, Melissa Miller, Michael Montesano, Dean Murray, Steven Otis, Anthony Palumbo, Amy Paulin, Christine Pellegrino, Gary Pretlow, Edward Ra, Andrew Raia, Philip Ramos, Frank Skartados, James Skoufis, Michelle Solages, Fred Thiele, and Kenneth Ze

Congress Passes Spending Bill, But No Market Stabilization Achieved

With the passage of the $1.3 trillion Omnibus Spending Bill on Friday, March 23, 2018, a shutdown of the federal government that could have happened that day was averted.  However, the bill did not offer any assurance against excessive health insurance premium rate hikes in the future and that threat remains prevalent.

The spending bill contained no provisions to stabilize the health insurance markets.  Legislation to restore the Cost Sharing Reduction (CSR) payments to insurers, which were eliminated by the Trump administration last October, would have brought stability to the market and offered some assurance to consumers against high percentage premium hikes in the near future.  These payments help low-income Americans afford their co-payments and deductibles.  The Omnibus also left out language directing the establishment of re-insurance funds for states.  These funds would help cover the cost of people with complex and expensive healthcare needs.   Economists widely agree that these two mechanisms are needed to ensure stability in the health insurance exchange markets. Text of the legislation is available online.

The Omnibus bill funds the federal government through September 30, 2018 and adheres to the federal fiscal spending levels agreed to as part of the Bipartisan Budget Act of 2018, which became law in February.  (Refer to my Blog Post of March 12, 2018 for more information about that Act.)

Although the insurance stabilizer provisions did not make it into the final legislation, healthcare advocates from the Long Island and Hudson Valley regions are grateful to the members of New York’s delegation who supported the Omnibus Bill because it did include other favorable healthcare provisions such as nearly $4 billion to address the opioid epidemic and $37 billion for the National Institutes of Health.  Legislators supporting the Omnibus bill include Senator Charles Schumer and Representatives Peter King, Kathleen Rice, Gregory Meeks, Nita Lowey, and John Faso. 

Reinstatement of the CSRs and establishment of a re-insurance fund remain priorities.  Healthcare advocates will keep fighting for these so that excessive premium hikes are avoided and patients can continue to afford their health insurance.  In a little more than four weeks, May, insurers must submit their proposed 2019 rates to New York State for review.  The uncertainty insurers faced all last year about CSR funding prompted most to increase premiums as a way to guard against the loss of CSR funding.

What the DC Budget Deal Means for Hospitals

The Bipartisan Budget Act of 2018, approved on February 9, 2018, offers a two-year budget deal, and most importantly, added an additional four years, for a total of 10 years, of funding to the Children’s Health Insurance Program (CHIP), delayed the Medicaid Disproportionate Share (DSH) cuts to hospitals for two years, and continued funding for the nation’s community health centers.  The budget legislation also directs a reinstatement and five-year extension of both the Medicare Dependent Hospital (MDH) program and Medicare Low-Volume (MLV) payment adjustment.  It did not, however, address Cost Sharing Reduction (CSR) payments or a re-insurance program that would help cover the cost of people with complex and expensive healthcare needs.  There will be more about these efforts in the next Dahill Dose post.

Nonetheless, the healthcare and hospital industry achieved progress, but funding threats still linger.  We are thankful to members of New York’s delegation who represent constituents in the nine suburban counties east and north of New York City for supporting the health priorities contained in the Bipartisan Budget Act of 2018.  The members who committed to support patients and communities served by Suburban Hospital Alliance hospitals include Senators Charles Schumer and Kirsten Gillibrand and Representatives Peter King, Kathleen Rice, and John Faso.  A special shout out to Senator Charles Schumer for his efforts in negotiating this budget deal.

The delay of the DSH cuts is not all good news for hospitals, because adding more years to these scheduled cuts means deeper cuts for hospitals on the back end.  DSH cuts are supplementary payments to hospitals that care for high numbers of uninsured and indigent patients.  The DSH cuts were agreed upon by the hospital industry back in 2010 as one way to help fund provisions of the Affordable Care Act, specifically insurance expansion.  The cuts are based on the belief that as insurance coverage expands, the ranks of the uninsured contract.  However, with the continual threat of the ACA’s demise and instability of the insurance exchanges, insurance expansion remains at risk and unpredictable.

The Trump administration canceled CSR payments to insurers in October 2017.  This one move has shaken the viability of the exchanges.  These payments help low income Americans afford their co-payments and deductibles. For New York, loss of the CSR payments means a loss of about $900 million in funding for the state’s Essential Health Plan.  This is a plan available to low-income New Yorkers who earn too much to qualify for Medicaid, but not enough to afford commercial insurance sold on the exchange.

The elimination of the individual insurance mandate, which was part of the tax reform legislation passed earlier this year, may also increase the number of uninsured.  The Congressional Budget Office (CB) estimates that this provision will swell the ranks of the uninsured by 13 million by 2027.

But back to the Bipartisan Budget Act of 2018.  A total of 99,119 children located in the nine counties throughout the Suburban Hospital Alliance regions no longer have to worry that their insurance coverage would stop.  The CHIP program has been a popular bi-partisan program in place for 20 plus years, guaranteeing children from low and moderate-income families’ access to affordable health insurance.  The Medicare Dependent Hospital payment adjustment assists small hospitals for which Medicare patients comprise a significant percentage of patients, and therefore, the hospital’s revenue.  Medicare Low Volume hospitals are essential to their rural communities, have a modest volume of patients, and are located at least 15 miles from the next nearest hospitals.  Both these Medicare payment programs help such vital hospitals remain solvent and available to their communities.

The next step in the federal budget process is for legislators to write appropriations bills to spend the money allocated by the budget bill.  Appropriations bills are due March 23, 2018. Check the Dahill Dose then for the outcome of this legislative process.



Minding One’s Weight Benefits All; One Regional Collaborative Keeps Tabs on Obesity


by Kevin Dahill

Patients and their doctors alike have known for some time now that lifestyle choices affect health.  The research is definitive about this, and it concludes that lifestyle choices account for 70 percent of the incidence of chronic diseases – diabetes, high blood pressure, heart disease, asthma, even mental health conditions can link their origins back to what we do and don’t do as humans.

The Centers for Disease Control and Prevention note that at least 50 percent of all adults in the U.S. suffer from at least one chronic disease and 86 percent of U.S. healthcare costs are attributed to chronic disease. Population health is a way of addressing healthcare needs from a broader perspective that takes into account all the factors, such as housing, nutrition, transportation, that affect the outcome of disease among populations. These are commonly referred to as the social determinants of health and are now generally recognized by healthcare providers and researchers as contributing significantly to patients’ health.

The healthcare industry has embraced prevention and education as a preemptive strategy to halt some of the more deadly consequences of uncontrolled and poorly managed chronic diseases.  Through a variety of population health efforts, hospitals, health departments, community-based organizations, health plans, schools, and employers have joined forces to improve the health of their communities.  New York State has even funded 11 regional Population Health Improvement Programs (PHIP) throughout the state.  These entities are charged with helping communities better understand their pressing healthcare needs and then convening diverse partners from within the community to work together to meet those needs.

For many regions in the state, obesity remains high and it is a driver for all sorts of chronic conditions.  The PHIP on Long Island, through the Long Island Health Collaborative, has been keeping tabs on the region’s obesity rates and recently released some findings from its ongoing Community Health Assessment Survey  This tool collects primary data about Long Islanders’ health concerns for themselves and their communities. The data is used by hospitals, county health departments, community-based organizations and other social and health services providers to offer programs that best meet the needs of local communities.

In the group’s most recent analysis of year to year (2016 and 2017) community health data, it found that obesity and weight loss issues are of slightly less concern to the region’s residents.  The obesity finding is a bit of good news for the region’s health providers who have been collaborating with public health agencies and community-based organizations to chip away at the obesity crisis. The New York State Department of Health Prevention Agenda Dashboard of health indicators shows that there is improvement throughout the state in children receiving an assessment of weight status at a yearly outpatient visit. However, the percent of overweight and obese children and adults remains high.

But there is lots more work to be done, admit the collaborative partners.  Some of the partners’ current programs include tower gardens in schools, after-school recess programs, and programs to get people more active, such as the collaborative’s Are You Ready, Feet?™walking initiative.

Other results show that diabetes moved from the fifth most selected concern to the third most selected for individuals in Nassau County, with the need for diabetes screenings and education moving from the fourth most selected need in 2016 to the first most selected need in 2017. In Suffolk County, concern about heart disease and stroke moved from fourth position in 2016 to first position in 2017 among individuals. Similarly, blood pressure screenings and education appeared near the top of the list for services needed in the community.

These results and other reports are displayed on the collaborative’s user-friendly Population Health dashboard, which offers a window into the region’s healthcare landscape. The dashboard is an excellent resource for researchers, grant writers, physicians and anyone involved in providing healthcare and social services.  But even a member of the general population can get a sense of the burden of disease on their communities by looking at the dashboard. A healthier community leads to a more robust local economic infrastructure and prosperity. Health is the undervalued connector, and patients play a key role in ensuring their own good health by adopting healthy behaviors and adhering to treatment plans.