Savings Initiatives – Health Care

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The 2007-08 savings plan includes the first step in a multi-year plan to reform the State's health care system. Savings are projected to total more than $1 billion in the aggregate. The plan reduces the growth in reimbursement rates paid to most providers to strengthen statewide anti-fraud activities; reduces costs of prescription drugs; and enhances management of high-cost beneficiaries. The following table itemizes the savings from these initiatives.

Medicaid/HCRA/Health/Mental Hygiene Savings Plan
(millions of dollars)
  2007-08 2008-09
  Executive
Proposal		 Enacted
Budget		 Executive
Proposal		 Enacted
Budget
Change 2007 Reimbursement Rates 350 143 389 154
Redirect Subsidies to High-Need Medicaid Hospitals 81 81 105 105
Pharmaceutical Savings 240 199 301 247
Enhance Management of High-Cost Beneficiaries 5 5 43 43
Strengthen Anti-Fraud Capabilities 104 134 109 139
Other General Fund Medicaid Savings (net of avails) 215 183 95 57
Other HCRA Savings 219 201 544 510
Public Health 39 39 33 33
Mental Hygiene 195 192 111 108
 
Total Medicaid/HCRA/Health/Mental Hygiene Savings 1,448 1,177 1,730 1,396
 
HCRA Savings in Other State Funds (147) (120) (776) (729)
 
Net General Fund Savings 1,301 1,057 954 667

Specific savings initiatives include:

  • Reduce Rates/Redirect Subsidies: The Enacted Budget reduces the automatic inflationary rate increases for hospitals and nursing homes by 25 percent, freezes managed care premium payments, and revises subsidy payments to redirect funding to high-need facilities.
  • Reduced the Cost Medicaid Pays for Drugs: Reduces reimbursement rates for pharmacies; increases enrollment in the Medicare Part D program; and expands the applicability of the Preferred Drug Program to the Elderly Pharmaceutical Insurance Coverage (EPIC) program.
  • Enhanced Management of High-Cost Beneficiaries: Implements a series of new demonstration projects to help provide cost-effective and coordinated care to high-cost beneficiaries.
  • Anti-Fraud: Enactment of a False Claims Act covering Medicaid, audit staffing increases, greater use of technology, and stepped-up audit procedures will be put into place to generate overall financial savings.
  • Click here for more detail.

Other savings include maximizing Federal aid, an increase in the covered lives assessment paid by insurance carriers, and additional health care conversion proceeds.  The Enacted Budget does not continue the 0.35 percent assessment on hospital revenues beyond March 31, 2007.

Other Savings

Revenue Loophole Closers

NOTE: The information on this page is taken from the 2007-2008 Financial Plan.

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