Uncertainties over how $8B Medicaid waiver will work By Dan Goldberg and Laura Nahmias, City and State
5:31 p.m. | Oct. 1, 2014 Leading New York state health industry players disagreed Wednesday during a Crain’s New York business event over whether eliminating hospital beds and jobs statewide would be necessary for reshaping the state’s health system as part of the reforms hospitals are required to make under a recently approved federal Medicaid waiver.
The greatest tension is that the waiver—an $8 billion program designed to incentivize reform in how health care is delivered—only works if hospitals, health systems and other providers take a regional view, disregarding self-interest in the name of efficiency.
No system has ever shown a great willingness to do that, said Stephen Berger, a financier and former state government official who chaired two statewide commissions on hospitals and health facilities.
“The plan was resisted and nothing happened,” Berger said. “Not one of its recommendations were implemented.” His point was that everyone knows New York needs reform. It’s been talked about since the Medicaid program began. But political interests, unions, physicians, hospitals, any group that benefits from the bloated spending often resists dramatic change.
The problem, as Berger sees it, is that the Medicaid money acts as a giant carrot but without a mandate, a stick of some sort, major reforms won’t take place.
“Asking you to all be volunteers in self-repurposing is too complicated,” Berger said. “Asking you to decide who will close and who will downsize, who will give up jobs may be too much to ask.” Kevin Finnegan, political director for 1199 SEIU, the state’s most powerful health care union, said “the bottom line” from his standpoint was to protect jobs, wages and benefits.
That will be hard if the Medicaid waiver achieves its ultimate goal and reduces in-patient utilization by 25 percent during the next five years. That decrease in utilization, a trend already sweeping New York and much of the country, means fewer occupied beds. Fewer occupied beds tends to make health systems want to reduce staff.
“As a labor leader, I have to tell you our first priority is to protect those jobs and, as you might expect, 1199 and I are certain the other unions will fight the wholesale closing of hospitals without a solid plan to preserve and indeed improve care in communities and ensure that currently employed union members are given the opportunity to continue in jobs with their current wage and benefit structures intact,” Finnegan said.
The union hope is that these employees will be seamlessly transitioned into a new line of work in an outpatient setting. And because 1199 leadership was at the table while the waiver details were being negotiated, there are hundreds of millions of dollars available for retraining.
The waiver also requires applicants seeking its funding to include “workers and their representatives in the planning an implementation of their overall project with particular emphasis on the comprehensive workforce strategy.”
And the union, whose leaders enjoy a good working relationship with Governor Andrew Cuomo, got a big assist in this year’s state budget process. The budget included $380 million to help subsidize a salary increase for home health care workers. But labor battles are only one problem. The state’s Delivery System Reform Incentive Program, DSRIP for short, envisions a host of regional partnerships across the state called Performer Provider Systems, or P.P.S. That means hospitals and other providers, which have competed with one another for decades, are expected to work together, and do so quickly.
“I think to ask natural competitors all of a sudden drop their competitive spirit … is a challenge,” said Arthur Gianelli, president of Mount Sinai St. Luke’s. “It is really challenging and I’m not clear it is ultimately required that performing provider systems further collapse into one another such that historically natural competitors work within the context of a single performance provider system.”
And if everyone works together well, there are concerns about that, too, because that would mean mega-providers with outsized bargaining power to negotiate prices of care. History says bigger and fewer just means higher costs,” said Jeff Alter, C.E.O. of United Healthcare’s employer and individual business. “We are concerned about the leverage.”
The compressed timeframe isn’t making matters any easier, said Jim Introne, special advisor to the state health commissioner, who said it was the one thing he wished he could change about the Medicaid waiver.
The project applications are due in less than 90 days, and will require a level of coordination that is unprecedented in the state. “This is the holy grail of what we’ve been trying to do for 90 years,” said Jeff Kraut, a senior vice president at North Shore L.I.J. “Yesterday, we get the application for DSRIP and in 90 days we are going to see. The fact of the matter is this is extraordinarily complex. … to get organizations to pick their heads up and have a regional view and collective responsibility, a collective moral accountability for what they do.”
“Ninety days isn’t enough,” Alter said, “and we might be living for decades with the unintended consequences.”