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The Social Security Act permits the Secretary of Health and Human Services discretion in waiving certain aspects of the Act in order to conduct experimental demonstration projects. These demonstrations are frequently aimed at redesigning a health system to test new procedures designed to better serve greater numbers of Medicaid recipients while reducing costs through the use of various mechanisms, such as managed care. The Partnership Plan is one such demonstration. The State has effectively dealt with many difficult issues in implementing the Partnership Plan in twelve upstate counties and in preparing to implement Phase 1 in New York City.

The Partnership Plan. On March 20, 1995, New York State submitted a section 1115 waiver application that would permit Federal financial participation in a demonstration called the Partnership Plan. The State proposed to move over two million currently eligible individuals and approximately 370,000 "Safety Net" (Home Relief) recipients into a managed care environment. When the Partnership Plan is completely implemented, about 85 percent of New York State's Medicaid eligible population will be in managed care.

Today's action will allow the State to begin enrolling Medicaid recipients in Staten Island, lower Manhattan, and parts of Brooklyn into managed care organizations as soon as the State provides documentation that the required conditions are met.

The New York State Proposal. The New York State Partnership Plan proposal incorporates four broad initiatives:

1. The transition of the State's acute care program from fee-for-service to managed care.
   
   
2. Converting approximately 370,000 residents covered by the State's "Safety Net" program to Medicaid beneficiaries covered by a Federal entitlement program.
   
   
3. The development of Special Needs Plans to serve: people who are HIV-positive or who have AIDS; adults who are seriously and persistently mentally ill; and children with serious emotional problems.
   
   
4. The creation of a $1.2 billion pool of money to assist hospitals in moving to managed care. These funds help cover both training staff and establishing or enlarging neighborhood-based clinics and health centers. This transition initiative will be funded by redirecting a portion of the State's special Medicaid allotment for hospitals that treat a larger-than-normal percentage of indigent or uninsured patients.
   

Delivery system. Counties in New York State will procure contracts with managed care organizations. In order for a county to be permitted to implement the Partnership Plan, it must offer its Medicaid population a choice of at least two managed care organizations. Partially capitated plans will be utilized to ensure access to care in areas of the State that do not have sufficient managed care capacity. Managed care organizations will be encouraged to establish network arrangements with traditional providers, such as Federally Qualified Health Centers, school-based health centers, and Ryan White CARE Act providers.

Conditions. Before Phase 1 of the New York City enrollment can begin, the State must provide documentation that a number of conditions have been fulfilled. The three principal conditions, as outlined in the July 1997 special terms and conditions and identified in HCFA's most recent letter to the State, are as follows:

The New York State Department of Health must provide a detailed interim monitoring plan so HCFA can do an early evaluation of the quality of care being provided.
The New York State Department of Health must provide a detailed Statewide Quality Assurance Monitoring Plan, including a subset plan for New York City. [Both monitoring plans must pay particular attention to vulnerable, at-risk populations such as people with diabetes, AIDS, asthma or hemophilia.]
New York State must submit the final Partnership Plan Operational Protocol --the rules that govern the functions of the waiver. This protocol must include the State's fair hearing policy for people who believe that they have not received the care or service that they needed.

This operational protocol (including the fair hearing policy) and the monitoring plans must be approved by HCFA before New York begins Phase 1 enrollment.

Phase-In Process. Due to the complexity of the project, the State suggested that there be five, separate phase-in areas of the waiver in New York City. The first two implementation phases include: Phase 1-- Staten Island, Lower Manhattan, parts of Brooklyn; and Phase 2 -- Northeast Queens and North Bronx. HCFA is comfortable with Phase 1 and believes that Phase 2 could be ready in the future. There are no firm specific time frames for the process beyond Phase 2. HCFA and the State continue to work with the State to make sure the requirements for all phases are fulfilled prior to implementation approval.

Benefits. Managed care enrollees will be entitled to the same benefits that are available under the fee-for-service program. They will receive a comprehensive benefits package through their managed care organization but certain services (e.g., long-term care services and prescription medicines) will continue to be provided on a fee-for-service basis.

Eligibility and enrollment. Most Medicaid-eligible New York residents eventually will be required to enroll in managed care, and enrollment will be done in phases on a county-by-county or, in the case of New York City, a zip code by zip code basis.

Exempted and excluded populations. However, some people may be exempted or excluded. Exempted populations will have the option to enroll in managed care organizations but will not be required to join. Those exempted include: people with HIV/AIDS, people who are seriously and persistently mentally ill, people for whom a managed care provider is not geographically accessible, pregnant women already receiving prenatal care from a primary care provider, and Native Americans.

Because some patients need specialized care and/or live in institutions, they will not be given the option to enroll in managed care organizations. Some examples of excluded populations are people who are dually eligible for Medicaid and Medicare, residents of nursing facilities, residents of State-operated psychiatric facilities, and Medicaid-eligible infants living with incarcerated mothers. People in these excluded groups represent approximately 15 percent of the State's Medicaid eligibles and account for approximately 40 percent of the State's Medicaid expenditures.

Community input. Since signing the Partnership Plan waiver in July of 1997, HCFA and New York State have been conducting many efforts to ensure a smooth transition to a majority Medicaid managed care environment in New York State. Quarterly public meetings are conducted at which community groups and the general public can provide comments about managed care to HCFA, State and New York City officials.

Meetings are also held with health advocacy workgroups every 4-6 weeks to discuss access and care issues. We have asked advocates their opinions and concerns on the waiver, and they have provided HCFA with significant support and information. We will continue to solicit their advice about all aspects of the waiver. Both of these forums have provided HCFA staff, as well as New York State and City staff, an opportunity to respond to their concerns and suggestions. This partnership with the advocates has helped -- and will continue to help -- shape the policies and procedures developed for the waiver.

Current status. On July 15, 1997, HCFA approved the State's 1115 waiver application, and issued Special Terms and Conditions for program implementation. The first five New York counties "went live" with Medicaid managed care on October 6, 1997. As of April 1999, twelve counties have begun to implement the waiver. These counties are: Albany, Broome, Columbia, Erie, Greene, Monroe, Niagara, Onondaga, Ontario, Rensselaer, Saratoga and Oswego.

The HCFA review team has completed its review of New York City. The review consisted of an intensive organizational review; meetings with State and City officials; visits to six managed care organizations; presentations by and discussions with Maximus, the enrollment broker; two meetings; and a meeting with the New York City Task Force on Medicaid Managed Care.

As soon as the State and city fulfill the three principal and other related conditions outlined in the HCFA letter of May 26, 1999, the City may begin enrolling Medicaid-eligible New Yorkers in Staten Island, lower Manhattan, and parts of Brooklyn as Partnership Plan beneficiaries.