TO:
All Trustees

The State Legislature began passing budget bills late last night after round-the-clock negotiations. Trustee advocacy played a key role in the positive outcomes we have achieved. At the time of this writing, budget bills have been printed and the Legislature is working to resolve other budget issues. The following reflects some of the key provisions of the final health budget agreement:

Hospital Provisions

• increases hospital outpatient Medicaid funding by $56 million, effective December 1, 2008, through March 31, 2009, with various distributions to clinics, ambulatory surgery, and emergency rooms;
• to finance the hospital-based ambulatory care increases, inpatient reimbursement will be reduced by $51 million across-the-board, effective December 1, 2008;
• defers for a year the proposal to rebase the inpatient reimbursement system and creates a study group to examine the issue of rebasing and other reform;
• changes the Medicaid outpatient payment mechanism, also effective December 1, 2008, to one based on Ambulatory Payment Groups (APGs).
• increases physicians' fees, diagnostic and treatment center rates and specific initiatives by approximately $45 million;
• restores Graduate Medical Education (GME) funding;
• restores New York City Emergency Medical Services funding as inpatient payments;
• restores hospital workforce recruitment and retention cuts;
• reduces the 2008 hospital trend factor by 35%;
• includes the Doctors Across New York proposal and provides funding for the program at $15 million from the GME pool for the first year (2008);

Continuing Care Provisions

• fully restores the promise made to nursing homes on the nursing home rebasing proposal enacted two years ago;
• partially restores nursing home recruitment and retention funds that were cut last year in the State Fiscal Year 2007-2008 budget agreement;
• substantially restores the proposed home care cuts;
• accepts the proposed nursing home and home care trend factor cuts of 35%;

Other Provisions

• repeals the Department of Health bond issuance charge of 0.3% that recently became a significant problem for both the State Dormitory Authority and Industrial Development Agency financings;
• accepts a partial increase of the covered lives assessment on third-party payers, worth $70 million;
• extends the Health Care Reform Act through March 31, 2011; and
• provides $7 million for local health planning grants pursuant to a request for proposal for examining racial and ethnic disparities, consumer needs assessment, long-term care needs, and out-migration of services.

For additional and more specific details, I encourage you to contact your hospital chief executive.

I want to thank trustees for your devoted advocacy this year; whether it was attending the HTNYS/HANYS Leadership Advocacy Day and making legislative visits, or writing letters to your legislators, your efforts have been tremendously effective in helping us achieve many of the successes we did in this year's state budget.

Please take the time to thank the legislative leaders, Senate Majority Leader Joseph Bruno, Assembly Speaker Sheldon Silver, and Senator Kemp Hannon and Assemblyman Richard Gottfried and your local legislators for their hard work in ensuring that New York's hospitals, health systems, and continuing care providers can continue to put patients first.

Thank you for your assistance, continued support, and involvement.