Final Budget DRP Averts Major Health Care Cuts and Taxes

The state Senate and Assembly this morning approved a revised deficit reduction plan (DRP) that provides more than $2.7 billion in overall budget savings and mitigates most of the previously proposed health care cuts and taxes. The Governor’s original DRP proposal would have reduced Medicaid payments to providers by more than $800 million, and later proposals included a hospital gross receipts tax and reduction in nursing home rebasing funds. None of these items are in this final package.

“By significantly reducing the magnitude of health care cuts, the Legislature has demonstrated its commitment to working to protect New York’s fragile health care system in these very difficult economic times,” commented HANYS’ President Daniel Sisto. “We stand ready to work with lawmakers as they prepare to address the state’s budgetary issues going forward.”

Importantly, the final DRP did not include the following harmful provisions that had been proposed:

• No across-the-board Medicaid cuts as originally proposed by the Governor in October.
• No increase in the hospital gross receipts tax.
• No reduction in nursing home rebasing funds.

Included among the health care provisions of the DRP are:

• The elimination of the 2010 trend factor (inflationary update) for January 1, 2010 - March 31, 2010, currently estimated at 1.7%, for hospitals, nursing homes, and home care agencies (provider impact: $69 million).
• A delay in some Health Care Efficiency and Affordability Law for New Yorkers (HEAL NY) funding awards due prior to April 1, 2010 until the later of April 1, 2010 or the enactment of 2010-2011 state budget, estimated to save the state $45 million.
• Modification of the timeframe associated with medication pre-fill for home care services, from eight to 15 days.
• A reduction of state funds related to Timothy’s Law to more accurately reflect costs.

HANYS thanks its members for their tremendous grassroots advocacy over the past weeks, and encourages members to thank their legislators for substantially lessening the burden of this DRP on health care.

The Governor has indicated that he believes this DRP package did not go far enough to resolve the state’s fiscal issues. Today, he announced a plan to direct the Division of Budget to reduce state aid payments administratively to address anticipated budget shortfalls. It remains unclear how such actions would affect health care funding. Contact: Nicholas Henley