Healthcare Business News

N.Y. proposes Medicaid overhaul to save $1.14 billion

By Melanie Evans
Posted: February 24, 2011 - 4:15 pm ET

New York's Health Department proposed the state cap on Medicaid spending and adopt dozens of other changes to curb health expenses in the coming year by $1.14 billion. The Medicaid overhaul package was released during a meeting of the state's Medicaid redesign panel, which will vote on March 1 on a final package. New York's fiscal year begins April 1 and the state faces a $10 billion deficit.

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The Medicaid redesign panel, established in January by executive order, recently ranked a short list of proposals (with an option to rank any of more than 220 others), according to documents released by the panel. The health department considered the rankings and other proposals and comments as staff drafted a preliminary package of overhaul initiatives.

The draft package would cap Medicaid spending growth to 4% and gives the health department authority to regulate use of services or reduce provider rates to control spending, the documents show. Medicaid spending would be reported quarterly and monitored statewide and regionally. The proposal calls for an across-the-board 2% reduction to Medicaid rates and would eliminate yearly rate increases. Other proposals would cap non-economic damages for medical malpractice and create a neurologically impaired infant medical indemnity fund and a test of Medicaid accountable care organizations. ACOs were included in the Patient Protection and Affordable Care Act as a new payment model to be tested under Medicare.

New Medicaid spending estimates are expected to shave $475 million off the state's plan to slash the program by $2.85 billion, according to the documents.

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