Health and Human Services Secretary, Mike Leavitt, has approved a five-year, $3 billion experiment by New York State to reorient its Medicaid program to take care of more people in their homes and communities with an eye toward enhancing patient satisfaction, eliminating waste and improving the economic viability of the program.

New Yorks Medicaid program currently covers nearly 4 million beneficiaries at an estimated annual cost to the state and federal governments of $43 billion. The traditional delivery system, which emphasizes inpatient hospital and nursing home care, is expensive, inflexible and often not oriented to patient needs. Todays approval will set the state on a course of eliminating excess waste with unused hospital and nursing home beds, building creative new care solutions in homes and communities and shifting greater emphasis to preventive programs such as disease management.

I applaud Governor Pataki and the state of New York for facing the challenges to the Medicaid program and taking action that will improve care for beneficiaries while also sustaining Medicaid into the future, Secretary Leavitt said.


The program, the Federal-State Health Reform Partnership (F-SHRP), was developed by the state in close collaboration with HHS and will put into practice the goal of increasing access to up-to-date care through structural reform of all health care delivery systems away from institutions through greater patient involvement in the type and location of care they receive.

This reform program embodies key principles to keep Medicaid up to date and sustainable into the future, said Mark B. McClellan, M.D., Ph.D., administrator of the Centers for Medicare & Medicaid Services (CMS). Health care is increasingly about coordination of services and preventing complications before they happen, not just paying more for more services in costly settings, and we are pleased to support the State of New York in their efforts to improve quality and avoid unnecessary costs.

Medicaid will also increase use of coordinated-care health plans, which can deliver services to Medicaid beneficiaries with greater emphasis on care management and preventive services. The improved efficiencies from greater reliance on managed care are expected to help finance the cost of the demonstration.

The F-SHRP project will run through September 2011 and CMS will perform ongoing monitoring through the programs implementation.

The announcement also includes a three-year renewal of an ongoing demonstration, the Partnership Plan, which has been operating since 1997 and provides coverage for most state Medicaid recipients through managed care. The plan provides comprehensive health coverage to low-income uninsured adults whose income may be higher than traditional Medicaid eligibility standards.

I urge other states to follow New Yorks lead in designing Medicaid health care systems that are more responsive to patient needs and desires to be cared for at home, to exercise greater control over their health care and to use savings from these changes to build a solid foundation for Medicaid into the future, Secretary Leavitt said.

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