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The NYSPA Report – NYS Governor’s Executive Budget Proposal: Issues for the Mental Health System

This edition of the NYSPA Report focuses on the Governor Paterson Executive Budget Proposal for the 2009-2010 fiscal year. Customarily, the Governor’s annual budget proposal is released in January of each year. However, because, in the words of Governor Paterson, the state is facing the most serious financial crisis since the Great Depression, the Governor released his budget in December in the hope of stimulating urgent attention and spurring the Legislature to act expeditiously. The budget proposal can be viewed online at: www.assembly.state.ny.us/comm/WAM/20081216/a158.pdf.

In addition to proposals for cuts in spending, the Governor’s budget proposal also includes proposals for significant changes in the NYS Medicaid program that are intended to “reform” the program and generate savings. This article will review three proposals for change in the Medicaid program. Our goal is to bring these proposed changes to the attention of advocates, patients and their families.

The NYS Medicaid Drug Formulary

New York has established a Drug Utilization Review Board which is charged with advising the Department of Health on which medications from different classes of medications shall be included in its list. Under the new statutory proposals, the DURB will now be asked to recommend guidelines for specific therapeutic regimens for specific diagnoses which practitioners may prescribe without requirement of prior authorization. The key change in the budget bill (Section 45(7), p. 81) eliminates the current right of the prescribing physician to override Medicaid prescribing restrictions. If the change is enacted into law, a shift will occur and the Medicaid program’s decision will be final rather than the physician’s. Although a physician may appeal from a denial of coverage, the decision by the Medicaid program is final. Despite national outcries against the increasing insertion of bureaucrats between doctors and patients, NYS is about to take a giant step in that direction. NYSPA opposes this change. Our longstanding policy requires that generally accepted medical practice must prevail over bureaucratic cost-cutting.

Pharmacy Benefit Managers (PBM)

The Governor has proposed an entirely new statutory scheme (p. 88) that would regulate pharmacy benefit managers – the companies that are hired by health plans to oversee and manage the prescription drug benefit part of a health plan. Many patients are surprised to learn that a PBM employed by their health plan has contacted their physician requesting that that the doctor “switch” the patient’s prescribed medication from the drug prescribed by the physician to another drug suggested by the PBM. Too often such requests are made for the financial benefit of the PBM or health plan rather than for the clinical benefit of the patient.

The proposed statute would require a PBM to notify the patient (or the patient’s guardian) before contacting the patient’s physician about switching the patient’s prescription and when the PBM contacts the physician, must provide the physician with clinical and financial information regarding the drug switch. It then requires that prescribers make their decision based on the whether the proposed “switch” is in the patient’s best interest. Seems good! Seems patient centered! But is it? The answer lies in the definition of “switch” in §4450 (12). Under the proposed statute, the definition of a switch has two elements. First, a switch is an attempt by a PBM to switch multiple patients because of clinical considerations or the economic benefit to the PBM. However, the definition then states that an attempt to change a prescription excludes an attempt to switch the patient to “a lower or equally priced therapeutically equivalent drug.” “Lower or equally priced” refers to the participant’s co-payment or co-insurance amount.

By defining “switch” to exclude attempts to switch patients to another drug when there is no cost to the patient, the bill’s apparent patient friendly appearance is stripped away. The definition defines “switch” in such a way as permit PBMs to continue to act as they currently do so long as the patient’s out of pocket payment is not increased. NYSPA advocates for the removal of (b) from the definition of “switch” and opposes the section as presently written.

Reducing the Influence of Drug Companies

The Governor also has proposed sweeping new provisions that would seek to protect physicians and other prescribers from the undue influence of pharmaceutical companies. Proposed laws would restrict gifts to physicians, impose disclosure requirements relating to drug manufacturers’ provision of things of value to prescribers, and limit the influence of drug companies and medical device manufacturers on continuing medical education.

While some may argue against the details and burden created by the proposed restrictions on continuing medical education and recommend that New York wait until anticipated federal action addressing these concerns, the goal of insulating prescribers from undue manufacturer influence seems to be in the broad public interest. However, the state’s thrust seems less far ranging than it might have been. In the PBM section, there are specific (although inadequate) restrictions on PBM activities and the health plan must give permission for attempts at switching. What is strikingly absent is a requirement that the prescriber agree to be solicited regarding switching. As a result, drug manufacturers will be able to continue targeting physicians to urge them to prescribe products based on the company’s profit goals based on detailed knowledge of the doctor’s prescribing pattern. The only way to prevent drug companies from attempting to improperly influence physician decision making is to deny drug companies access to physician prescribing data. NYSPA urges adding language preventing the sale or distribution of physician specific prescribing information and patterns to manufacturers. NYSPA is advocating for the changes in the “language” section of the bill and urges other advocates to join with us in this endeavor.

Proposed Budget Cuts for Hospitals

Finally, we wish to point out another danger to the mental health delivery system. To no one’s surprise the income and expenditure projections laid out in the budget bill are beyond harsh, mirroring the state’s present reality. Perhaps unexpectedly, the OMH budget shows a small increase. However, if you look further and recognize the broad role played by the Article 28 licensed facilities, such as hospitals, in providing mental health service in the state, the picture becomes more ominous. Even when departments of psychiatry in particular hospitals may remain profitable or at least break even, the hospitals of which they are a part may be severely, adversely impacted as the proposed budget severely reduces Medicaid rates. The consequence may be the closing of institutions which are important providers of mental health services to the communities they serve. We last encountered a similar threat to the mental health system when we raised concerns about the potential impact on mental health services of the “Commission on Health Care Facilities in the 21st Century”, known as the “Berger Commission” in 2006. Fiscal data presented at that time made the point that Article 28 facilities accounted for an enormous percentage of mental health service in the state. For example, 48% of funds expended for inpatient care and 40% for outpatient care was provided through Article 28 facilities (See the NYSPA Report, Mental Health News Spring, 2006 V. 8, No. 2, available in the back issues section of the Mental Health News website: www.mhnews.org). We want to make sure that legislators are aware of this pressing concern when they consider changes to the Medicaid reimbursement scheme this year.

Our aim is to reduce the undue influence of drug companies, protect the doctor-patient relationship from further bureaucratic intrusions, protect patients from inappropriate medication “switches” by their PBMs, and assure adequate access to the public mental health system for persons with serious mental illness.

Barry B. Perlman, MD is the Chairman of the Committee on Legislation of the American Psychiatric Association, and Immediate Past President of the New York State Psychiatric Association. Seth Stein, Esq., is the Executive Director & General Counsel of the New York State Psychiatric Association.

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