2001 Yellow Book
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DEPARTMENT OF HEALTH

                                      Adjusted         Executive                       
                                 Appropriation           Request                       Percent 
                                       2000-01           2001-02            Change      Change 

AGENCY SUMMARY
  Community Projects Fund           15,545,293                 0       (15,545,293)   -100.00%
  General Fund                   6,511,029,400     7,048,075,000       537,045,600       8.25%
  Special Rev.-Fed.             19,834,837,900    21,505,845,000     1,671,007,100       8.42%
  Special Rev.-Other             2,024,098,500     2,152,996,000       128,897,500       6.37%
  Fiduciary                          2,725,000         2,965,000           240,000       8.81%
  Enterprise                            10,000            10,000                 0       0.00%
  Capital Projects Fund             11,600,000        11,600,000                 0       0.00%
  Capital Projects Fund-1996     
    CWA (Bondable)                  60,000,000        50,000,000       (10,000,000)    -16.67%
  Federal Capital Projects Fund     48,477,000        53,659,000         5,182,000      10.69%
  Fiduciary Funds -     
    Miscellaneous New York     
    State Agencies                           0         1,000,000         1,000,000        --  
  Total for Agency:             28,508,323,093    30,826,150,000     2,317,826,907       8.13%
  Total Contingency:               650,000,000       850,000,000       200,000,000      30.77%
  Total for AGENCY SUMMARY:     29,158,323,093    31,676,150,000     2,517,826,907       8.64%


STATE OPERATIONS
  General Fund                     206,406,800       227,995,000        21,588,200      10.46%
  Special Rev.-Fed.              3,275,044,400     3,392,061,000       117,016,600       3.57%
  Special Rev.-Other               350,117,400       351,527,000         1,409,600       0.40%
  Fiduciary                          2,725,000         2,965,000           240,000       8.81%
  Enterprise                            10,000            10,000                 0       0.00%
  Fiduciary Funds -     
    Miscellaneous New York     
    State Agencies                           0         1,000,000         1,000,000        --  
  Total for STATE OPERATIONS:    3,834,303,600     3,975,558,000       141,254,400       3.68%

Administration and Executive Direction
  General Fund                      18,758,400        17,291,000        (1,467,400)     -7.82%
  Special Rev.-Fed.                 14,464,000        12,839,000        (1,625,000)    -11.23%
  Special Rev.-Other                24,877,600        29,917,000         5,039,400      20.26%
  Total for Program:                58,100,000        60,047,000         1,947,000       3.35%

AIDS Institute
  General Fund                      16,838,700        16,851,000            12,300       0.07%
  Special Rev.-Other                 2,062,200         2,136,000            73,800       3.58%
  Total for Program:                18,900,900        18,987,000            86,100       0.46%

Environmental Health
  General Fund                       9,797,000        10,204,000           407,000       4.15%
  Special Rev.-Fed.                 13,255,300        11,105,000        (2,150,300)    -16.22%
  Special Rev.-Other                13,819,200        14,290,000           470,800       3.41%
  Total for Program:                36,871,500        35,599,000        (1,272,500)     -3.45%

Community Health
  General Fund                       9,442,700         9,797,000           354,300       3.75%
  Special Rev.-Fed.                103,759,700        98,268,000        (5,491,700)     -5.29%
  Special Rev.-Other                 5,596,800         5,554,000           (42,800)     -0.76%
  Fiduciary Funds -     
    Miscellaneous New York     
    State Agencies                           0         1,000,000         1,000,000        --  
  Total for Program:               118,799,200       114,619,000        (4,180,200)     -3.52%

Laboratories and Research
  General Fund                      35,604,800       35,867,000            262,200       0.74%
  Special Rev.-Fed.                  7,962,200        7,932,000            (30,200)     -0.38%
  Special Rev.-Other                28,777,300       29,359,000            581,700       2.02%
  Fiduciary                          2,000,000        2,600,000            600,000      30.00%
  Total for Program:                74,344,300       75,758,000          1,413,700       1.90%

Managed Care
  General Fund                      14,098,300       13,234,000           (864,300)     -6.13%
  Total for Program:                14,098,300       13,234,000           (864,300)     -6.13%

Health Care Standards and Surveillance
  General Fund                      26,876,000       30,319,000          3,443,000      12.81%
  Special Rev.-Other                42,022,300       43,372,000          1,349,700       3.21%
  Total for Program:                68,898,300       73,691,000          4,792,700       6.96%

Health Care Financing
  General Fund                       5,934,800        5,575,000           (359,800)     -6.06%
  Special Rev.-Other                 5,782,700        6,145,000            362,300       6.27%
  Total for Program:                11,717,500       11,720,000              2,500       0.02%

Institution Management
  Special Rev.-Other               111,707,000      102,860,000         (8,847,000)     -7.92%
  Fiduciary                            325,000          325,000                  0       0.00%
  Enterprise                            10,000           10,000                  0       0.00%
  Total for Program:               112,042,000      103,195,000         (8,847,000)     -7.90%

Medicaid Management Information System
  General Fund                      48,676,000       60,766,000          12,090,000     24.84%
  Special Rev.-Fed.                 67,511,000       67,510,000              (1,000)    -0.00%
  Total for Program:               116,187,000      128,276,000          12,089,000     10.40%

Elderly Pharmaceutical Insurance Coverage
  General Fund                      12,320,600       11,039,000          (1,281,600)   -10.40%
  Total for Program:                12,320,600       11,039,000          (1,281,600)   -10.40%

Office of Medicaid Audit and Fraud Prevention
  General Fund                     18,303,700        18,977,000             673,300      3.68%
  Special Rev.-Fed.                34,563,500        36,566,000           2,002,500      5.79%
  Special Rev.-Other               14,500,000        14,500,000                   0      0.00%
  Total for Program:               67,367,200        70,043,000            2,675,80      3.97%

Office of Continuing Care
  General Fund                     22,477,400        23,902,000           1,424,600      6.34%
  Special Rev.-Fed.                12,778,000            61,000         (12,717,000)   -99.52%
  Special Rev.-Other                3,632,700         5,626,000           1,993,300     54.87%
  Fiduciary                           400,000            40,000            (360,00)    -90.00%
  Total for Program:               39,288,100        29,629,000          (9,659,100)   -24.59%

Child Health Insurance
  Special Rev.-Fed.                13,400,000        30,280,000          16,880,000    125.97%
  Special Rev.-Other               11,251,600        11,680,000             428,400      3.81%
  Total for Program:               24,651,600        41,960,000          17,308,400     70.21%

Maintenance Undistributed
  General Fund                    (79,338,000)      (78,338,000)          1,000,000     -1.26%
  Special Rev.-Other               78,338,000        78,338,000                   0      0.00%
  Total for Program:               (1,000,000)                0           1,000,000   -100.00%

Office of Medicaid Management
  General Fund                     46,616,400        52,511,000           5,894,600      12.64%
  Special Rev.-Fed.             3,007,350,700     3,127,500,000         120,149,300       4.00%
  Special Rev.-Other                7,750,000         7,750,000                   0       0.00%
  Total for Program:            3,061,717,100     3,187,761,000         126,043,900       4.12%

AID TO LOCALITIES
  Community Projects Fund          15,545,293                 0         (15,545,293)   -100.00%
  General Fund                  6,304,622,600     6,820,080,000         515,457,400       8.18%
  Special Rev.-Fed.            16,559,793,500    18,113,784,000       1,553,990,500       9.38%
  Special Rev.-Other            1,673,981,100     1,801,469,000         127,487,900       7.62%
  Total for AID TO LOCALITIES: 24,553,942,493    26,735,333,000       2,181,390,507       8.88%

Administration and Executive Direction
  General Fund                        869,300           869,000                (300)     -0.03%
  Total for Program:                  869,300           869,000                (300)     -0.03%

AIDS Institute
  General Fund                     61,556,700        53,656,000          (7,900,700)    -12.83%
  Special Rev.-Other               34,595,000        34,597,000               2,000       0.01%
  Total for Program:               96,151,700        88,253,000          (7,898,700)     -8.21%

Environmental Health
  General Fund                      1,500,000         6,000,000           4,500,000     300.00%
  Special Rev.-Fed.                 2,810,800         2,208,000            (602,800)    -21.45%
  Special Rev.-Other                  200,000           200,000                   0       0.00%
  Total for Program:                4,510,800         8,408,000           3,897,200      86.40%

Community Health
  General Fund                    393,356,500       461,588,000          68,231,500      17.35%
  Special Rev.-Fed.               584,097,900       569,686,000         (14,411,900)     -2.47%
  Special Rev.-Other               36,578,100        36,614,000              35,900       0.10%
  Total for Program:            1,014,032,500     1,067,888,000          53,855,500       5.31%

Laboratories and Research
  General Fund                      1,071,000         1,071,000                   0       0.00%
  Special Rev.-Fed.                 2,134,800         2,105,000             (29,800)     -1.40%
  Total for Program:                3,205,800         3,176,000             (29,800)     -0.93%

Health Care Standards and Surveillance
  General Fund                     10,284,900         9,535,000            (749,900)     -7.29%
  Total for Program:               10,284,900         9,535,000            (749,900)     -7.29%

Institution Management
  General Fund                              0        30,000,000          30,000,000        --  
  Total for Program:                        0        30,000,000          30,000,000        --  

Medical Assistance
  General Fund                  5,694,300,000     6,083,400,000         389,100,000      6.83%
  Special Rev.-Fed.            15,300,500,000    16,424,000,000       1,123,500,000      7.34%
  Special Rev.-Other            1,153,000,000     1,177,400,000          24,400,000      2.12%
  Total for Program:           22,147,800,000    23,684,800,000       1,537,000,000      6.94%

Medical Assistance Administration
  General Fund                     87,750,000        78,557,000          (9,193,000)   -10.48%
  Special Rev.-Fed.               378,650,000       388,750,000          10,100,000      2.67%
  Total for Program:              466,400,000       467,307,000             907,000      0.19%

Elderly Pharmaceutical Insurance Coverage
  General Fund                    252,200,000       360,400,000         108,200,000     42.90%
  Total for Program:              252,200,000       360,400,000         108,200,000     42.90%

Office of Continuing Care
  General Fund                     11,342,200         7,342,000          (4,000,200)   -35.27%
  Special Rev.-Fed.                         0           315,000             315,000       --  
  Total for Program:               11,342,200         7,657,000          (3,685,200)   -32.49%

Child Health Insurance
  Special Rev.-Fed.               291,600,000       726,720,000         435,120,000    149.22%
  Special Rev.-Other              240,000,000       280,320,000          40,320,000     16.80%
  Total for Program:              531,600,000     1,007,040,000         475,440,000     89.44%

Community Projects
  Community Projects Fund          15,545,293                 0         (15,545,293)  -100.00%
  Total for Program:               15,545,293                 0         (15,545,293)  -100.00%

Maintenance Undistributed
  General Fund                   (209,608,000)     (272,338,000)        (62,730,000)    29.93%
  Special Rev.-Other              209,608,000       272,338,000          62,730,000     29.93%
  Total for Program:                        0                 0                   0       --  

CAPITAL PROJECTS
  Capital Projects Fund            11,600,000        11,600,000                   0      0.00%
  Capital Projects Fund-1996     
    CWA (Bondable)                 60,000,000        50,000,000         (10,000,000)   -16.67%
  Federal Capital Projects Fund    48,477,000        53,659,000           5,182,000     10.69%
  Total for CAPITAL PROJECTS:     120,077,000       115,259,000          (4,818,000)    -4.01%

Laboratories and Research
  Capital Projects Fund             4,000,000         4,000,000                   0      0.00%
  Total for Program:                4,000,000         4,000,000                   0      0.00%

Maintenance and Improvements of Existing Institutions
  Capital Projects Fund             7,600,000         7,600,000                   0      0.00%
  Total for Program:                7,600,000         7,600,000                   0      0.00%

Water Resources
  Federal Capital Projects Fund    48,477,000        53,659,000           5,182,000     10.69%
  Total for Program:               48,477,000        53,659,000           5,182,000     10.69%

Safe Drinking Water - Clean Water/Clean Air 96
  Capital Projects Fund-1996     
    CWA (Bondable)                 60,000,000        50,000,000         (10,000,000)   -16.67%
  Total for Program:               60,000,000        50,000,000         (10,000,000)   -16.67%

CONTINGENCY
  Fiduciary                       650,000,000       850,000,000         200,000,000     30.77%
  Total for CONTINGENCY:          650,000,000       850,000,000         200,000,000     30.77%

Medical Assistance
  Fiduciary                      650,000,000        850,000,000         200,000,000     30.77%
  Total for Program:             650,000,000        850,000,000         200,000,000     30.77%



                                                                                                                                                

                         ALL FUNDS PERSONNEL
                        BUDGETED FILL LEVELS
                                                                                                                                                
                            Current  Requested
Program                     2000-01    2001-02    Change
                                                                                                                                                
Suballocation                    12         12         0
Administration and Executive   
  Direction                     520        538        18
AIDS Institute                  218        214        (4)
Environmental Health            427        423        (4)
Community Health                659        651        (8)
Laboratories and Research       658        658         0
Managed Care                    155        155         0
Health Care Standards and   
  Surveillance                  536        536         0
Health Care Financing           129        129         0
Institution Management        1,569      1,569         0
Elderly Pharmaceutical   
  Insurance Coverage             28         28         0
Office of Medicaid Audit and   
  Fraud Prevention              484        509        25
Office of Continuing Care       398        408        10
Child Health Insurance           42         42         0
Office of Medicaid Management   387        387         0

Total General Fund :          2,540      2,525       (15)
Total All Other Funds :       3,682      3,734        52

TOTAL:                        6,222      6,259        37
                                                                                                                                                 


                          BUDGET HIGHLIGHTS
                   (Executive Budget: pp.133-141)

As the designated State agency responsible for promoting and supervising 
public health activities, ensuring sound and cost effective quality medical 
care, and reducing infectious diseases, the Department of Health (DOH) works
towards its goal of ensuring the highest quality, most appropriate and 
cost-effective health care for all New Yorkers.  Since State Fiscal Year 
(SFY) 1996-97, when authority for the State's Medical Assistance (Medicaid) 
Program was transferred from the former Department of Social Services, the 
Department of Health has also served as the principal State agency responsible
for interacting with the Federal and local governments, health care providers,
and program participants on behalf of the Medicaid Program in New York.  
Transfer of all Medicaid functions to the Department of Health consolidated 
for the first time in one agency the operational and oversight responsibilities
for the Medicaid Program, thereby clarifying State accountability for Medicaid
policy and allowing for greater efficiencies in the administration of
health care programs.

This Agency is contained in the Health, Mental Hygiene and Environmental 
Conservation appropriation bill.

The Governor recommends All Funds appropriations for the Department of Health
totalling $31,676,150,000, an increase of $2,517,826,907, or 8.64 percent over
State Fiscal Year (SFY) 2000-01 primarily attributable to an increase in Federal
Funds.  The Governor recommends General Fund appropriations for the Agency 
totaling $7,048,075,000, an increase of $537,045,600 or 8.25 percent over 
last year.  Additionally, the Governor recommends Special Revenue Funds-Federal
appropriations for the Agency totaling $21,505,845,000, an increase of 
$1,671,007,100 or 8.42 percent over last year.

State Operations

The Executive recommends a total All Funds appropriation for State 
Operations of $3,975,558,000, which reflects an increase of $141,254,400
or 3.68 percent over SFY 2000-01.  This increase due primarily to increased
federal funds in the Office of Medicaid Management.  The Executive proposes
General Fund State Operations appropriations totaling $227,995,000, an 
increase of $21,588,200 or 10.46 percent over SFY 2000-01.  The Executive 
also recommends Special Revenue Funds-Federal totaling $3,392,061,000 for 
State Operations, which is an increase of $117,016,600 or 3.57 percent over
the previous year.

The Executive proposes the creation of 10 new positions in the Office of 
Continuing Care at a General Fund cost of $450,000 to conduct nursing home
surveillance activities.  The Executive also proposes creating 25 new 
positions in the Office of Medicaid and Fraud Prevention to increase 
anti-fraud efforts.  Of these 25 new positions, 13 are proposed to
be paid for from the General Fund at a cost of $312,000.

Other notable changes proposed by the Executive in State Operations include:

--     a $5,466,000 General Fund increase for the implementation of the Health
       Information Quality Improvement Act of 2000, commonly referred to as 
       "Physician Profiling."  This new appropriation plus the proposed
       reappropriation of $3,000,000 reappropriation will bring total funding 
       for this initiative to $8,466,000;

--     a new $514,000 Special Revenue Funds-Other fund to collect fees related
       to the Funeral Direction Administration Program;

--     a new $2,000,000 Special Revenue Funds-Other fund to establish a Quality
       of Care Improvement Account, which will be used for the purpose of 
       protecting the health and property of residents in residential health care
       facilities;

--     a new $250,000 Maintenance Undistributed appropriation for Syringe 
       Access Demonstration Program costs related to the distribution of
       public information on syringe availability; and

--     a $600,000 increase in the Breast Cancer Research and Education Fund
       to provide a State match for funds donated annually by taxpayers through
       the income tax check-off.

Institutional Management

As part of the enacted Health Care Reform Act (HCRA) of 2000, the 
Roswell Park Cancer Institute was scheduled to receive $90,000,000 in 
calendar year 2000; $60,000,000 in 2001; $40,000,000 in 2002, and 
$20,000,000 as half year funding in 2003. 

In the Executive 2001-02 Budget, the Governor recommends a $30,000,000 
decrease in funding for the Roswell Park Cancer Institute from HCRA for 
calendar 2000 and proposes the substitution of a $30,000,000 General Fund
appropriation in SFY 2001-02 to cover the proposed HCRA funding reduction.

The Department of Health currently maintains four direct care institutions:
Helen Hayes Hospital in West Haverstraw and three nursing homes for the 
care of veterans and their dependents - Oxford, New York City, and Western
New York. The Executive also proposes a $9,667,000 funding increase for the
Montrose Veterans' Nursing Home, which is a new, 252-bed facility in the
lower Hudson Valley scheduled to open early in SFY 2001-02.

Aid to Localities

The Executive recommends All Funds appropriations totaling $26,735,333,000,
which is an increase of $2,181,390,507 or 8.88 percent over the SFY 2000-01
funding level.  This increase is primarily attributable to an increase in
Special Revenue-Federal Funds in the Medicaid Program.

The Executive proposes General Fund appropriations totaling $6,820,080,000,
an increase of $515,457,400 or 8.18 percent over SFY 2000-01.  The 
Executive also recommends a Special Revenue Fund-Federal, totaling 
$18,113,784,000 for Aid to Localities, which is an increase of 
$1,553,990,500 or 9.38 percent over the previous year.

For the Early Intervention Program, the Executive recommends an 
appropriation of $155,700,000, an increase of $20,700,000 over SFY 2000-01
funding level. While the proposed appropriation anticipates enrollment 
growth, the Executive expects to partially offset such growth by maximizing
the use of Medicaid reimbursement for approximately 10,000 Medicaid eligible
children within the next two years.  Such action is expected to hold actual
General Fund spending for the Early Intervention Program to the current 
fiscal year level of $130,000,000.

In SFY 2001-02, the Executive recommends an appropriation of $360,400,000,
year-to-year for the Elderly Pharmaceutical Insurance Coverage (EPIC) 
Program. This $108,200,000 net increase is associated with the EPIC
expansion provisions enacted in SFY 2000-01 which increased income 
eligibility to $35,000 for singles and $50,000 for married couples.
In addition, the EPIC expansion reduced annual fees and co-payments by 20
percent and reduced co-payment thresholds by five percent.  The EPIC 
expansion also reduced the number of co-payment amounts from five to four.
Additionally, the EPIC expansion simplified the program structure by 
limiting the fee plan to incomes up to $20,000 for singles and $26,000 for
married couples and by providing that eligible persons with incomes over 
these amounts will be in the deductible plan.

The Executive anticipates that the EPIC General Fund appropriation of 
$95,000,000 for SFY 2001-02 would have to be approximately $40,500,000 
higher were it not for various offsets being taken by the Executive.  
These offsets include: $30,000,000 from reducing pharmacy reimbursement 
from 95 percent of the Average Wholesale Price (AWP) to 90 percent of the 
AWP; $4,500,000 from altering the drug rebate methodology to mirror that 
of the Medicaid Program by applying the Consumer Price Index (CPI)
methodology used to calculate Medicaid rebates to EPIC rebates; and
$6,000,000 from requiring private health insurers to match membership 
files with EPIC enrollee files to facilitate coordination of benefits.  

In the Child Health Insurance Program (CHIP), the Executive recommends a
$492,748,400 increase for SFY 2001-02. Of this amount, $435,000,000 is
attributed to the share that New York State recently received as a
result of an allocation of federal CHIP funds unspent by other states in
Federal Fiscal Year 1998. The Executive also proposes accessing
$69,000,000 from unspent HCRA 1996 funds, which will be used to offset 
CHIP expenditures from HCRA 2000.  In addition, the Executive proposes 
Article VII legislation to extend the current CHIP program without change
until June 30, 2003.  The program is presently scheduled to expire on 
March 31, 2001.

The Executive recommends an appropriation of $194,900,000, an increase
of $28,900,000 for the General Public Health Works Program to support
local public health activities. The Executive also recommends a separate
$21,900,000 appropriation in the General Public Health Works Program to 
pay for activities related specifically to the West Nile encephalitis
outbreak, including epidemiology, surveillance, laboratory testing, 
spraying, larvicidal treatment, and general public information.  The 
Executive continues language that implements restrictions on the use of 
local tobacco settlement funds for matching State reimbursement except 
in the case of a public health emergency. 

The Executive recommends $5,000,000 in new funding for the Newborn 
Hearing Program to screen newborns and to ensure identification and 
treatment of infants with hearing impairments. This program will 
reimburse institutions for the cost of the testing and administration 
to carry out this program.  Children receiving Medicaid services would 
be covered for this testing under the Medicaid program.  Children that 
are ineligible for Medicaid services, but uninsured, would still be 
tested with the cost being reimbursed by the State at the proposed 
Medicaid rate of $27.84 per child. 

The Executive continues $2,400,000 SFY 2000-01 in Legislative enhancements
to the Healthy Women Partnerships Program and adds an additional $1,600,000
in new funding for SFY 2001-02 to increase breast and/or cervical screening
services.

Despite the escalating needs of community providers as HIV/AIDS caseloads
continue to grow, the Governor fails to recommend any new or additional
spending in the AIDS Institute; in fact, he cuts $7,901,000 in funding
added by the Legislature in SFY 2000-01.  The effect is the elimination
of total funding for some programs, such as treatment compliance.  

Other notable changes proposed by the Executive in Aid to Localities include:

--     a $3,700,000 General Fund increase to support the immunization of 
       underinsured children under 59 months with a new pneumonia vaccine
       which has recently been added to the Federal Vaccines For Children
       Program; 

--     a $700,000 General Fund increase for the Indian Health Program associated 
       with increased pharmaceutical costs; and,

--     a $500,000 General Fund increase for the creation of a Pharmaceutical 
       and Therapeutic Committee, which will consider measures to promote the 
       appropriate and cost-effective provision of pharmaceuticals and make
       recommendations regarding the drug formulary and utilization policies.

Medical Assistance (Medicaid) Program

As part of the Health Care Reform Act of 2000 agreement, the Medicaid cost 
containment measures, enacted as part of the SFY 1999-2000 budget, were 
extended for three years, until March 31, 2003, with the understanding that
no new cuts would occur during this period of time.  Despite this 
understanding, the Executive proposes new cuts to the State's
Medicaid Program.

The Executive recommends an All Funds Medicaid appropriation in Aid to 
Localities of $23,684,800,000, which is a net increase of $1,537,000,000
resulting from an increase in Federal Funds.  The Executive estimates
that total All Funds expenditures for the Medicaid Program, including 
Mental Hygiene related expenditures, will be $30.8 billion in the
current fiscal year.  Without the implementation of proposed new cost 
containment actions, the Governor expects expenditures would rise to 
$32.4 billion due to growth in entitlement spending.

The Governor's SFY 2001-02 Medicaid cost-containment package will result
in the loss of more than $350,000,000 in combined Federal, State, and 
local reimbursement to certain Medicaid providers.  These new cuts are 
targeted primarily at nursing homes, but also impact certified home 
health care agencies and the pharmaceutical industry. As estimated by
the Executive, these cuts will produce State share savings to the 
Medicaid Program of $138,900,000.  Specifically, the Governor proposes:
eliminating the 2001-02 trend factor for nursing homes, $50,000,000;
removing a supplemental payment to facilities that have more than 300
beds, $23,900,000; eliminating the return on equity incentives to 
proprietary homes, $11,000,000; updating the nursing home reimbursement
methodology by eliminating the cost of Medicare and all other non-Medicaid
patients from the Medicaid rate, $46,000,000; and establishing a fixed
cap on Certified Home Health Care Agency administrative costs, $2,000,000.
Additionally, the Executive proposes savings totaling $6,000,000
related to pharmaceutical efficiencies.

The Executive estimates General Fund disbursements in the Department of 
Health in SFY 2000-01 will be $5,692,800,000. For SFY 2001-02, the 
Executive proposes a total General Fund appropriation of $6,083,400,000,
an increase of $390,600,000 or 7.0 percent over the current fiscal 
year.  This appropriation reflects the total General Fund benefit to 
the Medicaid Program of the proposed new cost containment actions 
which the Executive estimates at $300,100,000.  Of this amount, 
$138,900,000 is achieved through the previously mentioned cuts to 
providers while another $160,000,000 is effectuated through revenue
and other Federal maximization efforts designed to offset Medicaid.

Additionally, the Executive proposes eliminating the transfer of 
$82,000,000 from HCRA of 2000 to offset General Fund Medicaid funding.
The Executive also proposes decreasing Supplementary Medical Insurance 
funding distributions in HCRA 2000, by a total of $25,000,000 for the
periods January 1, 2000 to June 30, 2003.  These two actions taken
together would provide for the elimination of $107,000,000 which would
have been used to offset General Fund Medical
Assistance spending.

The Executive's proposed SFY 2001-02 budget also includes $3,200,000
for new Medicaid expansions.  The Executive proposes $500,000 in SFY
2001-02 to provide Medicaid coverage up to 250 percent of the Federal
Poverty Level (FPL) to uninsured and underinsured women diagnosed with
breast cancer or cervical cancer through the Center for Disease
Control's national screening program, effective October 1, 2001. When 
the program is fully implemented, the Executive estimates that approximately
77,000 women will benefit from the expansion.  In addition, the 
Executive proposes $2,700,000 in SFY 2001-02 for administrative costs
associated with the creation of the Medicaid Buy-In Program for
the Working Disabled.  Beginning January 1, 2002, the Governor's 
proposal would authorize Medicaid coverage for disabled persons up to
250 percent of the FPL and with up to  $10,000 in resources.  When 
the program is fully implemented, the Executive estimates that 
approximately 19,000 persons will benefit from the expansion.

The Executive also proposes moving approximately 10,000 Early 
Intervention recipients into the Medicaid Program. While the 
Executive anticipates savings to the EI program from this move, 
the Executive recognizes increased cost to the Medicaid program
and adds $1,550,000 for this purpose.

Additionally, the Executive has indicated proposing legislation, 
titled the Nursing Home Quality Improvement Act, to improve the 
quality of care in nursing homes. The proposed legislation will 
require criminal background checks for all nursing home employees 
who provide direct care to residents; increase fines on nursing homes
for deficiencies, imposing higher fines for nursing homes with repeat
violations; grant the Commissioner of Health the authority to replace
"bad operators" of nursing homes without going through the courts; and
create a new nursing home complaint hotline to enable inspectors to
better track, coordinate and respond to patient complaints.

Article VII

In the Article VII bill, the Executive proposes:

--     extending the Child Health Insurance Program (CHIP) from 
       March 31,2001 until July 1, 2003;

--     continuing additional Disproportionate Share Payments for 
       the Health and Hospital Corporation (HHC) Hospitals; 

--     authorizing hospital proportionate share Medicaid payments for 
       certain non-State operated public facilities, assigning responsibility
       for Medicaid payments to the local social services district where 
       the hospital is located, and; authorizing Medicaid payments 
       at 50 percent Federal and 50 percent local shares;

--     authorizing Federal Financial Participation (FFP) for inpatient 
       hospital and other services provided to inmates in State and local 
       government facilities;

--     establishing a Medicaid Buy-In Program authorizing Medicaid coverage
       for disabled persons up to 250 percent of the Federal Poverty Level 
       (FPL) and $10,000 in resources, effective January 1, 2002;

--     authorizing a Medicaid expansion up to 250 percent of the FPL for
       low income women who are diagnosed with breast and/or cervical cancer
       through the national Centers for Disease Control's screening program,
       effective October 1, 2001;

--     authorizing reductions in local share reimbursement due to New York 
       City for persons eligible for Medicaid as a result of a mental
       disability;

--     eliminating the transfer of $82,000,000 from the Health Care Reform 
       Act of 2000 to offset General Fund Medical Assistance spending;

--     transferring $69,000,000 in residual HCRA 1996 funds into the Child
       Health Insurance Program Account to offset Child Health Insurance 
       expenditures, and using any unused or uncommitted funds remaining
       in HCRA 1996 after the $69,000,000 transfer will be used for the 
       funding of other programs in HCRA 2000; 

--     decreasing from $90,000,000 to $60,000,000 the Roswell Park Cancer 
       Institute funding level in HCRA 2000 for the period January 1, 2000 
       through December 31, 2000;

--     decreasing the Supplementary Medical Insurance (SMI) funding 
       distributions in HCRA 2000 by a total of $25,000,000  for the periods
       January 1, 2000 through June 13, 2003;

--     eliminating the return on equity for proprietary nursing homes, 
       beginning April 1, 2001 through June 30,2003;

--     eliminating annual inflationary payment increases, beginning 
       April 1, 2001 through June 30, 2003;

--     changing the Medicaid rate methodology by removing the cost of Medicare 
       and all other non-Medicaid patients from the Medicaid rate, effective 
       April 1, 2001 through June 30, 2003;

--     requiring managed care recipients to make a co-payment on prescription
       drugs similar to other Medicaid recipients; 

--     prohibiting Medicaid capital reimbursement for any new residential 
       health care facility bed that has not received final approval to 
       commence construction as of January 1, 2001;

--     extending the historical cost methodology for reimbursing nursing 
       home capital costs;

--     extending Prepaid Health Services Plans (PHSPs) through 
       June 30, 2002; and,


--     establishing the Quality of Care Improvement Account to receive all 
       penalty and fine revenues collected by the Department of Health and
       the Federal Department of Health and Human Services from residential
       health care facilities. 

In the Elderly Pharmaceutical Insurance Coverage (EPIC) Program, 
the Executive proposes:

--     lowering the pharmacy reimbursement from 95 percent of the 
       Average Wholesale Price (AWP) to 90 percent of the Average 
       Wholesale Price;

--     applying the Consumer Price Index (CPI) methodology to EPIC rebates;

--     permitting EPIC enrollees to have other pharmaceutical coverage;

--     requiring private health insurers to match membership files with the 
       EPIC program to facilitate a coordination of benefits; and,
 
--     authorizing the Commissioner of Health, upon recommendation from the
       EPIC panel, to allow the EPIC  program to reimburse for a drug not
       covered by a rebate agreement if the drug offers effective therapy or
       substantially improves treatment of a disease than would otherwise be 
       available.

Capital Projects

The Executive recommends an All Funds Capital Projects appropriation of 
$115,259,000, which is a net decrease of $4,818,000 due to a reduction in
the Capital Projects Fund-1996 CWA Bondable.

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