Medicaid Managed Care - U.S. Senate Special Committee on Aging

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July 16, 1997
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Governor Details Plan for <strong>Managed</strong> Health <strong>Care</strong>
By RAYMOND HERNANDEZ
A LBANY, N.Y. -- Gov. George Pataki unveiled his plan Tuesday to
Arequire most of the state's <strong>Medicaid</strong> recipients to join managed care
programs, while exempting people in nursing homes, pregnant women
and those living in areas with feWmanaged-care companies.
The plan was released a day after the Clinton and Pataki administrations
reached an agreement on a federal waiver to allow the state to phase out
<strong>Medicaid</strong>'s traditional "fee foLservice" method of paying doctor and hospital
bills.
The Clinton administration has already approved similar changes to <strong>Medicaid</strong>
programs in at least 12 other states. But New York's plan would be the largest
by far, with the state permitted to place 2.4 million of New York's 3.1 million
<strong>Medicaid</strong> recipients into managed care programs in three years.
The plan would also exempt people with grave illnesses like AIDS until the
state has developed a managed care plan that can deal with the complexities of
their illnesses.
The governor has repeatedly promoted managed care as a way to save the state
millions of dollars and improve health care for poor people, largely because
managed care companies are paid a set rate for each patient and, in turn, seek
to hold down costs by focusing on preventive medicine as well as limiting
access to specialists. The traditional method, by contrast, generally pays
doctors, hospitals and laboratories a separate fee for each medical procedure.
"We have been working.hard at improving-access to high quality medical care
for the state's most needy citizens, and with this approval, we have taken a
major step forward," the governor said.
The plan would phase recipients into managed care plans in stages: 945,000 in
the first year; 1.6 million in the second year and 2.4 million in the third year.
The administration estimates that the plan will reduce <strong>Medicaid</strong> spending by as
much as $650 million once it is fully in place.
In a concession to hospitals and unions representing health care workers, who
initially opposed the plan, it includes S 1.25 billion in so-called transitional aid,
federal money that is expected to come from savings in the new program. That
money would allow public and nonprofit hospitals to operate community health
clinics for <strong>Medicaid</strong> patients in poor areas traditionally underservedyy doctors
and medical centers.
The money would also be used for job training for hospital workers who might