Relates to covered lives assessments in the Rochester region.
TITLE OF BILL: An act to amend the public health law, in relation to covered lives assessments in the Rochester region
PURPOSE: This bill would facilitate health improvement in the Rochester region by funding regional health improvement projects and by providing a stable source of graduate medical education funding to ensure and maintain the adequate supply of physicians to provide care in the region.
SUMMARY OF PROVISIONS: All health insurers and self-insured employers currently pay what are called "covered lives assessments" (CLA). These are monthly payments based on the number of insured persons residing within each region of the State. The existing CLA process funds a number of important health financing objectives. This bill would incorporate two additional program areas in the Rochester region only that have been deemed by healthcare stakeholders in the region to be a priority. The CLA assessments already vary in amount by region and the proposed adjustment would affect only insurers and self-insured plans for their covered persons in the Rochester region. Most of the increased funding for graduate medical education would be offset by decreases in hospital rates to the insurers and plans: the increased costs to insurers would $17 per year for an individual and $58 per year for a family. The bill is supported by a broad coalition of business groups, the two largest health insurers and the hospitals in the region.
JUSTIFICATION: Rochester's health care system has the unique advantage of nearly a century of collaborative community planning. It has long distinguished itself as a community able to develop innovative, cooperative approaches to health care financing and delivery. It has been done so by bringing together the interests of employers, academia, providers, insurers, and consumers. The benefits of this community approach - costs that are 20% below the national average with excellent quality and access - have been highlighted by everyone from President Clinton to the recently issued report by the Institute of Medicine noting Rochester's annual cost-per-Medicare beneficiary was the lowest in the country.
One key factor in Rochester's pre-eminence is a teaching program that has provided a reliable pipeline of medical personnel across the Rochester region. Currently, the three Rochester-based providers train a total of 916 residents. On average, 42% of the graduating residents and fellows who train in Rochester remain there for their first professional position, which has enabled Rochester to avoid the severe physician shortages experienced elsewhere. An equal number of doctors who graduate from the University's School of Medicine and Dentistry affiliate with the local non-University health systems as with the Medical Center. The community's ability to attract and compete for the best students, physicians, and faculty is dependent on the quality and quantity of our academic research. Residents want to train at prestigious institutions with groundbreaking research and have access to the best physician mentors. These interrelated missions allow the next generation of practitioners and academic leaders in education, research, and community health to apply this knowledge to patient care. This translational research, which enables patients early access
through clinical trials to emerging technology, drugs, and procedures, also generates new jobs and companies for the region. Educating and training physicians would not be possible without both public (Medicaid and Medicare) and private health plan support. As a source of medical innovation and discovery, academic medical centers and teaching hospitals are inherently more expensive to operate.
This bill has two components:
* Approximately $100 million in GME support is currently generated from the claims payment rates Rochester region hospitals have negotiated with private payers, which covers additional expenses of operating hospitals with residents and fellows. The CLA adjustment in this bill will instead fund those costs through the CLA payments to assure more stable, long term funding. This bill will replace that existing support on a budget-neutral basis by reducing rates paid by these insurers and health plans, to avoid any premium impact.
* Of the $10 million in new funding provided through the CLA adjustment, $5 million will support associated research and educational costs incurred by Medical Center faculty who teach students and residents in the Rochester area hospitals and the remaining $5 million will fund valuable shared community health infrastructure (e.g. health planning, community-wide safety and quality programs, community measurement, elimination of health disparities, and information technology linkages) that improve quality, affordability, and accessibility through collaborative community efforts. A total of $2 million of the second $5 million would be dedicated to the Finger Lakes Health Systems Agency (FLHSA) and would serve as a local private sector match for recently enacted state funding. The FLHSA would oversee investment in community health initiatives through a transparent, fiscally accountable, multi-stakeholder process.
Currently, the services above are funded by voluntary contributions, with certain local health plans, hospitals and employers bearing a disproportionate share of the expense. A formalized CLA assessment is the only method to assure that all health plans and all employers pay their fair share of community health improvement costs, rather than asking only certain health plans and employers to shoulder this expense for the benefit of the entire community.
In sum, although the region's CLA would be increased by $110 million per year, hospitals and health plans have agreed to reduce the claims payment rates that health plans pay to Rochester region hospitals by an offsetting $100 million per year. A third party will be engaged to assure that offsetting reduction occurs. The net impact of this bill is an increase of only $10 million in health care spending in the Rochester region, which is the equivalent of a 0.5% increase in premiums. There is no impact on regions other than Rochester and no impact on the State's general fund.
HISTORY: Similar proposal was in the Assembly one-house budget bill for the March 31, 2014 Executive Budget (A 8558-C).
FISCAL IMPLICATIONS: There is no impact on the State Budget. The Medicaid program does not pay the HCRA CLA and the bill has no impact
on Medicaid spending. The HCRA CLA increase will be implemented by the Department of Health as the administrator of the HCRA collections process, but all CLA payments as a result of this bill will be made by private health insurers and self-insured employers in the Rochester region.
EFFECTIVE DATE: January 1, 2015.
STATE OF NEW YORK ________________________________________________________________________ 7081 IN SENATE April 24, 2014 ___________Introduced by Sen. ROBACH -- read twice and ordered printed, and when printed to be committed to the Committee on Health AN ACT to amend the public health law, in relation to covered lives assessments in the Rochester region THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 6 of section 2807-s of the public health law is amended by adding a new paragraph (g) to read as follows: (G) A FURTHER GROSS ANNUAL AMOUNT ALLOCATED TO THE ROCHESTER REGION BEGINNING JANUARY FIRST, TWO THOUSAND FIFTEEN SHALL BE ONE HUNDRED TEN MILLION DOLLARS. FOR CALENDAR YEARS TWO THOUSAND SIXTEEN AND THEREAFTER, THAT AMOUNT SHALL BE INDEXED FOR STATEWIDE HEALTH CARE INFLATION IN AN AMOUNT DETERMINED BY THE COMMISSIONER. SUCH AMOUNT SHALL BE EXCLUDED FROM ALL COMPUTATIONS AND ADJUSTMENTS MADE PURSUANT TO PARAGRAPH (B) OF SUBDIVISION SIX OF SECTION TWENTY-EIGHT HUNDRED SEVEN-T OF THIS ARTICLE. S 2. Subdivision 7 of section 2807-s of the public health law is amended by adding a new paragraph (d) to read as follows: (D)(A) FIVE MILLION DOLLARS OF THE FUNDS ALLOCATED TO THE ROCHESTER REGION PURSUANT TO PARAGRAPH (G) OF SUBDIVISION SIX OF THIS SECTION SHALL BE DISTRIBUTED TO A ROCHESTER REGIONAL HEALTH PLANNING ORGANIZA- TION FOR USE IN FUNDING REGIONAL HEALTH CARE IMPROVEMENT PROJECTS. THE REGIONAL HEALTH PLANNING ORGANIZATION SHALL DISBURSE THOSE FUNDS IN ACCORDANCE WITH THIS PARAGRAPH, OR PURSUANT TO GRANTS MADE BY THE ORGAN- IZATION IN ACCORDANCE WITH THIS PARAGRAPH. DISTRIBUTION OF ANY GRANT FUNDS ADMINISTERED BY THE REGIONAL HEALTH PLANNING ORGANIZATION SHALL BE PURSUANT TO A MULTI-STAKEHOLDER PROCESS. THE REGIONAL HEALTH CARE IMPROVEMENT GRANT FUND PROJECTS SHALL INCLUDE THREE MILLION DOLLARS PER YEAR FOR A SHARED COMMUNITY HEALTH INFRASTRUCTURE DESIGNED ON THE BASIS OF COLLABORATIVE COMMUNITY EFFORTS, INCLUDING COMMUNITY-WIDE PATIENT SAFETY AND QUALITY IMPROVEMENT PROGRAMS, ELIMINATION OF HEALTH DISPARI- TIES, HEALTH INFORMATION TECHNOLOGY, AND TWO MILLION DOLLARS TO FUND THE REGIONAL HEALTH PLANNING ORGANIZATION. THE HEALTH PLANNING ORGANIZATION SHALL USE REASONABLE EFFORTS TO GENERATE MATCHING FUND CONTRIBUTIONS IN THE FORM OF GRANTS, DONATIONS AND OTHER CONTRIBUTIONS.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14809-01-4 S. 7081 2
(B) ONE HUNDRED FIVE MILLION DOLLARS OF THE FUNDS ALLOCATED TO THE ROCHESTER REGION PURSUANT TO PARAGRAPH (G) OF SUBDIVISION SIX OF THIS SECTION SHALL BE ALLOCATED TO A NOT-FOR-PROFIT ORGANIZATION OR ASSOCI- ATION THAT HAS BEEN DESIGNATED THROUGH A MULTI-STAKEHOLDER PROCESS, WHICH SHALL DISTRIBUTE THOSE FUNDS TO ALL OF THE HOSPITALS IN THE REGION ENGAGED IN GRADUATE MEDICAL EDUCATION IN ORDER TO FUND GRADUATE MEDICAL EDUCATION. ONE HUNDRED MILLION DOLLARS OF SUCH FUNDING SHALL BE DISTRIB- UTED PROPORTIONALLY TO EACH OF THE HOSPITALS IN AMOUNTS WHICH REFLECT EACH HOSPITAL'S CURRENT COSTS FOR GRADUATE MEDICAL EDUCATION, AND FIVE MILLION DOLLARS OF UNREIMBURSED ADMINISTRATIVE AND OTHER GRADUATE MEDICAL EDUCATION RELATED COSTS SHALL BE ALLOCATED IN THE SAME PROPORTIONS. ONE HUNDRED MILLION DOLLARS OF THE DISTRIBUTED FUNDS SHALL BE IN LIEU OF CURRENT FUNDING OF SUCH COSTS AS CURRENTLY INCLUDED IN CLAIMS PAYMENTS BY THE TWO LARGEST NON-GOVERNMENTAL THIRD PARTY PAYORS RESULTING IN A REDUCTION IN THE AMOUNT PAID BY SUCH THIRD PARTY PAYORS IN AN AMOUNT EQUAL TO THE ONE HUNDRED MILLION DOLLARS. PRIOR TO THE ALLOCATION OF FUNDS PURSUANT TO THIS SUBDIVISION, THE PARTICIPATING HOSPITALS AND SUCH THIRD PARTY PAYORS SHALL DEVELOP A PROCESS FOR THE DISTRIBUTION OF SUCH FUNDS AND A MECHANISM TO ENSURE THAT THE REQUIRED REDUCTION OF PAYMENTS BY SUCH THIRD PARTY PAYORS TO THE HOSPITALS OCCURS. THE AFFECTED HOSPITALS AND THE TWO LARGEST NON-GOVERNMENTAL THIRD PARTY PAYORS IN THE ROCHESTER REGION SHALL JOINTLY SELECT AN INDE- PENDENT THIRD PARTY TO DETERMINE THE REDUCTIONS WHICH SHALL OCCUR FROM PREVIOUSLY NEGOTIATED RATES FOR CLAIMS PAYMENTS TO SUCH HOSPITALS BY SPECIFIED THIRD PARTY PAYORS IN ORDER TO AVOID DUPLICATE FUNDING PURSU- ANT TO THIS PARAGRAPH. S 3. This act shall take effect January 1, 2015; provided that the amendments to section 2807-s of the public health law made by sections one and two of this act shall not affect the expiration of such section and shall be deemed to expire therewith.