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Preserve New York State's Heathcare Safety Net

Memorandum In Support of S.8509A (Cleare)/A.9693(Rosenthal)
May 11, 2022

Apicha Community Health Center writes this memorandum in support of S.8509A (Cleare)/A.9693 (Rosenthal) which would repeal statutory language passed in the 2020 state budget directing the Department of Health to transition the Medicaid pharmacy benefit from managed care to fee-for-service, also known as the “carve out.” This enacted budget language, originally championed by the Cuomo Administration, will weaken New York’s healthcare safety net and threaten the health of Medicaid beneficiaries, the uninsured, and low-income New Yorkers across the State.

Recognizing the devastating impact of the proposed carve out, last year, the Legislature delayed implementation of the carve out until April 1, 2023, with the understanding that there would be more time for a robust discussion inclusive of all stakeholders. To date, the Department of Health has only engaged in discussions on how to advance the carve out, without engaging in discussion around alternative solutions that would meet Departmental goals without undermining the safety net. However, through S.8509A/A.9693, there is an opportunity to fully repeal the carve out and protect safety net patients and providers from its consequences.

Moving the pharmacy benefit from managed care to fee-for-service disintegrates pharmacy access from medical and behavioral health care and will hinder effective care management for Medicaid consumers. Management of the pharmacy benefit through Medicaid managed care, and especially in the HIV Special Needs plans, allows for better patient care management because plans and providers can quickly identify and address gaps between a patient’s adherence to HIV treatment and medical care. In general, plans play an important role in helping members manage the complex drug regimens required to address the multiple chronic conditions. California recently implemented its own carve out, using the same pharmacy benefit manager New York has contracted with, and the results have been disastrous for beneficiaries. Beneficiaries with complex health conditions have been waiting days and weeks for medications.

Additionally, the carve out eliminates the mechanism that enables safety net providers, like federally qualified health centers, Ryan White grantees, and disproportionate share hospitals, to access savings realized from the 340B federal drug discount program. 340B was created by Congress in 1992 to improve care for marginalized populations by providing discounts on prescription drugs as a condition of participation in the Medicaid program. The subsequent savings enable safety net providers to provide medical care to uninsured individuals as well as vital wraparound services like nutrition, transportation, and housing. Safety net providers depend on funds generated from 340B program to provide care and services to 2.3 million underserved New Yorkers. Approximately 70% of those individuals are people of color and nearly 90% are low-income. Federally qualified health centers alone will lose more than $100M annually in 340B savings if the carve out is implemented as planned.

The carve out will add additional hurdles for accessing care in low-income communities and communities of color, which have historically suffered from healthcare disparities and are now disproportionately impacted by the COVID-19 pandemic. At a time when the State and country are reckoning with its history of divesting in communities of color, it is nonsensical and inconceivable to advance a proposal that will likely result in the closure of 32 community health clinics and the loss of over 700 vital healthcare jobs that provide life-saving services in the most underserved neighborhoods.

A full repeal of the carve out will allow the Department of Health, safety net providers, health plans, patient advocates, and pharmacists to realign around shared priorities and determine opportunities to advance policy proposals that will not undermine any one vital corner of the health care system at a time when all New Yorkers are working to recover from COVID-19.

Apicha Community Health Center writes this memorandum in support for S.8509A/A.9693 and urges its swift passage in the Senate and Assembly to ensure that patients, safety net providers, and health plans can continue providing and receiving critical, coordinated and life saving care without disruption.

With questions or follow up, please contact Phillip Miner, Director of Grants and Communications,