Department of Health

The budget enacted by the Legislature makes the following changes to the Executive Budget (analysis as of March 30, 2006):

· Decreases the All Funds appropriation by $1.8 million, to a total of $4.65 billion. This decrease includes an overall $1.5 million decrease in General Fund appropriations and an overall $300,000 decrease in Special-Revenue Other appropriations. However, the summary table included in the appropriation bill indicates an All Funds appropriation that would result in an increase in funding when compared to the Executive proposal. This error appears to be correlated to a $4.4 million addition of funding located within the Local Assistance section of the budget within the AIDS Institute Program, rather than an actual addition to the department’s State Operations budget.

· Decreases the Executive’s proposed Administration and Executive Direction Program’s non-personal service appropriation by $1.5 million, a $610,000 decrease from the program’s non-personal service appropriation in the enacted SFY 2005-06 budget.

· Decreases the Center for Community Health Program’s maintenance undistributed appropriation by $2 million by eliminating the appropriation for services and expenses related to an early intervention fiscal agent. There is still a $4.9 million maintenance undistributed appropriation for other Center for Community Health programs.

· Decreases the Office of Managed Care Program Special Revenue Other appropriation by $300,000, which is due to the elimination of funding for the new Managed Care Review account.

· Adds $2 million to the Office of Medicaid Management Program’s maintenance undistributed appropriation for activities related to the maximization of the Federal Medicare Part D drug program.

· Includes Article VII language that will continue Medicaid wrap-around coverage for dual-eligible individuals, and implements an automatic enrollment of low-income EPIC recipients in Medicare Part D, with an option to decline enrollment.

· Accepts the Governor’s allocation of funds to the Roswell Park Cancer Center, including the Executive’s proposal that a portion of funds from the anti-tobacco program be allocated to Roswell Park for cancer research.

· Rejects the Governor’s proposal to eliminate the Family Health Plus for employees working in businesses with more than 100 employees (Anti-Wal-Mart provision).

· Establishes the Office of Health E-Links within the Department of Health, which will be headed by a state coordinator to “enhance the adoption of an interoperable regional health information exchange and technology infrastructure.” The only funding for this program was located under the Aid to Localities section of the DOH appropriation bill.

· Adds $10 million for “displaced hospitals workers” in the Local Assistance section of the DOH budget. According to previous reports this funding will be utilized to address the issue of worker dislocation as a result of any recommendations of the HEAL 21 Commission (hospital closing commission).

The Senate and Assembly made the following changes to the Executive Budget (analysis as of March 20, 2006):

· Reduced the Administration and Executive Direction Program’s non-personal service appropriation by $1.5 million.

· Reduced the Wadsworth Lab, non-personal services appropriation by $2.5 million.

· Included $10 million for the “Hospital Restructuring Incentive Program” in the Local Assistance section of the DOH budget. According to the Report of the Senate Finance Committee this program and funding will be utilized to address the issue of worker dislocation as a result of any recommendations of the HEAL 21 Commission (hospital closing commission).

· Rejected the Executive proposal for a $5 million non-personal service appropriation to Wadsworth Labs for the purchase of critical equipment. The Report of the Senate Finance Committee states that the Senate is calling for a “delay” in the purchase of equipment for the laboratories to realize $2.5 million in General Fund savings.

· Accepted the Governor’s proposal to eliminate eligibility for Family Health Plus for employees working in businesses with more than 100 employees (Anti-Wal-Mart provision).

· Removed the broad language used in the Executive’s Article VII budget proposal in regards to “a portion of such funds” from certain funding pools being allocated to Roswell Park Cancer Institute. The Senate’s Article VII budget proposal indicates that $15 million be allocated to Roswell for Cancer Research in 2006 and 2007, and $25 million be allocated for capital project costs.

· Rejected the proposed cigarette tax increase from $1.50 to $2.50 per pack, which would have generated $260 million in net HCRA revenue (Report of the Senate Finance Committee). In the Executive Budget a portion of the funds that this tax increase would have generated would be the source of the $15 million allocated to Roswell Park Cancer Institute for Cancer Research.

· Rejected the Executive’s Article VII legislation proposal that would have made permanent the financing of the Physician Profiling Program from the Office of Professional Medical Conduct (OPMC) account, and authorizes the use of funds from the OPMC account for one year. (Senate Finance Committee Report)

· Extended the transition period to the Medicare Part D Program until December 31, 2006. According to the Senate Finance Committee Report the Senate provides the Department of Health with the authority to appeal, on behalf of the recipients, any adverse decisions regarding prescription drug coverage made by the various Medicare Part D plans.

· According to the Senate Finance Committee Report the Senate budget proposal includes $75 million to maintain voluntary enrollment for EPIC enrollees in Part D (the Executive proposal called for mandatory enrollment).

· Rejected the Executive’s proposal to eliminate eligibility for Family Health Plus for employees working in businesses with more than 100 employees (Anti-Wal-Mart provision).

· Included $10 million in funding for services and expenses in the Local Assistance section of DOH budget, related to “displaced health care workers” due to the restructuring that will be recommended by the Commission on Health Care Facilities in the 21^st Century (hospital closing commission).

The 30 day amendments to the Executive Budget recommend the following changes (analysis as of February 8, 2006):

· Adds an appropriation of $18 million for the Roswell Park Cancer Institute in the Economic Development Program, which is located within the Urban Development Corporation’s budget. While the budget does not indicate the purpose of the allocation, the Governor’s 30-day Amendment Press release refers to this funding as a capital appropriation to “help outfit the top two floors of its main building.”

· Creates new appropriation of $580,000 within the Administration and Executive Direction Program. The increase is in Maintenance Undistributed funding for services and expenses of the statewide planning and research cooperative system for the purpose of supporting data collection from emergency departments and ambulatory care facilities. This appropriation can be used to hire State employees or consultants. How the department intends to use this funding should be explored at statewide agency labor management.

· Decreases the appropriation for the Health Care Financing Program by $1.93 million: a $1.9 million decrease in Personal Service funding and a $322,000 decrease in Non-Personal Service funding. The Division of Budget states this reduction is due to the shift of 25 positions to the Health Care Standards and Surveillance Program.

· Increases the appropriation for the Health Care Standards and Surveillance Program by $2.65 million: a $1.61 million increase in Personal Service funding and an increase of $1.04 million in Non-Personal Service funding. The Division of Budget states the addition of $1.93 million to this program is to fund the shift of 25 positions from the Health Care Financing Program; and the remaining $720,000 addition is for contractual services to operate the new Centralized Hospital Complaint Intake Program.

· Increases the overall appropriation of the Office of Managed Care Program by adding a $300,000 maintenance undistributed appropriation. This appropriation is due to the creation of a new Managed Care Review account (Special Revenue-Other) to collect fees charged for the review of managed care organization mergers and acquisitions. This appropriation can be used to hire State employees or consultants. How the department intends to use this funding should be explored at statewide agency labor management.

· Eliminates the $3.7 million Maintenance Undistributed Program, Recoveries and Revenue account. The funding is transferred from the Recoveries and Revenue Account to the Office of Medicaid Inspector General.

· Adds language to the Health Care Reform Act Program – Aid to Localities appropriation – to clarify that grants may be made available to State operated facilities for services and expenses related to the worker retraining program; and also language to make funds available for administrative expenses to implement the anti-tobacco program.

· Adds language to the Medical Assistance Program – Aid to Localities appropriation – to authorize the transfer of Local Assistance funds to State Operations for the education of dual Medicaid and Medicare eligibles regarding the Medicare Part D program. The Legislature overrode the Governor’s veto of legislation requiring the State to pick up the cost of uncovered drugs for Medicare and Medicaid “dual eligible” recipients. In the 30-day amendments the governor states that he reserves the right to submit additional amendments to cover the cost of this legislation.

· Modifies Article VII language to establish a Prescription Drug Retail Price list within the purview of the State’s Attorney General Office rather than the Department of Health.

· An increase of 81 FTEs in SFY 2006-07 from the adjusted 3/31/06 FTE level (this figure excludes the Medicaid Audit and Fraud Prevention program, which can now be found under the newly created Office of the Medicaid Inspector General (OMIG) – an independent entity within the Department of Health (DOH)).

§ In SFY 2005-06 there was a net increase of 311 FTEs during the fiscal year than the FTE level authorized in the enacted SFY2005-06 budget (4 more FTEs in Administration & Executive Direction, 37 more FTEs in Community Health, 5 more FTEs in Elderly Pharmaceutical Insurance Coverage, 47 more FTEs in Environmental Health, 25 more FTEs in Health Care Financing, 51 more FTEs in Health Care Standards and Surveillance, 16 more FTEs in Laboratory and Research, 126 more FTEs in the Office of Medicaid Management).

§ Proposed increases in SFY 2006-07 are in the following programs: 22 FTEs in Community Health; 5 FTEs in Elderly Pharmaceutical Insurance Coverage; 11 FTEs in Health Care Financing; 47 FTEs in Laboratories and Research; 6 FTEs in Managed Care; and 6 FTEs in the Office of Medicaid Management. Proposed decreases in SFY 2006-7 are in the following programs: 6 FTEs in Environmental Health and 10 FTEs in Health Care Standards and Surveillance. According to the Assembly’s 2006 Yellow Book, the changes in the DOH workforce will include adding 104 new positions and eliminating 23 positions associated with “nonessential programs.”

§ Proposes to move responsibility for regulating industrial uses of radioactive material and radiation equipment, with the exception of lasers, to DOH. This transfer includes 7 FTE positions. We believe these positions are located in the Community Health program but this issue needs to be clarified in labor/management.

· An All Funds appropriation of $4.6 billion, a decrease of $72.6 million (-1.5%). However this decrease is representative of the shift of funds that were appropriated to the Medicaid Audit and Fraud Prevention program previously under DOH, to the programs new location under the newly created OMIG. Together DOH and DOH-OMIG have an All Funds appropriation of $4.7 billion, an increase of $22 million (.5%).

· The establishment of an independent Office of Medicaid Inspector General. The creation of this new office will involve the transfer of existing audit and investigative resources from various State agencies to OMIG.

· An increase of $5.2 million in personal service funding agency-wide. Significant increases include: Health Care Financing (+$3,202,000) and Wadsworth Laboratories and Research (+$2,086,000).

· Wadsworth Labs will also be receiving $5 million for the purchase of critical equipment (reflecting the increase in nonpersonal services), and $10 million for capital improvements.

· A decrease of $34 million in Federal funding, and a net increase of $4.8 million in Special Revenue-Other funding for the Elderly Pharmaceutical Insurance Coverage (EPIC) program, an overall decrease of $29.2 million for EPIC. Changes to the EPIC program include: mandatory enrollment of EPIC enrollees in Medicare Part D; a reduction in the pharmacy reimbursement rate; and the elimination of drugs for erectile dysfunction.

· A decrease of $2.2 million in the Health Care Standards & Surveillance Program. The reductions can primarily be attributed to a decrease in the following areas: Personal Service funding (-$1,008,000), Maintenance Undistributed funding (-$227,000), Special Revenue-Other (-$732,000) and Special Revenue-Federal (-$300,000). A Federal funds appropriation of $300,000 for the Criminal Background Check account (Special Revenue-Federal was not appropriated for 2006-07. The reductions in funding for Health Care Standards reflect the recent reduction in FTEs and could be related to the creation of OMIG. An explanation for the reductions in this program should be addressed in Labor-Management.

· An increase of $2.9 million in funding for the Health Care Finance program. This increase includes: Personal Service funding (+$3.2 million) and Non-Personal Service funding (+$405,000). A decrease in Special Revenue-Other funding (-$659,000) can be attributed primarily to the reduction in Non-Personal service funding in the Health Care Finance program’s Hospital & Nursing Home Management Account and the Provider Collection Monitoring Account, offset by slight increases in both accounts’ fringe benefits.

· An increase of $11.2 million in the Center for Community Health program. Significant increases include Non-Personal Service funding (+$1.5 million); Maintenance Undistributed funding (+$6.9 million) for an early intervention fiscal agent, regional perinatal data centers and the hospital acquired infection reporting program; and Special Revenue-Other (+2 million) primarily in the WIC Civil Monetary Account.

· A decrease in the Institutional Management Program of $10.6 million. Decreases include the following:

--$892,000 or 3.5% decrease in the Lower Hudson (Montrose) Veterans Home Account

The decreases should be addressed with Labor-Management. Additionally, the purpose for the increase in NYC Veterans Account of $1.5 million (6.5% increase) should be clarified.

· An increase of $2.8 million in contractual services within the Medicaid Management Information System program. This is evidence of a possible increase in contracting out and should be explained in Labor-Management.

· Article VII legislation that makes permanent the financing of the Physician Profiling Program from the Office of Professional Medical Conduct (OPMC) account.

· Article VII legislation that expands State Planning and Research Cooperative System (SPARCS) to include data from hospitals and clinics.

· Article VII legislation provides further amendments to Health Care Reform Act (HCRA) programs and allocations. This includes: increasing the cigarette tax ($15 million of which is allocated to Roswell Park cancer research); closing Family Health Plus eligibility loopholes for large employers and increasing co-pays; and allocating the second $250 million installment for HEAL NY ($25 million allocated to Roswell Park for capital projects). Additionally, this includes $78 million in direct support for the Roswell Park Cancer Institute. Other HCRA actions included reductions in funding for worker retraining; shifting support for family planning services to Temporary Assistance to the Needy Families (TANF) funding; and eliminating funding LTC Revitalization. HCRA is authorized until June 30, 2007.

· Article VII Medicaid Reform legislation includes provisions which may affect State operated nursing homes in the long term, including: collecting delinquent assessments; rate changes to discourage inappropriate billings that shift costs to the State; paying Adult Day Health Care programs actual costs; requiring facilities to offset inflation; continuation of the 6% reimbursable assessment on nursing home receipts; and phasing in over a five year period, a new nursing home reimbursement methodology that will update the 1983 base year with 2003 as the base year (this proposal is contingent on: requiring a Medicaid only case mix in calculating the rates and the elimination of supplemental payments for hospital based nursing homes and facilities with more than 300 beds). FTE levels are not affected by these proposals in the current year, but they should be evaluated for their long-term impact.

· Article VII legislation identifies the following as “non-essential” programs that would be repealed: the posting of a prescription drug retail price list on DOH website; license and regulation of Tattooing and Body Piercing establishments; and regulation and inspection fees for the Durable Home Medical Equipment. Reflex Sympathetic Dystrophy Syndrome Outreach program and the Health Care and Wellness Education Outreach--Lymphedema program are modified to be funded under other DOH education and outreach activities, and will be completed based upon program priorities. The budget attributes savings from the elimination or modification of these programs at $4.5 million. It should be determined at Labor-Management if PEF members are associated with any of these programs, and if so, how they will be affected.

· Article VII legislation to further reduce Medicaid costs. This includes: elimination of rehabilitation services to illegal immigrants; eliminating loopholes that allow individuals to refuse to contribute any of their income and assets towards the cost of long term health care for a spouse; increasing the use of Medicaid managed care for the dual eligible and SSI population; requiring co-payments in Family Health Plus; prohibiting coverage for individuals working for business with more than 100 employees; cost containment proposals for pharmaceutical costs, including bringing pharmacy reimbursement more in line with actual costs, and eliminating funding for erectile dysfunction drugs; and providing a transition period for those eligible for both Medicaid & Medicare to the new Medicare prescription drug program, a 6-month period (through July 1, 2006) during which Medicaid program will continue to fund all medically necessary drugs in the event that they are not available under Medicare Part D. (Medicaid cost containment provisions related to hospitals are detailed in the SUNY Budget analysis)

Department of Health
Program Details-State Operations
	Enacted	Proposed	Enacted	Change in	Percent
Program	2005-06 Budget	2006-07 Budget	2006-07 Budget	Appropriation	Change
All Funds	$4,718,196,000	$4,647,206,000	$4,645,406,000	($72,790,000)	-1.5%
General Fund	$169,565,000	$167,242,000	$165,742,000	($3,823,000)	-2.3%
Special Revenue - Federal	$4,054,898,000	$3,979,144,000	$3,979,144,000	($75,754,000)	-1.9%
Special Revenue - Other	$493,723,000	$500,810,000	$500,510,000	$6,787,000	1.4%
Enterprise Fund	$10,000	$10,000	$10,000	$0	0.0%

Admin & Exec Direction Pgm	$63,788,000	$67,471,000	$65,971,000	$2,183,000	3.4%
Personal Service	$7,463,000	$7,463,000	$7,463,000	$0	0.0%
Nonpersonal Service	$13,600,000	$14,490,000	$12,990,000	($610,000)	-4.5%
Maintenance Undistributed	$0	$580,000	$580,000	$580,000	100.0%
Special Rev - Fed (SRF)	$9,824,000	$8,984,000	$8,984,000	($840,000)	-8.6%
Special Rev - Other (SRO)	$32,901,000	$35,954,000	$35,954,000	$3,053,000	9.3%

Child & Adult Care Food Acct - (SRF)	$818,000	$1,029,000	$1,029,000	$211,000	25.8%
Fed Food & Nutrition Services acct - (SRF)	$3,004,000	$2,128,000	$2,128,000	($876,000)	-29.2%
Fed Health &Human Services Fund - (SRF)	$1,085,000	$419,000	$419,000	($666,000)	-61.4%
Fed Block Grant Fund - (SRF)	$4,917,000	$5,408,000	$5,408,000	$491,000	10.0%

Technology Transfer Acct - (SRO)	$500,000	$500,000	$500,000	$0	0.0%

Health Occupation Dev & Workplace Demo - (SRO)	$2,344,000	$2,386,000	$2,386,000	$42,000	1.8%
Personal Service	$589,000	$589,000	$589,000	$0	0.0%
Nonpersonal Service	$1,507,000	$1,527,000	$1,527,000	$20,000	1.3%
Fringe benefits	$248,000	$270,000	$270,000	$22,000	8.9%

Pilot Health Insurance Acct - (SRO)	$2,355,000	$2,437,000	$2,437,000	$82,000	3.5%
Personal Services	$1,162,000	$1,162,000	$1,162,000	$0	0.0%
Nonpersonal Services	$704,000	$743,000	$743,000	$39,000	5.5%
Fringe Benefits	$489,000	$532,000	$532,000	$43,000	8.8%

Primary Care Initiatives Acct - (SRO)	$920,000	$1,013,000	$1,013,000	$93,000	10.1%
Personal Services