One-House Budget Outcomes

March 14, 2024

NYS Council members,

We began sharing outcomes from the Senate one-house budget bill on Monday night and we have been updating information on both bills since then.

Below we pulled together most of what we know to this point: 

COLA:  Both the Assembly and Senate are supportive of a COLA at 3.2% however both houses have placed restrictions on how these funds can be utilized by providers (only wages and salaries for direct care, DSPs and non-exec clinical job titles).  The NYS Council issued a Press Release on Tuesday afternoon on this matter (attached) and a group of advocates issued a joint statement (attached) calling on lawmakers to retain the flexibility providers need to be able to use these funds for both wages/salaries and operating expenses.  The COLA proposal in the Senate adds certain provider types that are not currently listed in the COLA statute to include Domestic Violence programs, Independent Living Programs, Health Home Care Management and Child Care and Aging providers.

Commercial Rate Mandate:  As you know, the NYS Council has been fighting for this groundbreaking reform for many years, and we have submitted proposed language to the executive in each of the last three years to address the access to care barrier faced by many New Yorkers with commercial insurance as they struggle to find a provider that can accept their insurance.    An August 2023 NYS Council survey confirmed that (on average) providers are reimbursed at (on average) just 50% of the Medicaid APG rate for the same services.  In the one house bills, the Senate accepted the Governor’s proposed language for the mandate.  The Assembly tweaked the language such that when the Medicaid APG rate is set each year, that’s the rate commercial insurers must pay throughout the year.  If the Medicaid APG rate changes during the year, the commercial insurer is only obligated to pay the rate that was established at the beginning of the fiscal year.   

OMIG Audit Reform:  The NYS Council continues to lead a statewide effort to reform the OMIG Audit process.  I am pleased to report that both the Assembly and the Senate support OMIG Audit Reform.  The Senate accepted the exact language of our OMIG Audit Reform bill (sponsored by Senator Harckham) whereas the Assembly made a statement of support in its one house budget bill.  The statement supports overall reform of the audit process with a strong focus on correcting the problem in which providers are punished for human errors that do not impact client care.

MCO Tax:  The NYS Council briefed our members last Saturday via email regarding the MCO Tax proposal that we had heard was going to be proposed in one or both one-house budget bills (see below for a look at the email we sent to all members giving a heads up on the MCO Tax).  The Senate and the Assembly include language in their one-house budget bills that support the general plan here.  The Senate is specific in its support for an MCO Tax that would leverage federal matching funds by placing a tax on MCOs that would then be used for rate increases for a number of provider types including hospitals, nursing homes.  The Assembly is more roundabout in its support for an MCO tax, calling for a special Medicaid Fund (generated by the Tax) that would be used to increase Medicaid rates.  Importantly, the Senate MCO Tax proposal excludes use of the funds for Article 16, 31 and 32 programs whereas the Assembly does not limit the types of programs that can benefit from the federal funds derived from the MCO Tax.  (see more below)

FQHC Telehealth Rates:  Both houses support FQHCs being added to the group of provider types that should be paid at face-to-face rates for telehealth services.  

Competitive Procurement:  Both one house bills reject the Governor’s proposal to require a Competitive Procurement process by which NYS identifies MCOs that will manage Medicaid managed care services.  

Community Mental Health Loan Repayment Program:  The Senate bill includes a new Part LL that would expand the Office of Mental Health Community Mental Health Loan Repayment Program (OMH CMHLRP) to include the following additional titles:  LMSW, LCSW, LMHC, LMFT, Psychoanalysts, Creative Arts Therapists and Applied Behavioral Analysts.

Health Homes:  The NYS Senate restores the cost reductions to Health Homes that were included in the Governor’s executive budget proposal whereas the Assembly makes a statement in its one-house bill rejecting the ‘elimination of the Health Home Program’ (which was not proposed by the Governor).  

3-Day Supply of Buprenorphine;  Controlled Substances:  The Senate one house bill accepts the Executive proposal to allow for a 3-day supply of Buprenorphine for an individual who is waiting for a referral to a prescriber/treatment program.  Senate rejects inclusion of several controlled substances as part of the NYS Controlled Substances Schedule. The Assembly rejects both.

OASAS Budget:  Both the Senate and the Assembly bills pledge funds to restore what appears to be a $11.4M reduction in funds for OASAS.  

Medicaid Continuous Coverage for ages 0-6:   Both houses support New York applying for CMS approval to implement continuous Medicaid coverage to New Yorkers age 0-6.  

Insurer Parity Violations:   While the Senate accepted the Governor’s proposal to increase fines in instances where an insurer violates parity laws, the Assembly did not accept the Governor’s proposal.

Opioid Stewardship Fund:  Senate proposal makes the opioid stewardship fund permanent whereas the Assembly extends the opioid stewardship fund through 2029.  

Telehealth Services:  While the Senate makes the current telehealth law permanent, the Assembly proposes a one-year extension of the law through 2025.

Paid Prenatal LeaveThe Senate modifies the Executive proposal to provide 40 hours of paid family leave for employees to use on prenatal health to change the leave provided from paid family leave to personal leave.

Assembly modifies the Executive proposal to include up to 40 hours of leave for prenatal care under Paid Family Leave. The Assembly proposal would instead explicitly include leave for prenatal care within employer-provided paid sick leave.

Short-Term Disability Leave Benefits
Senate modifies the Executive proposal to increase short-term disability leave benefits by implementing a progressive benefit structure over a three-year period and amends employee contributions provided that in no case shall employee contributions exceed $2.20 per week. The Senate also temporarily exempts workers and employers covered by a current collective bargaining agreement (CBA) until the expiration of such agreement. Senate provides $35 million to support this proposal.

Assembly modifies the Executive proposal to provide scheduled increases to the weekly and maximum weekly benefit rates for temporary disability leave. The Assembly proposal would implement a consistent benefit rate across all weeks of disability leave, accelerate the scheduled increases, and reduce the phase-in timeline by one year. The Assembly proposal would also remove the ability of the Superintendent of the Department of Financial Services to delay the scheduled increases, create greater flexibility in the increments of payable temporary disability leave that can be taken, and create a waiver to the scheduled increases for those subject to an existing collective bargaining agreement.

Paid Breaks for Milk Expression in the Workplace
The Senate modifies the Executive proposal to require paid breaks for breast milk expression in the workplace by increasing the paid break time from 20 minutes to 30 minutes.

Assembly rejects Executive proposal to require employers to provide paid break time of up to 20 minutes for breast milk expression. 

NYS COVID-19 Sick Leave Law
The Senate modified the Executive proposal to sunset the State’s COVID-19 Sick Leave law on July 31, 2024, by continuing such benefits for employees that work in facilities licensed under Article 28 of the Public Health Law.
Assembly rejects the Executive proposal to sunset the State’s COVID-19 Sick Leave law on July 31, 2024.

Personal Income Tax

  • Senate and Assembly both increase the personal income tax rates:
  • For filers making over $5 million but not over $25 million: increases from 10.3% to 10.8%
  • For filers making over $25 million: increases from 10.9% to 11.4%
  • New Yorkers making over $5 million are 0.3% of taxpayers
  • Both increases apply for tax years 2024 through 2027 
  • Total new revenue: $1.1 billion

Corporate Tax:

  • Senate and Assembly both increase the corporate tax from 7.25% to 9%
  • Increase applies for tax years 2024 through 2026
  • Total new revenue: $1.1 billion

MCO Tax email from NYS Council to all members on Saturday (below)

———- Forwarded message ———
From: Lauri Cole <>
Date: Sat, Mar 9, 2024 at 1:05 PM
Subject: One-House Budget Bills
To: Members

Good afternoon,

For many years, California has been using a federal waiver approval to implement a ‘tax’ on (California) Managed Care Organizations.  The ‘tax’ is based on the Per Member Per Month (PMPM) Medicaid payments made by the state to MCOs during the previous fiscal year.  The funds collected from the MCOs are used to increase Medicaid rates for California Medicaid providers and in this process, the state is able to draw down additional federal match dollars.  The state ‘pays back’ the MCOs through a rebate program using some of the proceeds from the additional federal dollars it has leveraged as result of its Federal Medical Assistance Percentage (FMAP) agreement with the federal government.  

Background: Medicaid is a joint federal-state program that provides healthcare coverage for low income individuals. Financing the program is a shared responsibility, with states receiving federal matching funds for eligible state expenditures. States like California, New York and Illinois have traditionally received the minimum amount of FMAP assistance – about 50% for most Medicaid services while other states receive far greater matching percentages. But there have been exceptions to this.  For instance, when the federal government decided to incentivize states to make care management services available to Medicaid members, NYS received a time limited 90% federal match to establish and operate the NYS Health Home Program.  The problem here is that the super high FMAP rate was not permanent. The state has been trying to reduce its overall spend on the Health Home Program ever since.

It appears that the ‘MCO Tax’ in California is used as a mechanism to generate additional state funds that can be used to match with federal funds to bring additional federal Medicaid dollars to California. We are hearing a persistent rumor that the Assembly is considering including a proposal in its one-house budget bill (coming out next week) that will include language requiring NYS to pursue CMS waiver approval for an MCO Tax, or something similar.  

It sounds like the Assembly is discussing a 3% across the board Medicaid rate increase with additional funds for hospitals, nursing homes and certain other healthcare provider types. This is not in place of a Human Services COLA.  
It’s helpful to remember that It’s an election year and the state has (according to the Division of Budget) a $1.35B deficit to fill.  Lawmakers are facing increasing pressure from advocates to raise rates. However, in January the Governor sent the legislature a budget proposal that included unpopular healthcare funding reductions. It is unclear whether the Senate one house budget bill will include a similar proposal, or whether the Senate or the Executive would ultimately support this idea.

From what I have read the ‘MCO Tax’ in California is used to leverage federal funds for its Medi-Cal Program.  It leaves the health insurance industry no worse off financially, and provides a net annual state General Fund benefit of roughly $1.5 billion, with these freed-up dollars supporting critical public services and systems.  The downside is that nothing lasts forever and states can become dependent on ‘innovative funding solutions’ that are temporary fixes.  An example of this is the OMH COPS subsidy that was designed to fix a rate problem decades ago but was deemed to be an illegal intergovernmental transfer. NYS was required to remove the COPS funds from the OMH Outpatient Clinic rates for providers that received it (and not all providers received this subsidy) and rates fell precipitously.  

One house budget bills are due to be released next week.  Please do not make any financial decisions based on this information.  First we need to see it in print in a one-house budget bill and this is no guarantee it will come to pass.  

Additional Information:

-Kaiser Family Foundation on States with an MCO Provider Tax,%22sort%22:%22asc%22%7D

-California Hospital Association on MCO Tax Ballot Initiative