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TO: Memo Distribution List

FROM: Hinman Straub P.C.

RE: 2020-21 Final Health & Medicaid Budget Overview

DATE: April 2, 2020

NATURE OF THIS INFORMATION: This is general information you might find helpful or

informative.

DATE FOR RESPONSE OR IMPLEMENTATION: None – this is for your information.

HINMAN STRAUB CONTACT PEOPLE: Sean Doolan, Caron Crummey, Wendy Saunders,

Matthew Leonardo, David Previte, Deborah Kozemko, Stephanie Piel, Jonathan Gillerman, and

Michael Paulsen

THE FOLLOWING INFORMATION IS FOR YOUR FILING OR ELECTRONIC RECORDS:

Category: #7 Legislature (NYS) Suggested Key Word(s):

©2020 Hinman Straub P.C.

Hinman Straub P.C. Date: April 2, 2020 Page: 2

On April 2, 2020, Governor Andrew Cuomo and legislative leaders announced an agreement on

New York State’s Fiscal Year (SFY) 2021, covering 2020-21. The following is a summary of the

final budget agreement and a high-level review of the pertinent health care related items included

in the final budget agreement. All provisions are effective as of April 1, 2020, unless otherwise

noted below, provided that the Director of Budget has been granted the authority to delay the

effective date for up to 90 days following the conclusion of the declared State Disaster Emergency

for most health-related items. Additional analysis and memoranda will be forthcoming as

additional information becomes available.

Budget Overview

In January, the Governor proposed a $178 billion budget for Fiscal Year (“FY”) 2021, an increase

of 1.2% over FY 2020 projected spending. A key aspect of the budget was addressing New York’s

Medicaid spending, which was projected to exceed the Medicaid Global Cap by a $4.0 billion.

Instead of proposing specific cuts to the Medicaid program within the Executive Budget, the

Governor reconvened the Medicaid Redesign Team (MRT II) to identify cost-containment

measures to provide $2.5 billion in gap-closing savings in FY 21 and ensure Medicaid spending

in future years adheres to the indexed rate.

The MRT II held three public meetings and a number of stakeholder meetings to develop and

advance recommendations to the Executive and Legislature in order to achieve $2.5 billion in

Medicaid savings. The recommendations, which included actions impacting managed care plans,

hospitals, nursing homes, care management, and pharmacy, total $2.5 billion in FY21 and more

than $3 billion in FY22. A number of the recommendations advanced by the MRT II were included

in the final budget agreement which attained $2.201 billion in savings in FY 21 and $2.737 billion

in FY 22.

While the MRT II was reviewing the State’s Medicaid program, New York began facing an

unprecedent public health crisis as a result of the rapid spread of the Coronavirus (COVID-19).

This crisis has put a significant strain on state resources and finances, hospitals, and the overall

healthcare system. Within this context, the final budget was enacted with a number of safeguards

in place in order to address the uncertainty that lies ahead.

New York’s constitution requires a balanced budget each year, and the new state budget confronts

a massive deficit estimated to be as high as $15 billion. The new budget reduces revenues by an

estimated $10 billion, the first year-to-year cut since 2011. It authorizes the State to issue up to $8

billion in short term bonds to provide funds in case of reduced revenues during the year. The

budget also allows two state authorities to provide the State with a $3 billion line of credit in the

new fiscal year.

Most significantly, the appropriation legislation provides significant authority to the Director of

Budget (DOB) to adjust or reduce any general and/or state special revenue fund as necessary to

ensure that the General Fund is balanced on a cash accounting basis. Adjustments or reductions

are to be done uniformly, across the board, or by specific appropriations, as needed. The legislation

creates three time periods for which forecast estimates and revisions will be compared against

actual receipts and spending: April 1 to April 30; May 1 to June 30; and July 1 to December 31.


DOB must notify the legislature 10 days prior to any reduction or adjustment. The Legislature

may, by concurrent resolution, reject the proposed reduction or adjustment and present its own

plan, but the failure to do so within 10 days automatically implements DOB’s plan. In addition,

prior to expenditure of any funds received from the federal government in response to the COVID-

19 pandemic, DOB may require that the agency or public authority making such expenditures

submit an allocation plan to DOB for approval.

While the enacted budget generally reflects the anticipated spending and program funding as

outlined in the Executive Budget, the authority granted to DOB to adjust or reduce funding as

needed to ensure the General Fund remains balanced is expected to have a significant impact on

the funding of State programs, especially during the first two review periods.

General Health Highlights

Included in the final Budget are the following items:

Across the Board Cuts (“ATB”). The final budget extended the 1% ATB cut

implemented on all providers and plans effective 1/1/20. In addition, the final budget

anticipates an additional .5% ATB cut effective 4/1/20.

Healthcare Liability for COVID-19. The final budget limits the liability for healthcare

professionals, health care facilities, and organizations that provide treatment and services

related to the COVID-19 pandemic response during the duration of the COVID-19 state of

emergency. The professionals, facilities, and organizations would remain liable for harm

caused by willful or intentional criminal misconduct, gross negligence, reckless

misconduct, or intentional infliction of harm. This will apply to any health care services

that are impacted by the facility or professional’s decisions or activities in response to the

COVID-19 outbreak and in support of the state’s directives. The term "health care facility"

means a hospital, nursing home, or other facility licensed or authorized to provide health

care services for any individual under article twenty-eight of this chapter, article sixteen

and article thirty-one of the mental hygiene law or under a COVID-19 emergency rule.

Health care professionals encompass agents, volunteers, contractors, employees or

otherwise that is a licensed or certified physician, physician’s assistant, specialist assistant,

chiropractor, pharmacist, pharmacy technician, nurse, midwife, psychologist, social

worker, mental health practitioner, respiratory therapist, clinical lab technician, nursing

attendant, certified nurse aide, nursing student, EMT, home care worker, health care facility

administrator, supervisor, executive, board member, trustee or other person responsible for

directing or managing a facility, or anyone else providing health care within the scope of

authority permitted by a COVID-19 emergency rule.

HCRA Extension. The final budget extends the Health Care Reform Act (HCRA) and all

surcharges and assessments until March 31, 2023. The final budget eliminates the Area

Health Education Centers, Ambulatory Care Training, and Health Workforce Retraining

programs that are currently funded through HCRA.


Distressed Provider Assistance Program. The final budget modifies the Governor’s

proposal to shift local Medicaid costs to localities by creating the Distressed Provider

Assistance Program. This program establishes a new funding pool to assist financially

distressed hospitals and nursing homes. Under the program, counties are responsible for

contributing their respective share and fifty million dollars annually beginning April 15,

2020, while New York City is responsible for an amount of two hundred million annually

beginning in 2021.

Excess Medical Malpractice. The Legislature rejects the Executive’s proposal to require

doctors to pay 50% of the premiums for participation in the Excess Medical Malpractice

Insurance Program. The final budget extends the current excess medical malpractice

insurance program for one year through June 30, 2021 at a funding level of $105 million,

which is reduced from previous years by $22 million. The Executive maintains that, based

on recent trends, the $105 million is sufficient funding to support the physicians enrolled

in the Program for the policy year.

Prevailing Wage to be Paid on Certain Private Construction Projects. The Final

Budget includes prevailing wage requirement to be paid on construction projects that cost

more than $5 million, which are paid for with at least 30 percent public funds. Exemptions

include not-for-profit corporations with gross annual revenues less than $5 million and

certain affordable, subsidized and supportive housing projects. A public subsidy board

would be empowered to examine and make any necessary adjustments to thresholds

included in the bill, provide additional exemptions, and make determinations related to

applicability of this section to projects undertaken with benefits stemming from certain

programs. The new requirements will take effective on January 1, 2022 and apply to

contracts for construction or applications for building permits applied for on or after that

date. It expressly excludes appropriations or re-appropriations of public funds made prior

to January 1, 2022.

Electronic Verification System (“EVV”). The final budget includes $202 million for

contractual services to operate an electronic Medicaid eligibility verification system,

Medicaid override application system, and Medicaid management information system. It

is our understanding that this amount represents a one-year appropriation for this service.

All Payers Database. The final budget includes $10 million in funding to support the

establishment and operation of the All Payers Database (APD).

SHIN-NY. The final budget includes an appropriation of $30 million for the continued

funding of the SHIN-NY. The funding is directed to the New York eHealth Collaborative,

which will administer the funding for the SHIN-NY and Qualified Entities – formerly

known as Regional Health Information Organizations (RHIOs).

Health Benefit Exchange Funding. The final budget allocates approximately $90 million

in new funds in FY 21 to fund the New York Health Benefit Exchange (New York State

of Health).


Statute of Limitations for Medical Debt. The final budget accepts the Executive’s

proposal to reduce time frame to bring an action to collect medical debt from six (6) years

to three (3) years.

Disclosure Requirements for Charitable Nonprofit Entities. The final budget modifies

the Executive’s proposal to require any registered charitable organization that is required

to file a funding disclosure report or financial disclosure report to file such annual report

with the Department of Law. It also requires covered entities to file a completed IRS Form

990, Schedule B with the Department of State, regardless of whether such form is required

to be submitted to the IRS.

Healthcare Capital Funding. The final budget includes a re-appropriation of the

remaining funds available for Statewide Transformation III. The RFA for this funding

opportunity has not been released.

Extension of SPARCS. The Executive proposes to extend the authorization to operate the

statewide planning and research cooperative system (SPARCS) for three (3) years through

2023.

Medical Indemnity Fund. The final budget accepts the Executive’s proposal to extend

this Program through December 31, 2021.

Gestational Surrogacy. The final budget includes an agreement on the legalization of

gestational surrogacy.

Rejected from the final Budget are the following items:

Legalization of Adult-Use Cannabis. The final budget does not include an agreement on

the legalization of adult-use cannabis.

Market-Rate Interest on Court Judgments. The final budget rejects the Executive’s

proposal to amend the statutory interest rate on judgments (currently 9%) to the weekly

average one-year constant maturity treasury yield, which is the same rate utilized by the

Federal court system.

Certificate of Need (CON) Fees. The final budget rejects the Executive’s proposal to

impose a surcharge equal to 3% of the total capital value of hospital (includes hospitals,

nursing homes, D&TCs) construction application.

Employer-Related Obligations Paid Sick Leave. The final budget includes the Executive’s proposal to require all

employers to provide sick leave to their employees each calendar year as follows:

o 0-4 employees must provide up to 40 hours of unpaid sick leave;

o 0-4 employees with a net income greater than $1 million must provide up to 40

hours of paid sick leave;

o 5-99 employees must provide up to 40 hours of paid sick leave; and

o 100 or more employees must provide up to 56 hours of paid sick leave.


The amount of sick leave earned is based upon hours worked, with the rate of accrual being

no less than one (1) hour of sick leave per every thirty (30) hours worked. An employer

must allow employees to use accrued leave, after January 1, 2021, for the following

purposes:

o For a mental or physical illness, injury, or health condition of such employee or

such employee's family member, regardless of whether such illness, injury, or

health condition has been diagnosed or requires medical care at the time that such

employee requests such leave;

o For the diagnosis, care, or treatment of a mental or physical illness, injury or health

condition of, or need for medical diagnosis of, or preventive care for, such

employee or such employee's family member; or

o For an absence from work when the employee or employee's family member has

been the victim of domestic violence (as is similar to the Human Rights Law, time

off for such reasons would not extend to the perpetrator of domestic violence).

Employers are obligated to allow employees to roll their unused sick leave to the next year

up to the max hours that can be earned.

The law does not require employers to pay employees for unused sick leave nor does it

preclude employers from having policies that provide time that is more robust than the law.

Employers can also front load the time to their employees at the beginning of the year to

eliminate the obligation to track how it is earned. Nonetheless, employers must maintain

records of sick leave earned and used and provide same to employees upon request within

three (3) business days.

Hospitals


Hospital Capital Reimbursement. The final budget reduces hospital capital

reimbursement by 5% relative to the rate that is in effect on the date this legislation is

effective. Reconciled payments for capital add-ons are additionally reduced by 10% and

reconciliation recoupment amounts are increased by 10%.

Enhanced Safety Net Hospital Program. The final budget repeals the Enhanced Safety

Net Hospital Program and the current criteria for an Enhanced Safety Net Hospital. The

budget re-establishes the Enhanced Safety Net Hospital Program as part of the Indigent

Care Pool (ICP) and establishes new criteria for an Enhanced Safety Net Hospital.

Enhanced safety net hospitals are defined as critical access hospitals, sole community

hospitals, public hospitals operated by counties, municipalities, public benefit corporations

or SUNY, and hospitals that have the following payer mix: not less than fifty percent

Medicaid or uninsured, not less than forty percent Medicaid inpatient discharges, not less

than twenty-five percent overall Medicaid discharges, not less than three percent

uninsured, and provides care to uninsured in ER, hospital based and community based

clinics.


Indigent Care Pool. The final budget amends the indigent care pool distribution

methodology and extends the pool to 2023. Reduces total pool from $994M to $969M and

includes an additional reduction in ICP distributions by $150M in the aggregate, annually,

from 2020 through 2022, but holds enhanced safety net hospitals harmless from this

reduction if they are not major public hospitals. Requires commissioner to promulgate a

methodology for such reduction. Removes the “transition collar” from pool. The transition

collar had limited 2019 reductions in ICP funding to hospitals to no greater than 17.5% of

2013 payments and was scheduled to increase to no greater than 20% in 2020. Instead of

the collar, hospitals, other than major public hospitals, that experience a reduction in ICP

payments will be eligible for $64.6M in funding under a methodology established pursuant

to regulation and proportional to the reductions experienced by such hospital.

Hospital Funding Pools. The final budget repeals the Hospital Quality Pool and enhanced

reimbursement for Sole Community Hospitals ($12 million).

H+H Rate Adjustments. The final budget authorizes rate adjustments for H+H hospitals

pursuant to a memorandum of understanding executed by DOH and H+H. The purpose of

these sections is to convert upper payment limit payments (UPL) made to H+H into rates.

The UPL conversion to a rate adjustment applies to FFS and Managed Care, inpatient and

outpatient demonstrations. In FFS NYC will advance the non-federal share of its estimated

UPL payment to DOH, which will then be utilized to draw down federal financial

participation in the form of a rate adjustment. The total amount of the rate adjustment will

be reconciled with actual utilization of services and then applied against the UPL

demonstration. Depending on the room calculated under the UPL demonstration, NYC may

be required to increase or decrease its non-federal contribution in a subsequent

reconciliation. In managed care, NYC will similarly advance the non-federal share of its

estimated member months that will receive a premium increase, again subject to the UPL

demonstration and subsequent reconciliation. If the rate adjustments pierce the Global Cap

the State may cancel or reduce such payments. Likewise, if such payments are disallowed

by CMS, H+H will hold the State harmless from any losses.

Medical Services for Victims of Sexual Assault. The final budget modifies the

reimbursement by the Office of Victim Services to a tiered structure based on the level of

services provided and age of the victim. It modifies the current required distribution of

post exposure prophylaxis to require hospitals to provide a seven-day starter pack for those

over the age of 18, and a full regimen for victims under 18. Hospitals are required to

coordinate the provision of transportation with a rape crisis or victim assistance

organization providing assistance in the hospital’s geographic area upon the conclusion of

medical services. Lastly, it requires DOH to produce an annual report on the cost of

reimbursement for medical examinations and treatment by the State on an annual basis.

Extend DSRIP Regulatory Waiver Authority. The final budget modifies the

Executive’s proposal to extend the authority of the commissioners of DOH, OMH,

OPWDD, and OASAS to waive regulations as necessary to allow the efficient scaling and

replication of promising DSRIP practices, as determined by the authorizing commissioner,

through April 1, 2021.



Hospital Resident Compliance Audits. The final budget rejects the Executive’s proposal

to repeal existing law requiring DOH to audit hospital resident hours annually and require

that hospitals certify that they are in compliance with applicable working hour and working

condition requirements annually.

Antimicrobial Resistance Prevention. The final budget rejects the Executive’s proposal

to establish a new requirement for all hospitals and nursing homes to establish

antimicrobial stewardship programs.

Sexual Assault Forensic Examiner (SAFE) Program Expansion. The final budget

rejects the Executive’s proposal require all hospitals with Emergency Departments to

establish SAFE programs. Hospitals without Emergency Departments would be required

to transport victims of sexual assault to hospital with SAFE programs.

Nursing Homes


Nursing Home Capital Reimbursement. The final budget includes the recommendation

of the MRT to reduce the capital cost component of nursing home Medicaid rates by 5%

for facilities that elect to refinance their mortgage loans.

Residual Equity. The final budget includes the recommendation of the MRT to eliminate

funding associated with residual equity reimbursement in the capital cost component of

Medicaid rates to nursing homes. This action and the reduction in capital reimbursement

is projected to reduce funding by $30 million annually (state-share).

Nursing Home Upper Payment Limit. The final budget accepts the Executive’s proposal

to extend the nursing home upper payment limit and intergovernmental transfers for public

residential health care facilities through March 31, 2023.

Health Care Facility Refinancing Shared Savings Program. The final budget accepts

the Executive’s proposal to extend the authority of the Commissioner to modify health care

facility real property costs to effectuate a shared savings program where facilities would

share a minimum of fifty percent of the savings from electing to refinance their mortgage

loans, through March 31, 2025.

Medicare Maximization Program. The final budget accepts the Executive’s proposal to

extend the Nursing Home Medicare Maximization program through February 1, 2023.

Health Occupation Development and Workplace Demonstration Program. The final

budget accepts the Executive’s proposal to repeal this program with the elimination of the

Health Workforce Retraining Initiative (HWRI) under HCRA.

Adult Day Health Care Transportation. The final budget allows ADHC providers to

elect to use the services of the State’s transportation manager, but does not require use.


Home Based Primary Care for the Elderly Demonstration Project Extension. The

final budget extends the Project for an additional five (5) years through 2026. The

demonstration program allows nursing homes that also provide a variety of community-

based care to provide home based physician, nurse practitioner and physician assistant

services to elderly patients in their homes.

Vital Access Provider (VAP) Funding. The final budget includes $66 million in

continuing funding to support critical health care providers through the State’s Vital Access

Provider (VAP) program.

Miscellaneous Appropriations. The final budget includes the following appropriations

impacting the Nursing Home sector:

o Continuing Care Retirement Community Account = $121,000 (increase in

$21,000)

o Nursing Home Receivership Account = $2,000,000 (re.)

o Quality of Care Improvement Account = $1,000,000

o Program for background checks on patient contact personnel in Long-term care

facilities = $3,000,000


Antimicrobial Resistance Prevention. The final budget rejects the Executive’s proposal

to establish a new requirement for all hospitals and nursing homes to establish

antimicrobial stewardship programs.

Spousal Refusal. The Legislature rejects the recommendation of the MRT and Executive

to eliminate ability of spouses living together in the community and parents living with

their child to refuse to make their income and resources available during the determination

of an applicant’s eligibility for Medicaid (known as Spousal Refusal).

Adult Home/Assisted Living

Included in the final budget are the following items:

EQUAL. The final budget amends EQUAL by changing the allocation methodology and

grant purposes. In addition to the financial status and size of the facility, as well as resident

need, the commissioner’s allocation methodology must now also consider the population

of residents who receive SSI, Medicaid or safety net assistance. Grant purposes are to fund

either projects that include clothing allowances, resident training for independent living

skills, improve food quality, outdoor leisure projects and culturally recreational and other

leisure events, as well as capital improvements that enhance the physical environment of

the facility. Expenditure plans to DOH for EQUAL funding must now detail how the funds

will be used to improve resident quality of life consistent with the new grant purposes.

Supplemental Social Security (SSI). The final budget accepts the traditional statutory

authority to pass-through any Federal COLA that becomes effective on or after January 1,

2021. The provision is effective as of July 1, 2020.


Respite Support. The final budget extends for three years, the authority of adult homes,

residences for adults, and enriched housing programs to provide respite support to non-

residents for up to 120 days.

ACF Criminal History Record Check. The final budget maintains funding at $1.3 million

for the administration of the criminal history record check system for staff at ACFs.

Miscellaneous Appropriations.

o Adult Homes Advocacy Program: $170,000

o Adult Home Resident Council Support Project: $60,000

o Assisted Living Residence Quality Oversight Account $2,110,000

o Adult Home Quality Enhancement Account: $500,000

o Enriched Housing Operating Assistance: $380,000

o Enhancing abilities and life experience (EnAbLE) appears to have been

discontinued.

Home Health Care


LHCSA Authorization Requirement. The final budget includes the recommendation of

the MRT to require all LHCSAs to be authorized by the DOH to provide services under

Medicaid. The Department is required to contract with a sufficient number of LHCSAs to

ensure Medicaid enrollees have access to care and services. The Department is required to

publicly post for at least 30 days the method for LHCSAs to submit a proposal for selection

and the eligibility criteria, which is limited to licensed LHCSAs.

Home Care Provider ID. The final budget adds a provision that requires home care

workers and personal assistants providing services under CDPAP to obtain an individual

“unique identifier” from the State by a date to be determined by the Commissioner in

consultation with OMIG.

Medicare Maximization Program. The final budget accepts the Executive’s proposal to

extend the Home Care Medicare Maximization program through February 1, 2023.

Home Care Workforce and Recruitment. This program is extended through March 31,

2023.

Home Health Aide Registry: $1,800,000

Personal Care Workforce Recruitment and Retention. This Program is extended

through March 31, 2023.

Wage Parity. The final budget includes the recommendation of the MRT to require

LHCSAs and FIs to provide annual written certification of compliance with wage parity

requirements and establishes criminal penalties and sanctions for false certifications of

compliance. All entities will be required to certify that no portion of the funds spent to


satisfy the wage or benefit portion shall be returned as a refund, dividend, or profit.

LHCSAs and FIs will be required to provide an annual statement of wage parity hours and

expenses accompanied by an independently-audited financial statement verifying such

expenses.

The amendments replace the requirement that MCOs, CHHAs, and/or LTHHCPs that

contract with LHCSAs and FIs obtain a written certification on a quarterly basis from the

LHCSA or FI which attests to its Wage Parity compliance, and replaces this requirement

with an annual certification. MCOs, CHHAs, and/or LTHHCPs are required to review the

annual compliance statement and make a written referral to the Department of Labor for

any reasonably suspected failures of LHCSAs or FIs to conform with Wage Parity

requirements.

The amendment removes FIs from being exempt from liability for recoupment of payments

or a penalty for services provided in which the LHCSA or FI failed to comply with Wage

Parity requirements. MCOs, CHHAs, and LTHHCPs continue to be exempt from liability

provided they conduct the monitoring and reporting now required.

The amendment also requires notification to home care aides of the benefit portion of the

minimum rate of their total compensation.

These provisions are effective as of October 1, 2020.

Primary Care, Clinics, and other Providers Included in the final budget are the following items:

Electronic Prescriptions. The final budget accepts the Executive’s proposal to extend the

“small provider” exception from the requirement for electronic prescriptions for an

additional three (3) years through June 1, 2023. The exemption applies to prescribers that

certify to DOH that they prescribe 25 or less prescriptions annually.

Physician Profile Website. The final budget accepts the Executive’s proposal to extend

the provision allowing the use of funds of the Office of Professional Medical Conduct for

use for the Physician Profile Website through 2023.

Clinic Bad Debt and Charity Care Payments. The final budget extends the authorization

for clinic bad debt and charity care payments through March 31, 2023 at $7.5 million

annually.

Clinic Safety Net Funding. The final budget includes level funding of $54.4 million for

the Diagnostic and Treatment Centers (D&TC) Safety Net Program. This funding helps

cover the cost of bad debt and charity care provided by federally qualified health centers

(FQHCs) and other D&TCs.


Health Homes: The Final Budget includes annual funding of $279.35 million for the

Health Home program. This reflects an annual decrease of $48.7 million from last year,

consistent with the MRT proposals related to Health Homes.

Patient Centered Medical Homes: The Final Budget reflects level annual funding of $110

million for Patient Centered Medical Homes (PCMH).


Physician Profile Enhancements. The final budget rejects the Executive’s proposal to

require additional information to be included on the online physician profiles, which would

have included hours of operation, availability of assistance technology, and availability to

take new patients as mandatory elements of a physician’s profile.

Physician Integrity and Accountability. The final budget rejects the Executive’s

proposal to amend the Education Law to eliminate indefinite licensure of physicians and

requires fingerprint-based criminal history background checks prior to licensure.

Commercial Health Insurance


Independent Dispute Resolution for Emergency Services. The final budget accepts the

Executive’s proposal to permit members to assign claims for emergency services, including

inpatient services following an emergency room visit, to a physician or hospital and the

Plan would be required to pay the physician or hospital for the services directly. The

Budget also prohibits physicians and hospitals from billing patients who assigned their

benefits, other than collecting appropriate cost sharing.

However, the Legislature rejected the Governor’s proposal to repeal the exemption safety

net hospitals from the dispute resolution process for emergency services.

Hospital Administrative Denials. The final Budget made a number of revisions to the

Governor’s proposal regarding hospital administrative denials. The Final Budget amends

existing law which prohibits denials of medically necessary inpatient services following an

emergency admission based solely on a hospital’s failure to notify a Plan of the services

by extending this prohibition to all types of administrative denials and to emergency

services, observation stays, and all inpatient admissions. Exceptions to the prohibition

include denials based on: (1) fraud or intentional misconduct resulting in misrepresentation

of patient diagnosis or the services provided or abusive billing; (2) when required by a state

or federal government program (e.g. Medicaid, if required by the State) or for coverage

provided by the state or a local government (e.g. NYSHIP or coverage for municipal

employees); (3) non-covered benefits; (4) services for which preauthorization was denied

prior to the delivery of services; (5) untimely claim submissions; and (6) out-of- network

providers. Further, Plans may deny claims on this basis that a hospital failed to seek prior

authorization if a hospital has “repeatedly and systemically” over the previous 12-month

period failed to seek preauthorization for services for which preauthorization was required.


The Final Budget also changes the maximum amount of the penalty to which Plans and

hospitals may contractually agree. Plans may now impose a penalty of no more than 7 ½

per cent of the amount otherwise due for failing to comply with a Plan’s administrative

requirements, rather than the current penalty of no more than the lesser of $2,000 or 12%.

Prompt Pay. The final Budget modified the Governor’s proposal to require Plans to notify

members or providers through the internet or other electronic means for claims submitted

electronically (in addition to in writing which is currently required), that the claim is denied

or additional information is necessary to pay the claim, and to include the specific type of

plan or product in which the member is enrolled.

The final Budget also adds a definition of the plans and products that are subject to the

prompt pay law. Specifically, it includes Medicaid managed care, Child Health Plus,

Essential Plan, qualified health plans purchased on the New York State of Health, and any

other comprehensive coverage subject to Articles 32, 43, and 47 of the Insurance Law or

Article 44 of the Public Health Law.

The final Budget deleted the requirement that interest would be due back to the original

date in which additional information was requested.

In the event that additional information is requested by the plan after submission of the

claim, Plans are required to make any additional payments they determine are due within

15 days of the determination. The final Budget deleted the proposal to require the payment

of interest on such payment computed from the date the claim was submitted.

Coding Disputes. The final Budget revised the Governor’s proposal to require Plans to

review disputes regarding coding based on national coding guidelines accepted by CMS or

the AMA, including ICD-10 guidelines, with the addition of language clarifying that such

codes must be used to the extent they exist. The language also clarifies that the use of the

national coding guidelines does not apply when the plan undertakes fraud, waste and abuse

efforts; any subsequent payment adjustments, however, must be made consistent with the

national guidelines. Current law also permits the parties to agree to an alternative process

for the reconciliation of coding disputes.

Plans are required to pay interest on the increased amount when they increase payment on

a claim after reviewing information provided by a hospital to substantiate the coding.

Interest is computed starting from 30 days after receipt of the initial claim, if electronic,

and 45 days after receipt of an initial paper claim.

Health Care Claims Reports. The final Budget included the proposal to require Plans to

submit quarterly and annual health care claims reports with respect to comprehensive

products to DFS, within 45 days of the end of a quarter or year. The reports would include

the number and dollar value of all claims, broken down by those received, paid, pended,

and denied. They would be reported in the aggregate, as well as broken down by type of

provider. The reports would be posted on the DFS website. The final Budget added a


provision that requires reports to address any patterns or suspected areas of revenue

maximization that may have contributed to the number of denials.

Health Care Administrative Simplification Workgroup. The final budget accepts the

Executive’s proposal to convene a health care administrative simplification workgroup

comprised of insurers, hospitals, physicians, and consumers. The workgroup would study

and evaluate mechanisms to reduce administrative costs and complexities through

standardization, simplification, and technology. The workgroup would examine claims

submission and payment, claims attachments, preauthorization practices, provider

credentialing and insurance eligibility verification. The workgroup’s report and

recommendations must be submitted within 18 months of the effective date of the law.

Utilization Review for Inpatient Rehabilitation Services. The final Budget modified the

Governor’s proposal to require preauthorization determinations for inpatient rehabilitation

services provided by a skilled nursing facility or hospital to be conducted within one

business day by limiting the applicability to only when the inpatient rehabilitation service

follows an inpatient stay. The final Budget also accepted the reduction in the timeframe to

file a utilization review appeal to 30 days, down from 60, and to require Plans to make any

additional payments on an overturned denial within prompt pay timeframes.

Provisional Credentialing. The final Budget modified the Governor’s proposal regarding

provisional credentialing. It requires Plans to treat as “provisionally credentialed” newly-

licensed physicians; physicians who newly relocate to New York; physicians who receive

a new tax ID number based on a corporate change when the physician previously had a

contract with the Plan immediately prior to the event that changed his or her corporate

relationship. Such provisional credentialing applies when the physician becomes employed

by a general hospital, diagnostic and treatment center, or OMH-licensed facility which has

a contract with the Plan and whose other employed physicians participate in the Plan’s

network. Such physicians are considered participating in a Plan’s network upon

submission of a completed credentialing application and the Plan being notified in writing

that the physician has been granted hospital privileges. A provisionally credentialed

physician would not be permitted to act as a member’s primary care physician. Plans would

not be required to pay a hospital, diagnostic and treatment facility, or OMH facility for

services provided by a provisionally credentialed physician until the physician is fully

credentialed and would only be required to pay for services provided by physician for up

to 60 after submission of the completed application.

The Legislature rejected the Governor’s proposal to require Plans to pay the out-of-

network rate when a physician’s application is denied. Rather, if a physician’s application

is denied, no payments are required.

Mental Health and Substance Use Disorder Parity Compliance. The final budget

modifies the Executive’s proposal to require penalties imposed on Plans for violation of

state mental health parity requirements to be deposited into a newly established “behavioral

health parity compliance fund”. The final budget removes the proposal to require DOH to

establish mental health and substance use disorder parity compliance program


requirements through regulation. Under the final language, all penalties collected for

violations related to mental health and substance use disorder parity compliance are to be

deposited in the Fund. As a result, the Department will not be required to establish

requirements for compliance.

COVID-19 Claims. The final budget precludes plans from retrospectively denying

emergency department and inpatient hospital services rendered by general hospital to treat

COVID-19 during the declared state of emergency.

Insulin Copay Limit. The final budget includes a limit on the out-of-pocket expense for

insulin to $100 for every 30-day supply of insulin, regardless of the type or amount of

insulin needed. This provision applies to coverage issued or renewed on or after January

1, 2021.

Essential Plan. New York will continue to support the Essential Plan. The final budget

provides $5.2 billion for the Essential Plan Program.

Gestational Surrogacy. The final budget provides for the legalization of gestational

surrogacy. With respect to health insurance, it requires the intended parents to pay for a

comprehensive health insurance policy for the surrogate that extends throughout the

duration of the expected pregnancy and for twelve months after the birth of the child, a

stillbirth, a miscarriage resulting in termination of pregnancy, or termination of the

pregnancy. It also requires the intended parents to pay for or reimburse the person acting

as surrogate for all co-payments, deductibles and any other out-of-pocket medical costs

associated with the pregnancy, childbirth, or postnatal care that accrue through twelve

months after the birth of the child, a stillbirth, a miscarriage, or the termination of the

pregnancy. A surrogate who is not receiving compensation may waive the right to have the

intended parents make such payments or reimbursements. The legislation also creates

“Donor medical Expense Insurance” which provides insurance to indemnify an intended

parent for medical and hospital expenses which they are obligated to pay when the

expenses result from medical complications associated with the donation of gametes.

Health Insurer Notice Procedures. The final Budget includes a requirement that health

insurers and utilization review agents have procedures for obtaining an insureds preference

for receiving notifications. To the extent practicable, written notice to an insureds provider

shall be transmitted electronically.

Cap on Long-Term Care Insurance Credit. The final budget accepts the Executive’s

proposal to limit the credit to up to $1,500 (currently 20% with no maximum credit amount)

and to taxpayers with incomes under $250,000.

Stop Loss Coverage for Small Groups and Municipal Consortiums. The final budget

extends the provisions authorizing the continued ability of small groups and municipal

corporations to purchase stop loss coverage to December 28, 2022.


Third Party Health Insurance Coverage for Medicaid Services. The final budget

includes a recommendation of the MRT to prohibit denials by third-party health insurance

(TPHI) carriers of Medicaid claims solely due to a lack of prior authorization. Liable

TPHI carriers are required to respond to a request for payment within 60 days after the

receipt of a claim for payment for health care services provided to a Medicaid enrollee who

is covered by TPHI and is prohibited from charging a fee to process or adjudicate a claim.

Property/Casualty Filing Exemption. The final budget extends for 3 years the exemption

from certain rate and policy form filing requirements for a domestic property/casualty

insurance company that maintains at least twice the minimum surplus to policyholders

required or an insurer licensed pursuant to Article 61 of the Insurance Law as a reciprocal

insurer that maintains at least the minimum surplus to policyholders, provided that the

insurer has total direct premiums comprised of at least 90% medical malpractice insurance,

assumes reinsurance premiums in an amount that is less than 5% of total direct premiums

written, and writes 90% of its total direct premiums in New York.

Health Insurance Entertainment Workers Continuation Assistance Demonstration

Program. The final budget adds language authorizing the extension this program, set to

expire July 1, 2020, for one additional year, until July 1, 2021.

Health Workforce Retraining Program. This Program, established under HCRA, is

repealed. This Program was established to make grants to eligible organizations to support

the training and retraining of health care employees to address changes in the health

workforce.


DFS Authority to Regulate Unfair and Abusive Acts and Increases Fines. The final

budget rejects the Governor’s proposal to expand the jurisdiction of DFS and increase the

fines and penalties that DFS may impose on entities regulated by DFS. The proposal would

have increased the civil penalty that DFS may impose for fraud, misrepresentation, unfair,

deceptive or abusive acts, and increased the penalty for violations under the Insurance Law

from $1,000 to $10,000 for each offense.

Pay & Pursue. The final Budget did not include any of the Governor’s proposal relating

to paying all medical necessity claims and then retrospectively negotiating or reconciling

the claims through a technical committee process.

Early Intervention. The final budget rejects the Executive’s proposal to implement a “pay

and pursue” model for early intervention (EI), which would have required insurers to pay

for early intervention services by in-network providers and pursue disputes thereafter via

appeal.

Department of Financial Services (“DFS”) Funding

The DFS is funded entirely by assessments on insurers and banks. The final budget accepted the

Governor’s proposed funding for SFY 2021, an increase of $1.325 million from 2019-20 funding

to, $439,155,963 with $83,715,000 earmarked for the Administration Program; $88,183,000

earmarked for the Banking Program, and $267,257,963 earmarked for the Insurance Program. As


in prior years, the legislature included an additional $75,000 in funding for the Pilot Program for

the Entertainment Industry Employees. While sub-appropriations from DFS remained mostly

consistent as prior years, the sub-appropriation to the Department of State for expenses incurred

in the enforcement, development and maintenance of the state building code increased continues

to be increased by $2 million, and the sub-appropriation for services and expenses related to the

Healthy New York Program decreased by $2 million from prior years. The Healthy NY decreased

funding may result in a lesser plan subsidy for the Healthy NY stop loss program.

State Employee Health Insurance


Medicare Part B Reimbursement Cap. The Governor proposed to standardize Medicare

Part B reimbursement for all retirees at $144.60 and cap state reimbursement at that level

to eligible retirees and their dependents effective January 1, 2020.

Income Related Medicare Adjustment Amounts (IRMAA) Reimbursement. The

Governor proposed to amend the Civil Service Law to cease reimbursement of additional

IRMMA premiums paid by higher-income state retirees retroactive to January 1, 2020.

Sliding Scale Reimbursement for Health Care Costs. The Governor included a proposal

that would require new civilian, non-disability State employees who begin their

employment on or after October 1, 2020 and subsequently retire with less than 30 years of

service would receive health insurance coverage benefits calculated on a graduated scale

based on years of service.

Medicaid


Medicaid Global Cap. The final budget includes a recommendation by the MRT to amend

the Global Cap by substituting the concept of a savings allocation plan with a savings

allocation adjustment. Previously, if the Cap was not balanced, the Commissioner was

required to develop a savings allocation plan that would detail the programs and services

that would be cut to bring the Cap back into balance. These amendments replace the savings

allocation plan with a savings allocation adjustment. The adjustment applies across the

board, unless projections demonstrate a specific category of service is causing the growth

in expenditures that pierces the Cap. The Commissioner is required to notify impacted

providers at least 30 days prior to implementation and must comply with State Plan

Amendment notice requirements for Medicaid reimbursement changes. If the

Commissioner develops a plan to avoid the adjustment, the Commissioner, subject to the

approval of DOB, may institute such plan in place of an adjustment. Additionally,

adjustments to plan premiums and rates of payment must be actuarial sound.

Medicaid Program Funding. The final budget increases state share of Medicaid funding

by 3%, or $500 million, growing from $19.4 billion to $20 billion (state share).

Eligibility for Personal Care Services and CDPAP. The final budget modifies a

recommendation by the MRT for eligibility for personal care services to require an


individual to be assessed: (1) as needing at least limited assistance with physical

maneuvering with more than two activities of daily living (ADLs); (2) diagnosed with

dementia or Alzheimer’s and needing at least supervision with more than one ADL. This

requirement will be applicable in FFS, mainstream managed care, and MLTC. The change

in eligibility is prospective and does not apply to individuals who received initial

authorization prior to October 1, 2020.

Medicaid Monetary Penalties. The final budget authorizes OMIG, in consultation with

DOH, to apply monetary penalties to providers, MCOs and MLTCs for: (1) the failure to

grant timely access to facilities and records, upon reasonable notice, for the purpose of

audits, investigations, or reviews; (2) knew or should have known that an overpayment has

been identified and it is not reported; (3) arranges or contracts with any individual or entity

that is known or should be known to be suspended or excluded from Medicaid. The final

budget removes language limiting the amount of an overpayment that may be recovered to

the amount paid for such claim. It also removes the limitation on monetary penalties

currently in effect when less than 25% of the claims subject to an audit result in an

overpayment.

Medicaid Compliance Program. The final budget requires providers, MCOs and MLTCs

to adopt and implement an effective compliance program that includes measures to prevent,

detect, and correct non-compliance with Medicaid requirements and to prevent, detect and

correct fraud, waste and abuse. OMIG is authorized to impose a penalty of $5,000 per

month for the failure to adopt and implement a compliance program that meets statutory

requirements ($10,000 per month if in second year of non-compliance).

Medicaid Integrity and Efficiency Initiative. The final budget extends for two years, the

authority of the department of health to establish a statewide Medicaid integrity and

efficiency initiative for audit recoveries.

Coverage for Speech, Occupational and Physical Therapy. The final budget amends

the fee for service Medicaid benefit to remove visit limitations for the coverage of speech,

occupation and physical therapy. This provision is effective as of October 1, 2020.

DOH Contracting Authority. The final budget authorizes DOH to amend or extend the

terms of a contract awarded for Enrollment Broker and Conflict-Free Evaluation Services

under the Medicaid program for a period of six years, through 2023, without a competitive

bid, upon a determination that the existing contractor is qualified to continue to provide

such services.

Private Duty Nursing. The final budget authorizes the Commissioner to increase fees for

private duty nursing services provided under Medicaid to medically fragile children by fee

for service private duty nursing service providers. The Commissioner of DOH is also

authorized to develop a directory of qualified fee for service private duty nursing providers.


Look-Back Period for HCBS. The final budget includes a modified recommendation of

the MRT to apply a 30-month look-back period to home and community based long-term

care services (home health care, private duty nursing, personal care, assisted living).

Community Spouse Resource Amount. The final budget includes a recommendation of

the MRT to apply transfer of asset rules currently applicable to nursing home services to

community based long-term care services (home health care, private duty nursing, personal

care, assisted living).

Medicaid Rates for Taxis/Livery. The final budget reduces rates of payment to

taxis/livery by 7.5% for periods between April 1, 2020 and November 30, 2020 and an

additional 7.5% from rates on and after December 1, 2020.

Transportation Provider Cost Reports. The final budget authorizes DOH to require

transportation providers to report costs of providing transportation services to Medicaid

beneficiaries.

Ground Emergency Medical Transportation Services. The final budget authorizes

DOH to establish a program for the federal financial participation in reimbursement for

ground emergency medical transportation services provided to Medicaid beneficiaries and

establish a methodology for supplemental reimbursement.

Transportation Broker and Carve Out. The final budget authorizes DOH, for periods

on and after April 1, 2021, to contract with a transportation broker for non-emergency

medical transportation on a regional or statewide basis under the Medicaid program. The

broker will also assume management of transportation services provided by MLTC plans,

except for PACE and FIDA programs. Adult day health providers are not required to enroll

with the broker.

Medicaid Managed Care (MMC), Managed Long Term Care (MLTC), Child

Health Plus (CHP), and Essential Plan


Quality Pool. The final Budget includes savings from a reduction in the Medicaid

Managed Care (“MMC”) and MLTC quality pools. For MMC, the quality pool payments

are reduced by 50% effective 10/1/19 ($60m in savings). For MLTC, the quality pool

payments are reduced by 25%, effective 4/1/20 ($17.25m in savings) (source: scorecard;

to be confirmed).

Rate Range Reductions. The final Budget includes savings from a reduction in the

Medicaid Managed Care (“MMC”) and MLTC rates to the lowest level of the actuarial

soundness rate range. This action, first implemented in the 1/1/20 rate will be continued in

FY 21. Provided, however, according to DOH, the rate range reduction may limit the ATB

rate cuts in that the rate will not be reduced below the lowest level of the actuarial

soundness rate range.


DSRIP Equity Pool. Consistent with the MRT recommendations, the final budget

included savings from the elimination of the DSRIP equity pools (source: scorecard)

Enhanced Safety Net Program. Consistent with the MRT recommendations, the final

budget included savings from the elimination of this Program.

VBP Stimulus. Consistent with the MRT recommendations, the final budget included

savings from the elimination of this funding.

Penalties for Misstated Cost Reports. The final budget authorizes OMIG to impose a

penalty on managed care organizations (MCOs) and MLTCs whose filed cost report

contains a misstatement of fact, including unsubstantiated or improper costs, number of

member months, or number of events. For misstatements of the number of member

months, the penalty shall be the amount of the premium capitation paid for the region per

member month. The penalty amount for including unsubstantiated or improper costs will

be the amount of the misstatement multiplied by two. This provision applies to costs

reports submitted on or after January 1, 2014.

Fraud, Waste and Abuse Prevention. The final budget requires MCOs and MLTCs to

implement policies and procedures designed to detect and prevent fraud, waste and abuse,

including the implementation of a compliance program. For plans with an enrolled

population of 1,000 enrollees in the aggregate annually, the plan must establish a special

investigation unit with the primary responsibility of implementing policies to detect and

prevent fraud, waste and abuse. OMIG is authorized to promulgate regulations establishing

standards and requirements for fraud, waste and abuse activities, including requirements

for special investigation units.

Medicaid Overpayments and Self-Disclosure Program. The final budget requires

MCOs and MLTCs to implement programs and processes related to overpayments,

consistent with statutory requirements. The program must require that overpayments

received by providers, MCOs and MLTCs be reported and returned to DOH within 60 days

of identifying the overpayment or the date any cost report is due, and provide written

notification to OMIG of the reason for the overpayment. The deadline for returning

overpayments is to be tolled when OMIG acknowledges receipt under the self-disclosure

program and in the absence of fraud, the overpayment may be repaid in installments. Any

overpayment retained after the deadline is subject to monetary penalties. OMIG is directed

to establish a Self-Disclosure Program to allow eligible providers, MCOs and MLTCs to

return overpayments.

Encounter Data Penalties. The final budget adds penalties for inaccurate data submitted

at a category of service level. DOH and OMIG, when assessing such penalties must

consider the degree and frequency to which the MCO submitted (or failed to submit)

inaccurate data at category of service level. Penalties are now assessed against the

premium, rather than the administrative component. Applicable penalties have been

increased from .5% to 1.33% percent for MCOs. For MLTC plans, penalties for

submissions past deadlines is .25%; for incomplete or inaccurate data at a category of


service level the penalty is 1%; for data that results in a rejection rate of over 10% the

penalty is .25%, and for incomplete or inaccurate data identified in audit the penalty is 1%.

MLTC Moratorium. The final budget adopts a recommendation by the MRT to establish

a moratorium on applications for a Certificate of Authority to operate an MLTC and

applications to expand the service area or scope of eligible enrollee population of an

existing MLTC. The moratorium is effective April 1, 2020 to March 31, 2022, but does

not apply to applications submitted to DOH prior to 1/1/20. The moratorium shall not

apply to: (i) applications to transfer ownership or to consolidate MLTCs; (ii) applications

which demonstrate that they address a “serious concern with care delivery”; or (iii) PACE

or dual eligible applications. During the moratorium, the Department is required to assess

the public need for MLTCs that are not integrated with an affiliated Medicare plan and the

ability of such plans to provide high quality, cost-effective care for members, and is

required to develop an orderly wind-down and elimination of such plans to coincide with

the expiration of the Moratorium.

MLTC Enrollment Cap. For the duration of the MLTC Moratorium, each MLTC will be

assigned an annual cap on total enrollment, based on a percentage of each plan’s reported

enrollment as of October 1, 2020, and have a premium withholding of 3% of the base rate.

In the event a plan exceeds its annual enrollment cap, the Commissioner is authorized to

retain all or a portion of the premium withheld, based on the amount over which a plan

exceeds its enrollment cap ($215m in savings). The enrollment cap will be based on: (i)

the ability of eligible enrollees to access care; (ii) plan quality scores; (iii) historical plan

disenrollment; (iv) the projected growth of individuals eligible for such plans in a particular

geographic region; (v) historical plan enrollment; (vi) other factors deemed appropriate by

the DOH to ensure federal compliance and access. If an MLTC exceeds its cap, the DOH

is authorized to withhold all or a portion of the withheld premium.

MLTC Auto-Assignment. The final budget requires that individuals automatically

assigned to an MLTC by the Department of Health shall take into account consistency with

any prior community-based direct care workers having recently served the recipient, and

authorizes individuals to receive services under FFS Medicaid prior to being assigned to a

new MLTC.

Independent Assessor for Personal Care and CDPAP. The final budget includes a

recommendation by the MRT to require DOH to establish or procure an independent

assessor to take over from LDSSs, MCOs, and MLTCs the UAS Community Health

Assessments and reassessments required for determining needs for personal care services.

The use of the independent assessor must be implemented by October 1, 2022.

MLTC Eligibility. The final budget modifies a recommendation by the MRT to amend

MLTC eligibility criteria to require an individual to be assessed: (1) as needing at least

limited assistance with physical maneuvering with more than two activities of daily living

(ADLs); (2) diagnosed with dementia or Alzheimer’s and needing at least supervision with

more than one ADL. The change in eligibility is prospective and does not apply to

individuals continuously enrolled prior to October 1, 2020.


MLTC Assessment. The final budget adopts a recommendation by the MRT to change

the frequency in which the Community Health Assessment is conducted from every six

months to once annually, subject to requiring reassessments based on changes in health

condition or status.

Notice of Consumer Directed Program. The final budget adopts a recommendation by

the MRT to eliminate requirement that managed care plans and LDSS educate consumers

about the availability of the CDPAP program annually. The final budget expands this

provision to limit the ability of individuals to apply for participation in CDPAP only once

annually.

MLTC Coverage of Behavioral Health Services. The final budget authorizes MLTC

plans to cover behavioral health services.

Integration of Dual Eligibles. The final budget includes a recommendation by the MRT

to require dual eligible enrolled in a Medicare Dual Eligible Special Needs Plan who do

not require 120 days of community-based LTC to enroll in an available affiliated MLTC.

Home Care Assessment Tool. The final budget includes a recommendation by the MRT

to development and implement a uniform task-based assessment tool to assist plans and

LDSS with determinations for utilization of home care services, including the number of

personal care and CDPAP hours each day and other options for needs for assistance with

ADLs can be met, such as through telehealth and family/social supports. The use of the

Home Care Assessment Tool must be implemented by April 1, 2021.

Independent Review for CDPAP and Personal Care Cases. The final budget includes

a recommendation by the MRT to establish an independent panel of clinicians to determine

eligibility for CDPAP cases.

Fully Integrated Products. The final budget extends the authority of the Commissioner

of the Office of Temporary Disabilities Assistance (OTDA) to conduct fair hearings to all

fully integrated products for three (3) years to January 1, 2024.

Managed Care Enrollee Notifications. The final budget authorizes enrollees to receive

notifications electronically, requires integrated delivery systems to have procedures for

receiving an enrollees preference for written or electronic notification, and eliminates

requirement that utilization review agents make notice of pre-authorization by written

notification, and to the extent practicable, utilize electronic notification. MCOs are

required to have procedures for receiving an enrollees preference for written or electronic

notification for purposes of pre-authorization utilization review.

Value-Based Payment Demonstration Program. The final budget authorizes DOH, in

consultation with DFS, to implement one or more five-year demonstration programs

designed to improve health outcomes and reduce costs, using a value-based model that

pays providers an actuarially sound pre-paid, capitated rate. The demonstration may offer


funding and incentives designed to improve health outcomes, develop infrastructure and

systems and connect individuals to community-based organizations that address social

determinants of health.

Regional Population Health Improvement Initiative. The final budget authorizes DOH,

in consultation with DFS, to implement one or more five-year demonstration programs,

beginning January 2022, that is designed to accelerate regional population health

improvement initiatives, adopting value-based models and aligning care incentives under

an integrated health system.

Pharmacy


Prescription Drug Pricing and Accountability Board. The final budget modifies the

Governor’s proposal to give DFS broad authority to investigate the circumstances

involving drug price increases and also proposes to establish a Drug Accountability Board

(DAB):

o Prescription Drug Price Review: The Superintendent would be permitted to

investigate any prescription drug that is sold or offered for sale that is set to

increase, or has increased by more than 50 percent within a one-year time period to

an amount greater than five dollars per unit, if the Superintendent believes there to

be evident of false pretenses or fraud and it is in the public interest that an

investigation be made.

DFS may also require other data and information, such as independent

investigations and would be empowered to subpoena witnesses and compel

attendance under oath, and require the production of any books or materials deemed

relevant to the inquiry. Any individual that fails to perform any action required by

DFS under such an investigation would be guilty of a misdemeanor and would be

subject to a civil penalty not to exceed one thousand dollars per day for the duration

of the failure.

o Drug Accountability Board: The final budget establishes a nine-member drug

accountability board with members to be selected by DFS. The Board membership

would consist of: (i) individuals licensed and actively engaged in the practice of

medicine and pharmacy; (ii) individuals with expertise in DUR who are health care

professionals licensed under the Education Law and are Pharmacologists; (iii)

consumer representatives; (iv) health care economists; (v) actuaries; and, (vi)

experts from the Department of Health. The purpose of the DAB would be to aid

in investigations related to drug price increases, and allow DFS to refer drugs to the

DAB for a report to be prepared. If a drug is referred to the DAB, the Board, would

be required to determine:

- The drug’s impact on the premium costs for commercial insurance in the

state, and the drug’s affordability and value to the public;


- Whether increases in the price of the drug over time were significant and

unjustified;

- Whether the drug may be priced disproportionately to its therapeutic

benefits; and, any other question DFS may certify to the Board to aid an

investigation.

Papers and information considered by the Board as part of their review, and any Board

report prepared, would be considered confidential and exempt from disclosure; however,

the Superintendent would be permitted to determine that the release of the information

would not harm an ongoing investigation and would be in the public interest, and would

therefore be permitted to release the report or any portion thereof to the public.

Additionally, DFS may call a public hearing on the determinations of the board.

DFS is also authorized to promulgate regulations relating to the operations of the

accountability board.

Expansion of Supplemental Rebate Authority. The Final Budget expands the

Executive’s authority to negotiate supplemental rebates directly with drug manufacturers

by adding: (1) “gene therapies”, (2) “high cost drugs”, (3) Medication Assisted Treatment

(MAT) drugs on the new Medicaid single Statewide formulary, and (4) any other “class or

drug designated by the commissioner” to the categories of drugs DOH is permitted to

negotiate supplemental rebate arrangements for with drug manufacturers. DOH already has

authority under Section 367-a to enter into supplemental rebate arrangements for Hepatitis

C agents and HIV/AIDs drugs. The final budget also accepts the Executives’ proposal to

extend the authorization for the State to negotiate, in lieu of a managed care provider, with

a pharmaceutical manufacturer for the provision of supplemental rebates through March

31, 2023.

Under the law, drug manufacturers would not be permitted to enter into any supplemental

rebate arrangements with MMC plans and PBMs if a supplemental rebate arrangement with

DOH is in place for the drug, and standard clinical criteria are imposed on the MMC plan.

Consistent with existing statutory requirements, DOH is required to establish adequate

rates of reimbursement for MMC plans in such situations. The authority for DOH to enter

into such rebates is extended until March 31, 2023, and the rebate arrangement itself may

not extend beyond this date.

Additionally, the Final Budget authorizes DOH to refer “high cost” drugs that are not

currently on a managed care plan formulary or on the FFS preferred drug list to DURB for

a target supplemental rebate. DOH is required to follow similar protocols used in

connection with the Medicaid Drug Cap to first attempt to negotiate a rebate arrangement

with the drug’s manufacturer. However, if unsuccessful, the Final Budget authorizes DOH

to use other tools available under the Medicaid Drug Cap statute (280 of the PHL),

including information disclosures and DURB review and recommendation of a target

rebate, to facilitate rebate arrangements with drug manufacturers.

Under the Final Budget language, a “high cost drug” means either:


o a brand name drug or biologic that has a launch wholesale acquisition cost of

thirty thousand dollars or more per year or course of treatment;

o a biosimilar drug that has a launch wholesale acquisition cost that is not at least

fifteen percent lower than the reference brand biologic at the time the biosimilar

is launched, or a generic drug that has a wholesale acquisition cost of one hundred

dollars or more for a thirty-day supply or recommended dosage approved for

labeling by the FDA; or

o a brand name drug or biologic that has a wholesale acquisition cost increase of

three thousand dollars or more in any twelve-month period, or course of treatment

if less than twelve months.

Additionally, a “Gene therapy” means:

o a drug approved by the FDA or licensed under the Federal Public Health Services

Act, that “treats a rare disease or condition” as this term is defined under 21 USC

Section 360bb(a)(2) or is “life-threatening” as defined under 42 CFR Section

321.18;

o is considered a gene therapy by the FDA for which a biologics license is held;

o if administered in accordance with the labeling of such drug, is expected to result

in either the cure of such disease or reduction in the disease’s symptoms that

materially improves patient’s length or quality of life; and,

o is expected to achieve the results in not more than three administrations.

The provisions of this section technically take effect immediately; however, DOH is

permitted to delay the effective date by up to ninety days following the conclusion of the

COVID-19 declared state of emergency.

Carve Out the Pharmacy Benefit from Managed Care to Fee-for-Service (FFS). The

final budget includes the MRT recommendation to authorize DOH to carve the Medicaid

pharmacy benefit out of managed care and back into FFS Medicaid, no sooner than April

1, 2021. The language also adds that an advisory board would be created to make non-

binding recommendations by October 1, 2020 with respect to how the State would achieve

proposed savings associated with the carve-out, and how FFS reimbursement would be

adjusted for 340B covered entities.

The Final Budget also includes language that DOH will examine all “reasonably available

methods” for determining actual acquisition cost (AAC) and the professional dispensing

fee for entities that purchase drugs under the 340B program. The language provides that

changes to the AAC and dispensing fee would be reviewed and adjusted for such drugs “no

sooner than April 1, 2023.” As a result, it appears that the 340B providers will be “held

harmless” of any rate reductions from the date of the carve-out (4/1/20) until 4/1/23.

Additionally, the language notes any proposed reimbursement modification for 340B

would be subject to the availability of Federal Financial Participation (FFP).

Align the Medicaid Drug Cap with the Medicaid Global Cap. The final budget revises

the year-to-year growth allowed under the Medicaid Drug Cap. For the current SFY,


growth would be limited to the CPI plus 2%, a reduction from CPI plus 4%. For SFY 2021-

22, and thereafter, annual growth would be aligned with the growth rate of the Medicaid

Global Cap.

Expand DOH Authority Under the Medicaid Drug Cap to Limit Reimbursement for

Drugs Provided by Medical Practitioners. The Final Budget Agreement adds that if

projected drug expenditures are expected to pierce the Drug Cap for the fiscal year, and a

manufacturer has not entered into a supplemental rebate agreement with DOH after the

DURB has recommended a target rebate amount for a particular drug, DOH is now

authorized, and “may” direct MMC plans to limit or reduce reimbursement for a drug

provided by a “medical practitioner”.

Statewide Formulary for Medication Assisted Treatment. The Final Budget accepts

the Executive’s proposal to establish a single statewide formulary for Medication Assisted

Treatment (MAT) drugs in FFS and MMC. The MAT Formulary would be separate from

the FFS preferred drug program, and consist of all MAT drugs that are on a managed care

plan formulary or in the FFS preferred drug program that DOH is able to obtain at a cost

that is less than the lowest cost paid for the drug by any managed care plan or the FFS

preferred drug program, net of all rebates, as of the date the single statewide formulary is

implemented. This “lowest cost” provision means in cases where there is a generic version

of a brand drug, DOH must be able to obtain the brand drug at the same lowest cost

available in FFS or MMC as its generic bioequivalent.

In addition, other MAT drugs not currently on a managed care plan formulary or covered

under the FFS preferred drug program may be added to the single statewide formulary if

DOH is able to obtain the drug at a cost that is equal to or less than the lowest cost to DOH

for comparable drugs in the class, net of all rebates.

Under the law, MAT drugs on the single statewide formulary would not be subject to prior

authorization under FFS. Current law already prohibits prior authorization for initial or

renewal prescriptions for preferred or formulary forms of MAT in MMC and FFS.

In addition, the Final Budget adds new exception criteria for beneficiaries to request

coverage of a MAT drug under FFS and MMC, that is not on the single statewide

formulary. The language notes a MMC plan’s failure to comply with the requirements of

this section would subject them to a $1,000 fine per violation.

As for the effective date of the single statewide formulary, DOH is required to implement

the single MAT Statewide formulary within six months of these provisions becoming law.

However, DOH is permitted to delay the effective date by 90 days following the conclusion

or termination of the COVID-19 State of emergency.

No Prior Authorization for Methadone. The Final Budget Agreement adds that no prior

authorization will be required for Methadone when used for opioid use disorder and

administered or dispensed in an opioid treatment program, in FFS and MMC.


Pharmacy Reimbursement. The final budget accepts the Governor’s proposal to extend

provisions of law related to methodologies for reimbursement of pharmacy under Medicaid

through 2023.

CPI Penalties for Generic Drugs. The final budget accepts the Executive’s proposal to

extend CPI penalties for generic drugs through March 31, 2022. An additional rebate is

triggered under existing law when a generic price increases more than 75% of SMAC. Prior

to April 1, 2017, the rebate was not triggered unless the price increase was more than 300%

of SMAC in 12 months.


Pharmacy Benefit Manager Regulation. The Legislature rejects the Executive’s

proposal to regulate and require the registration and licensure of PBMs.

Prescriber Prevails. The Legislature rejects the MRT II’s proposal to eliminate

“prescriber prevails” in both the Fee-For-Service (FFS) and the Medicaid Managed Care

(MMC) programs.

Limit Coverage of Non-Prescription (OTC) Drugs in Medicaid. The Legislature rejects

the MRT’s proposal to allow “modifications” to the list of non-prescription drugs that may

be covered by Medicaid to be filed as regulations without notice and comment.

Rx Copays in Medicaid. The Legislature rejects the MRT’s proposal to increase

copayments from .50 cents to $1.00 for certain OTC drugs. This proposal has been put

forward by the Executive since 2017-18.

Optimize Pharmacist Services. The Legislature rejects the MRT’s proposals to expand

immunizations that may be provided by pharmacists and expand the Collaborative Drug

Therapy Management (CDTM) program involving pharmacists and Article 28 facilities to

the community setting. The Final Budget Agreement also sunsets the existing authority for

pharmacists to provide immunizations under the CDTM, March 31, 2022. Further, the

Legislature rejects the MRT proposal to add pharmacists as participating providers eligible

for reimbursement under the Medicaid smoking cessation program.

Health Planning, Medical Education and Public Health


Telehealth Expansion. The final Budget includes an MRT proposal to expand telehealth

services. It adds care managers in Health Homes, Patient Centered Medical Homes

(PCMH), Hospice, OPWDD settings and Foster Care as allowable providers. In addition,

if federal financial participation is available, DOH is also authorized to add additional

modalities for the provision of telehealth services, including audio-only and on-line portals,

to expand access to care for behavioral health, oral health, maternity care and other high-

need populations.

Social Determinants of Health Pilot Programs. The final budget modifies a

recommendation by the MRT to establish pilot programs for the purpose of promoting

social determinant of health interventions, including: (1) up to 3 projects for medically

tailored meals; (2) up to 5 projects for medical respite programs to provide care to homeless


patients; and (3) a street medicine program to allow D&TCs to bill for services provided

at offsite locations to serve the chronic homeless population. The authorization for these

programs is effective on September 1, 2020. The final budget removed the

recommendation to invest $4.3 million toward the development of Social Determinants of

Health networks.

Maternal Health Promotion Pilot. The final budget includes a recommendation by the

MRT to authorize a program to provide Medicaid reimbursement for prenatal maternal

childbirth education and preparation classes, and transportation for classes, to improve

maternal outcomes and reduce maternal-infant mortality.

Chronic Back Pain Pilot. The final budget includes a recommendation by the MRT to

authorize Medicaid payment for chiropractor services under a pilot program to promote the

use of alternatives to chronic lower back pain by providing access to acupuncture and

chiropractic services.

Diabetes and Chronic Disease Self-Management Pilot. The final budget includes a

recommendation by the MRT to authorize the Diabetes and Chronic Disease Self-

Management Pilot program in one or more counties to improve clinical outcomes.

Payment may be made for education, consultation and peer support services. The

Commissioner is authorized to establish fees for counseling services under the program.

Public Health Programs. The final budget accepts the Executive’s proposal to discontinue

funding for the Area Health Education Center, Ambulatory Care Training, and Health

Workforce Retraining programs funded through HCRA.

Autism Awareness and Research Fund. The final budget accepts the Executive’s

proposal to transfer responsibility for this fund from DOH to OPWDD.

Banning Fentanyl Analogs. The final budget modifies the Executive’s proposal to ban

fentanyl analogs by adding 13 fentanyl analogs to Schedule I and 1 to Schedule II list of

Controlled Substances. The legislature rejected the proposal to authorize the

Commissioner of Health to classify any substance as a State Schedule I Controlled

Substance when already listed on the Federal Schedules of Controlled Substances.

Comprehensive Care Centers for Eating Disorders. The final budget rejects the

Executive’s proposal to transfer responsibility for this fund from DOH to OMH, and

transfers the provisions governing this program to the Mental Hygiene Law.

Accountable Care Organizations. The final budget accepts the Executive’s proposal to

extend the certificates of authority to Accountable Care Organizations (ACOs) through

December 31, 2024.

Health Occupation Development and Workplace Demonstration Program. The

Executive proposes to repeal this program with the elimination of the Health Workforce


Retraining Initiative (HWRI) under HCRA. The Program currently applies to nursing

homes, hospice, CHHAs, and D&TCs.

Children and Youth with Special Health Care Needs (CYSHCN) Program. The final

budget makes technical amendments to the CYSHCN programs within a county with a

population of less than 150,000, where the county health director may serve as the director

of the CYSHCN program.

Adult Cystic Fibrosis Assistance Program. The final budget accepts the Executive’s

proposal to repeal this program.

Environmental Health Program Fee Increases. The Final Budget rejects the increase

in the permit fee for summer camps, but includes the increases proposed by the Governor

for fling realty subdivision plans, licensing and inspection of tanning facilities, and

asbestos training programs.

Tobacco and E-Cigarette Products. The Final Budget includes a series of measures

designed to reduce tobacco use and the use of vapor products, including electronic

cigarettes (e-cigarettes) but with several modifications from the proposals advanced by the

Governor. All measures take effect on July 1, 2020, except the ban on flavored vapor

products, which takes effect 45 days after enactment:

o Flavored Vapor Products: The Final Budget modifies the Governor’s proposal to

bans the sale of all flavored nicotine vapor products, other than tobacco-flavored

by adding a new exemption for any product approved by the federal Food and Drug

Administration (FDA).

o Sale in Pharmacy: The Final Budget modifies the Governor’s proposal to prohibit

the sale of tobacco products, herbal cigarette, electronic cigarette or other vapor

product within a pharmacy by continuing to allow the sale in retail establishments

in which a pharmacy is operated.

o Carrier Oil Restrictions: The Final budget modifies the Governor’s proposal by

limiting DOH’s ability to regulate or prohibit the sale of carrier oils, which are used

to control the consistency and characteristics of vapor products, to those that are

suspected of causing illnesses and have been identified as a “chemical of concern”

by the CDC.

o Shipping Ban on Vapor Products to New York Consumers: The Final Budget

includes the Governor’s proposal to prohibit the shipment of any vapor products in

New York, except to registered vapor dealers.

o Tobacco and Vapor Coupons and Discounts: The Final Budget includes the

Governor’s proposal to add vapor products to the current prohibition of coupons

for tobacco products. It also expands the definition to include vouchers, rebates,

cards, etc. whether paper or digital and prohibits the use of multi-pack discounts,

discounts of multi-product purchases, and sales below the list price.

o Ingredient Disclosure: The Final Budget modifies the Governor’s proposal by

adding toxic metals used in heating elements to the required manufacturer

disclosure to DOH of ingredients in its products, including any “chemicals of

concern” designated by DOH. It also includes the proposal to require disclosure of

any manufacturer research on health effects of its products and ingredients.


o Penalty Increases: The Final Budget modifies the proposed penalty increases

leaving the initial minimum penalty unchanged ($300) and raising the maximum

from $1000 to $1500, instead of the Governor’s proposal to set initial penalties at

$1000-$2000. Subsequent penalties will increase from $500-$1000 to $1000-

$2000, rather than $1500-$3000 proposed by the Governor. The Final Budget

includes the Governor’s proposal to double length of suspension of retailers ability

to sell tobacco and vapor products from six months to one year.

o Vapor Advertising: The Final Budget modifies the advertising restriction to

prohibit advertising for tobacco and vapor products and paraphernalia in store

fronts located within 1500 feet of a school, or 500 feet in New York City.

o Tobacco Displays: The Final Budget rejects the Governor’s proposal to prohibit

the display of tobacco and vapor products and associated paraphernalia in stores

where people under the age of 21 are permitted entrance.

o Clarification of Clean indoor Air Ban: The Final Budget rejects the Governor’s

proposal to clarify that the workplace tobacco and vapor restrictions apply to

outdoor covered areas.

o Tobacco and Vaping Awareness and Control Programs: The Final Budget adds

new provisions expanding tobacco prevention, awareness and control programs to

include vaping and increases the targeted audience to age 21. It also adds a new

vaping prevention, awareness and control program specifically targeted for

students, parents and schools.

Doctors Across New York: The Final Budget includes level funding of $9.065 million for

the Doctors Across New York physician loan repayment and Physician Practice Support

programs.

Maternal and Infant Community Health Collaboratives (MICHC). The Final Budget

includes level funding of $1,835,000 for the MICHC program (prenatal care assistance).

Family Planning Services. The Final Budget includes total base funding of $40.6 million

for Family Planning services. Funding is provided through a sub-allocation from the

Department of Financial Services to DOH ($19.9 million), and two appropriations in DOH

totaling $20.7 million. This is an increase intended to support the loss of $14.2 million

federal Title X funding due to changes in the federal rules governing the program that

forced New York to stop participating in the program. In addition, the Legislature provided

an additional $938,000 in funding to the program.

Nurse-Family Partnership. The Final Budget includes $3 million in base funding for the

Nurse Family Partnership Program. The Legislature also provided an additional $800,000

for the program.

Maternal Mortality. The Final Budget includes level annual funding of $4 million in

funding for reducing maternal mortality. This includes funding for expanding community

health workers through the MICHC program, developing a training curriculum on implicit

racial bias, and creating a data warehouse to help analyze maternal outcomes. It also


includes funding for a Maternal Mortality and Morbidity Review Board and the Advisory

Committee on Maternal Mortality.

Tobacco Programs. The Final Budget includes level funding for tobacco related

programs, including $2.1 million for tobacco enforcement and education, and $33.1 million

for the tobacco use prevention and control program.

Women Infant Children (WIC). The Final Budget includes level funding of $26.2 million

for WIC.

Hunger Prevention and Nutrition Assistance Program (HPNAP). The Final Budget

includes level annual base funding of $34.5 million for HPNAP. The Legislature also

provided an additional $500,000 for the program.

Migrant Health: The Final Budget includes $406,000 in level funding for health centers

that provide primary care to migrant and seasonal farm workers.

Rural Health Care Access and Development: The Final Budget includes the Governor’s

proposal to combine the two separate appropriations for Rural Health Care Access and

Rural Health Care Development into a single $9.4 million appropriation, which reflects

reduction in approximately 25% of total funding. However, the Legislature added $1.9

million in funding to the program, resulting in an overall cut of $1.3 million (about 11%).

Population Health Improvement: The Final Budget reflects level annual funding of $7.5

million for the Population Health Improvement Program, which supports regional

coordination and collaboration between local health providers to implement the State’s

public health Prevention Agenda.

Mental Health & Human Services


Oversight of Medicaid Community Based Services for the Developmentally

Disabled. The Final Budget includes the Governor’s proposal to transfer oversight of

Medicaid funded community-based services, including those provided by Health Homes,

to the Office of People with Developmental Disabilities (OPWDD). Providers of these

services will be subject to OPWDD oversight for all aspects of care delivery and will no

longer be subject to the separate requirement for DOH Criminal History Record Checks.

Pre-Admission Process for Residential Treatment Facilities. The final budget modifies

the Executive proposal to streamline the pre-admission process for children and youth with

mental illness entering residential treatment facilities (RTF’s) by expanding the newly

created advisory board to include family representatives and appropriate medical

personnel, requiring the advisory board to issue an annual report to the Governor and

Legislature, limiting medical necessity checks to be done no sooner than 14 days after


admission to a RTF, and require OMH to consult with the RTF regarding placement of

children and youth at the facility before placement of that child at the facility.

Applied Behavioral Analysis Exemption. The final budget extends the exemption

allowing for OPWDD, OMH and OCFS to employ qualified professionals to provide

services which may otherwise fall within the scope of practice for Applied Behavior

Analysis through July 1, 2025. The exemption is currently set to expire on July 1, 2020.

Sex Offenders Requiring Confinement. The final budget accepts the Executive’s

proposal to establish a separate appointing authority of secure treatment and rehabilitation

center within OMH for the care and treatment of dangerous sex offenders requiring

confinement. Transfers employees substantially engaged in the care and treatment of such

offenders to the secure treatment and rehabilitation center and retains employee geographic

location and civil service title and status.

Comprehensive Psychiatric Emergency Programs (CPEP). The final budget accepts

the Executive’s proposal to extend the authority of the Commissioner of OMH to designate

facilities to operate CPEP, for 4 additional years, provides that triage and referral services

be provided by psychiatric nurse practitioners or physicians, and if the patient is not

discharged within 6 hours, to be further examined by a staff physician. Designated

hospitals are permitted to operate CPEPs at satellite facilities, upon the Commissioner’s

approval. The Legislature rejects the Executive proposal to expand the time a person may

stay in a CPEP program from 72 hours to 96 hours.

Notification Requirements for Closure or Transfer of State Operated Individualized

Residential Alternative (IRA). The final budget extends the notification requirements

upon the closure or transfer of state operated IRAs, until March 31, 2022.

Rejected from the final budget are the following items:

Justice Center Child Abuse Central Registry Check: The final budget rejects the

Executive’s proposal to allow the Justice Center the discretion of checking the Statewide

central register of Child Abuse and maltreatment only when it considers it relevant during

an investigation. Currently, the Justice Center must check it during every investigation.

Housing Nursing Home Transition and Diversion Waiver: The Final Budget includes level

annual funding of $1,842,000 for housing subsidies through the NHTD program.

Bioscience Funding

Stem Cell Funding. The final budget maintains funding for the Empire State Stem Cell

Research Account at $44,800,000.

Spinal Cord Injury Research Fund Account. The final budget continues to allocate $8.5

million for the Spinal Cord Injury Research Program (SCIRP). 4823-4955-5897, v. 1

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