1. October 1,2012 Webinar 2012-13 Medicaid Global Spending Cap

2. Overview New York State Budget Overview Medicaid – Before and After MRT Recap of 2011-12 Medicaid Global Cap Results Components of $600 Million Annual Medicaid Global Spending Cap Growth Results through July 2012 Successfully Maintaining the $15.9 Billion Global Cap 2

3. FY 2013 Enacted Budget Financial Projections $ in billions 3

4. FY 2012 and FY 2013 Gap-Closing Plans 4

5. Medicaid Growth Before and After MRT (2010-11 Base Year) State statute “bends the cost curve” by holding spending to Medical CPI (currently at 4%). 5 $53.8 B Average Annual Growth is 8.7%; Consistent with CBO average growth Average Annual Growth is 4.6%

6. Historical Budgeting Process Focus on reducing annual Budget gaps; not promoting multi-year reforms Limited stakeholder buy-in or ability to plan for future Controversial; heavily influenced by budget negotiation process Primary emphasis on statutory approaches, developed internally, to achieve desired savings level:  Provider reductions & rate cuts  Across-the-board (ATB) cuts  Elimination of lower priority services (i.e., optional services) 6

7. MRT Process Focus on implementing reforms over time; allows modest growth (4%) to facilitate investments and planning Collaborative process that encourages stakeholder involvement & community education Minimizes the number of issues needing to be resolved during budget negotiation process Primary emphasis on reform and efficiency  Brings comprehensive solutions to bear on cost drivers in a transparent manner  Provides a multi-year road map to meeting fiscal targets and ensuring Medicaid sustainability  Emphasizes quality and accountable health care outcomes for all New Yorkers 7

8. Medicaid Spending Cap Implementation of Medicaid Global Cap was an essential element in changing the budget paradigm. Living within the cap has fundamentally changed the relationship between the State and Medicaid stakeholders. Spending is monitored monthly against category-specific targets and reported publicly. The incentive is to understand and address unanticipated spending patterns. This has spurred creative solutions and unprecedented provider collaboration (e.g., repaying accounts receivable balances). The focus is on preventing the need for the Commissioner of Health to implement traditional cost containment actions to bring spending levels back in line. 8

9. Recap of 2011-12 Global Cap Spending under the 2011-12 Global Cap was $14 million below the $15.3 billion target Accounts receivable balance totaled $575 million as of March 31, 2012 Peaked at over $750 million in January 2012 Health care coverage was provided to an additional 154,000 fragile and low income recipients Medicaid Managed Care enrollment increase by 230,000 recipients Fee for Service enrollment decreased by 76,000 recipients 9

10. Recap of 2011-12 Global Cap Based upon latest information available, enrollment increased by approximately 136,000 recipients between December 2010 and December 2011 10 By Eligibility GroupNewly EnrolledDisenrolled Net Increase (Decrease) TANF (age 0 – 64)505,521423,01982,502 Safety Net (age 0 – 64)281,836235,79146,045 SSI (age 65+)98,513117,850(19,337) Aliens/Emergency Medicaid23,6996,07717,622 FHP104,06694,9299,137 Total1,013,635877,666135,969 There were 877,666 members disenrolled (18%) from the Medicaid program as part of the “churning” within the program and is higher than prior years. However, the Department is taking steps and other streamlining efforts (i.e., phone renewals) to reduce disenrollments. DOH and DOB estimate that this enrollment growth (phased in over the year) costs the Medicaid program $267 million which is accommodated within the Global Cap. Enrollment increased at a slower annual rate -- 4.4% as of December 2010 declining to 2.8% as of December 2011. Unemployment decreased from 8.6% in 2010 to 8.2% in 2011

11. Components of $600 Million Annual Growth Price (+$363 million) Price includes an increase in managed care premiums and fee-for-service pharmacy costs, as well as various inpatient and outpatient rate changes. Utilization (+$433 million) Utilization reflects the annualization of 2011-12 net enrollment growth (154,000 recipients) as well as assumed new enrollment for 2012-13 (ranging from 90,000 to 120,000 recipients) One-Timers (-$67 million) One-Timers primarily include the loss of enhanced FMAP which expired in June 2011 (+$703 million), offset by 53rd Medicaid cycle in 2011-12 (-$325 million) and accounts receivable recoupments in 2012-13 (-$259 million). MRT/Other (-$129 million) Other reflects the annualization of MRT Phase I savings ($156 million) offset by MRT Phase II initiatives ($27 million). Annual growth of $600 million over last year includes costs associated with both price and enrollment increases, offset by a net change in one-time revenue and spending actions as well as the continuation of MRT initiatives. 11

12. 2012-13 Medicaid Global Spending Cap – Monthly Projections Monthly projections range from a low of $950 million in September 2012 to a high of $1.7 billion in August 2012 12

13. Results through July 2012 Medicaid expenditures through July 2012 are $63 million or 1% below projections 13 Medicaid Spending July 2012 (dollars in millions) Category of ServiceEstimatedActualVariance Total Fee For Service$3,792$3,700($92) Inpatient$1,048$1,036($12) Outpatient/Emergency Room$187$176($11) Clinic$229$240$12 Nursing Homes$1,144$1,120($24) Other Long Term Care$624$622($2) Non-Institutional$561$507($54) Medicaid Managed Care$2,914$2,919$5 Family Health Plus$310$311$1 Medicaid Administration Costs$122$134$13 Medicaid Audits($86)($76)$10 All Other$424$425$2 Local Funding Offset($2,378) $0 TOTAL$5,097$5,035($63)

14. A/R Balance – July 31, 2012 The accounts receivable balance is expected to decline by $259 million during SFY 2012-13 Balance as of March 31, 2013 is projected at $316 million DOH will continue to work with providers asking for voluntary payment of outstanding liabilities Avoids interest costs Mitigates adverse impact on Global Cap 14

15. Medicaid Enrollment Medicaid total enrollment reached 5,044,044 enrollees (excludes CHP) at the end of July 2012. This reflects an increase of roughly 52,000 enrollees, or 1.0%, since March 2012. 15

16. MMC/FHP Enrollment Medicaid Managed Care enrollment in July 2012 (includes FHP and Managed LTC and excludes CHP) reached 3,624,998 enrollees, an increase of almost 86,000 enrollees, or 2.4%, since March 2012. 16

17. Keys to Successfully Maintaining the $15.9 Billion Global Cap Continue working collectively with the health care industries to Shift less severe patients from the hospital and emergency room to more appropriate ambulatory/primary care settings Better management of the dual-eligible (Medicaid-Medicare) population and control of Long Term Care spending Shift Medicaid recipients from costly fee-for-service into Medicaid Managed Care where services are better coordinated and financial incentives are more rational Voluntarily repay over $500 million to the State for outstanding liabilities owed by providers 17

18. Keys to Successfully Maintaining the $15.9 Billion Global Cap Improvement in economy will drive lower enrollment growth Continued successful implementation of MRT Phase I and Phase II initiatives 18