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NY Daily News Op-Ed: A Hit to Safety-Net Health-Care Providers We Must Prevent

New York Daily News, December 14, 2020

By Richard N. Gottfried, Brad Hoylman, Gustavo Rivera and Linda B. Rosenthal

Many of New York’s health-care providers are in crisis. COVID-19 has increased the cost of providing care and cut their income because people are postponing care. This is on top of the fact that many health-care providers that rely on Medicaid have been on painful austerity budgets for years due to government cuts. Then, in April, Gov. Cuomo’s state budget slashed Medicaid even more.

As if that was not enough, one little-noticed action in the budget changes how Medicaid pays for prescription drugs. It will financially cripple our most vulnerable safety net providers and leave their patients without care.

Here’s the story. The vast majority of Medicaid recipients are required to get their coverage, including prescription drugs, from a Medicaid managed care plan. Each managed care plan does its own price negotiating with drug manufacturers. A small number get their Medicaid coverage directly from the state, without a managed care plan, and the state pays directly for their drugs, through its “preferred drug program.”

This year’s state budget “carves out” all prescription drugs from Medicaid managed care coverage and requires all Medicaid patients to get their prescription drugs directly through the state.

Like many small business owners, local baker and trained chef Samantha Hamilton had to figure out how to keep her home-based business, The Sugar Shack Bakery, alive during a…

In many ways, this is a good idea. The state will be negotiating drug prices for a much bigger group of patients than any one managed care plan. This will mean lower prices. And the preferred drug program gives patients and their doctors more choice of drugs than managed care plans do. For years, we’ve advocated getting Medicaid managed care plans out of the picture for drugs. (The NY Health Act, our single-payer bill, would get all insurance companies out of the whole picture for all of us, but that’s for another article.)

However, there is a serious problem in this plan. Community health centers, HIV providers, sexual health clinics, many rural hospitals and other safety net providers currently participate in a federal program called 340B, which allows them to purchase prescription drugs at a significantly reduced price. These providers rely on their 340B savings to “stretch” their Medicaid funding to pay for health care for the people they serve. The catch is, under federal law, this only works for drugs purchased under Medicaid managed care.

340B was created in 1992 by Congress “to stretch scarce…resources as far as possible, reaching more eligible patients and providing more comprehensive services.” It guarantees dramatically lower drug prices for the providers that are covered. In New York, these providers are all non-profit groups.

The money trail is complicated (like almost everything involving prescription drugs), but the bottom line is: If New York State shifts Medicaid drug coverage away from managed care, the way it was done in the budget, these non-profit safety-net providers will lose hundreds of millions of dollars they now use for patient care.

If this change goes ahead, the state and the federal government will pocket the savings. The benefit will no longer help the safety net providers the 340B program was created to help. How the Cuomo administration will use the money is anybody’s guess.

We believe it’s possible to change the new carve-out law to protect the 340B providers and HIV health plans. But it will take time for the Health Department, legislators, health-care providers and HIV plans to develop, evaluate and implement a successful carve-out that does not diminish access and quality for programs and the vulnerable people they serve.

That is why we’ve introduced a bill to have the carve-out go ahead for the bulk of Medicaid, but to delay it for three years specifically for 340B providers. The Legislature and the governor have to pass this bill before the full carve-out goes into effect on April 1, 2021. Otherwise, vulnerable health-care providers that serve vulnerable New Yorkers will suffer serious financial harm, and many will not survive.

Gottfried, chair of the Assembly Health Committee, represents parts of the West Side and Midtown Manhattan. Rivera, chair of the state Senate Committee on Health, represents parts of the Northwest Bronx. Hoylman represents parts of Manhattan in the state Senate. Rosenthal, chair of the Assembly Committee on Alcoholism and Drug Abuse, represents the Upper West Side and parts of Hell’s Kitchen.

Press release: Assembly Manhattan Delegation Releases Report Urging NYCHA Funding in State Budget

Today, the Manhattan Assembly delegation issued a report, NYCHA Crisis: Finding Tenant Solutions, that details the living conditions of several NYCHA developments across Manhattan, and urges New York State to commit substantial and consistent funding for NYCHA’s most urgent capital needs.

“Written prior to the COVID-19 State of Emergency, the pandemic further highlights that, for over 400,000 NYCHA tenants in substandard housing, the public housing crisis is a public health crisis,” said Assembly Member Richard N. Gottfried, the dean and Chair of the Manhattan Assembly Delegation.  “New York State can act now with serious funding commitments and lead the way towards the restoration of NYCHA.”

NY Post: Cuomo panel recommends $400M in hospital cuts as coronavirus pandemic rages

It’s unclear whether the Legislature or even the governor, who must approve the changes as part of the state budget, have the stomach to cut spending to medical facilities grappling with an expected wave of COVID-19 patients and a potential health catastrophe, as well as rolling back Medicaid services to patients.

“It’s never a good time to cut health care, especially when the only rationale is to fit into an artificial limit. It’s even more wrong in the midst of a growing epidemic,” said Assembly Health Committee Chairman Richard Gottfried (D-Manhattan).

City & State: Cuomo allies are aplenty on the Medicaid Redesign Team

Assemblyman Richard Gottfried and state Sen. Gustavo Rivera, who lead the health committees in the state Legislature, both expressed disappointment that NYC Health + Hospitals, the city’s public hospitals system, was left out especially given that New York City is expected to be hit particularly hard under the governor’s proposal to shift Medicaid costs onto localities. 

“As they say, ‘if you’re not at the table, you’re on the menu,’” Gottried said in a statement. A week earlier, he and Rivera had criticized the governor and his administration for not providing updates about the selection for the team.

Daily News: ‘Nothing more than political theater’: Lawmakers raise doubts about Cuomo’s $6 billion Medicaid budget gap

ALBANY — Skeptical lawmakers skewered state health officials Wednesday as they sought details on Gov. Cuomo’s plan to tackle New York’s projected $6 billion Medicaid-induced budget deficit.

“It is a little bit concerning, scratch that, a lot, very concerning that you are coming to a public hearing on Jan. 29 and you’re telling us that by April 1 we have to just accept something that’s put together by a magical crew of folks,” Sen. Gustavo Rivera (D-Bronx), the chairman of his chamber’s health committee, said as he peppered state Health Department commissioner Howard Zucker and state Medicaid Director Donna Frescatore with questions about the proposal.

WSKG: Tensions Surface At Hearing On Proposed Cuts In Medicaid

ALBANY, NY (WSKG) – A lack of information on how Governor Andrew Cuomo plans to cut billions out of state-funded health care programs led to some tense moments at a legislative budget hearing Wednesday.

Cuomo, in his budget address, said he will convene a commission to decide how to cut $2.5 billion in Medicaid spending to help close a $6 billion budget gap without harming recipients.

But that commission, known as the Medicaid Redesign Team, won’t report back until sometime in March, potentially just weeks or even days before the state budget is due, leaving the Legislature little time to analyze the proposals.

Buffalo News: The Medicaid muddle: Cuomo’s budget proposal creates worry and confusion

Cuomo said the MRT panel should hold counties “harmless” in its plan and that Medicaid recipients should not see benefits affected. What’s that leave? Real cuts to providers? Tax hikes on private insurance plans? New ways to reduce waste or fraud?

“I’m incredibly concerned that the governor’s office has yet to release the necessary details we need to assess the potential impact on our localities’ Medicaid share,” said Sen. Gustavo Rivera, a Bronx Democrat who heads the Senate health committee. He said Cuomo’s fiscal overview suggests New York City – and “particularly residents of my district” – will feel end up seeing actual Medicaid cuts.

Gottfried, the Manhattan lawmaker, is even more pointed. “It’s hard to believe that it isn’t a sham,’’ he said of the MRT route. He thinks it’s quite possible Cuomo’s budget team already has specific plans that will be rubber stamped by the MRT. Gottfried served on the 2011 MRT, and he eventually praised the end product.

NY Post: Cuomo proposes 3 percent tax on new medical facilities

Many health care firms looking to erect new medical facilities face a fat tax hike under Gov. Andrew Cuomo’s $178-billion budget plan.

But health care advocates and analysts said the 3 percent surcharge is a sick tax that should be rejected.

“This does not seem to be fully thought through. In the Public Health Law, ‘hospital’ is a broad term that includes not only things we ordinarily call hospitals, but also community health centers, clinics, nursing homes, etc,” said Assembly Health Committee Chairman Richard Gottfried (D-Manhattan).

Bloomberg Law: New York’s Medicaid Budget Is Bleeding; Some Want Cash Infusion

The governor, in his Jan. 8 address, called the current situation “unsustainable” and referenced the state’s Medicaid Redesign Team, or MRT, which he created in 2011.

Assembly Health Committee Chairman Richard N. Gottfried (D) called the MRT largely a “sham.”

Many of the problems the state is experiencing came from changes made by the redesign, like moving toward managed care plans, he said. “I believe that the only responsible answer to this increase in Medicaid spending is on the tax side of the ledger.”

Bloomberg News: New Yorkers to Pay 20 Percent Sales Tax on Vaping Products

“There’s certainly no reason why we should be taxing different nicotine delivery systems differently, whether they’re tobacco cigarettes or e-cigarettes,” said Assemblyman Richard N. Gottfried (D), who chairs the Health Committee. “The experience is pretty clear that taxing the product discourages use.”