of funds from the Tobacco Control and Insurance Initiatives Pool to the

State Special Revenue Fund-Other, HCRA Transfer Fund-Medical Assistance

Account to fund specified percentages of the State share of Family

Health Plus program expenditures.

Section 2 of this bill requires the State to assume the local share of

the Family Health Plus program over the next two years.

Sections 3-6 of this bill direct the Commissioner of Health, the Super-

intendent of Insurance and the Commissioner of Housing and Community

Renewal to implement a comprehensive education and marketing campaign on

the availability of long term care insurance coverage, New York State

partnership for long term care insurance coverage programs, and the use

of reverse home mortgages to finance long term care costs. The Long Term

Care Education and Marketing program is financed through five million

dollars from the Health Care Reform Act (HCRA).

Section 7 of this bill directs the Department of Health to apply for a

federal Medicaid waiver which would allow the State to provide home and

community based services to individuals who would otherwise require care

in a nursing facility. The Nursing Facility Transition and Diversion

program would assess patients currently residing in nursing homes to

determine whether more appropriate care could be provided within the

community.

Section 8 of this bill authorizes the Commissioner of Health to imple-

ment mandatory Medicaid managed care in rural areas of the State,

subject to Federal approval.

Sections 9-12 of this bill amend the tax law increasing the existing

Long Term Care Insurance Tax Credit from ten percent to twenty percent,

effective for the tax year beginning in 2004.

Sections 13 and 14 of this bill direct the New York State Department of

Insurance and the Department of Banking to study and develop long term

care investment products for insurance policy holders and homeowners.

Section 15 of this bill directs the Commissioner of Health and the

Director of the State Office for the Aging to jointly oversee develop-

ment, implementation and maintenance of "SeniorNet," a centralized,

single point of information on the full range of long term care services

available to seniors and disabled individuals in New York. '

Sections 16-21 of this bill establish a Preferred Drug List (PDL) and

Prior Authorization program for both Medicaid and EPIC beneficiaries.

Section 22 of this bill requires recipients of the Family Health Plus

program to make co-payments, in varying amounts by service, for health

care services received.

Sections 23 and 24 of this bill establish an asset test, similar to that

in use by the Medicaid program, for applicants to the Family Health Plus

program.

Section 25 of this bill increases the waiting period for eligibility for

the Family Health Plus program from the current six month requirement to

twelve months.

Section 26 of this bill modifies the existing Family Health Plus program

benefits package to more closely resemble the benefits provided by the

Healthy NY program.

Section 27 of this bill establishes a "crowd out" provision which

prevents Federal, State, County or Municipal employees, as well as

anyone employed by a business with fifty or more employees, from apply-

ing for or receiving benefits under the Family Health Plus program.

Sections 28 and 29 of this bill eliminate facilitated enrollment funding

for the Family Health Plus program.

Section 30 of this bill authorizes the Department of Health (DOH) to

establish up to six Disease Management demonstration programs throughout

the State for medicaid recipients with chronic health problems. Enroll-

ment in a demonstration program will be voluntary. In addition, DOH

will monitor and report on these programs.

Section 31 of this bill directs HCRA funds (in an amount of up to $5

million for the period January 1, 2004 to December 31,2004 and up to

$2.5 million for the period January 1, 2005 to June 30, 2005) be used to

support disease management demonstration programs.

Sections 32-34 of this bill establish a Prescription Drug Discount

demonstration program, through use of Section 340B of the Federal Public

Health Service Act, involving at least three correctional facilities,

work release facilities or alternate correctional facilities.

Section 35 of this bill provides for effective dates and ties the take

over of local Family Health Plus program costs to enactment of all other

provisions of this bill and future enactment of sufficient cost contain-

ment measures to the Medicaid program.

JUSTIFICATION: In the 38 years since its inception, the Medicaid

program in New York State has evolved from a health insurance program

for the needy to a program offering a multitude of services to a wide

range of population groups. The result is that New York State's Medicaid

program cost an estimated $41 billion in 2003. Over the past three

years, New York's State share alone has grown at an average annual rate

of 10.5 percent while inflation has only increased at an average annual

rate of 2.2 percent throughout the same time period. At the local level,

Medicaid spending has increased in excess of 34 percent over three

years, from $3.7 billion in 1999 to $4.9 billion in 2002. This skyrock-

eting growth in New York's Medicaid program poses the single most daunt-

ing fiscal challenge to our State and local governments.

The growth in Medicaid spending, coupled with problems associated with

access to quality care and lack of accountability, provide the most

compelling evidence that New York's Medicaid program lacks a sensible

and coherent set of public policy principles to guide it. For too long,

the Medicaid crisis has been addressed only during budget deliberations

in the context of specific budget recommendations. Cost containment

proposals, which do not address the systemic problems of the program,

are advanced and providers and advocates successfully press their cases

defeating them. The debate has been consistently focused on appropri-

ations, institutions, and interests. Typically after budget restorations

are made, little or no discussion takes place regarding how well the

system works, the burden placed on the taxpayers who fund the program,

or what level of quality and value is purchased by the State on behalf

of those who depend on Medicaid's services. As the amount of money spent

on Medicaid soars, providers contend they are inadequately compensated

and pushed to the edge of insolvency, opting out of the program. At the

same time, more than seventy-five percent of all Medicaid costs go to

finance care for the elderly and disabled in a long term care system

where patients have too few choices and providers are hampered by too

many regulations.

This bill rejects the traditional approach of incremental reforms which

yield nothing but the certainty that things will never change. As such,

this bill proposes a fundamental restructuring of New York's Medicaid

program by concentrating on the interests of two long ignored groups:

Patients, who have every right to expect quality and humane care; and

Taxpayers, who have every right to expect efficiency, value, and sound

judgment in the expenditure of public funds.

LEGISLATIVE HISTORY: New Bill.

FISCAL IMPLICATIONS: This bill has a cost to the State of $43.2

million in SFY 2004-05. Local governments will save $185 million in SFY

2004-05.

EFFECTIVE DATE: Immediately.