New York budgets $24 million in grants to help nonprofit providers create HIV/AIDS care networks New York's long-awaited special needs plans (SNPs) for Medicaid recipients with HIV/AIDS appear to be closer to reality. In his budget proposal, Gov. George Pataki announced plans to set aside $24 million in grants to help SNPs get off the ground. Well-capitalized, for-profit HMOs would not be eligible for the grants. Only non-profit health care providers and community groups serving those with HIV/AIDS would be eligible for the grants if they decide to create managed care networks. Every dollar in grant funding would have to be matched, however, by a dollar of private capital. The governors proposal ... puts for-profits at a disadvantage unless they have very deep pockets, which of course some of them do, said Dr. George Clifford, administrator of the AIDS program at the Albany Medical Center, one of the hospitals looking into the possibility of forming a SNP. It creates an unlevel playing field. Many observers think the state is trying to do just that, to make sure that the groups already providing services don't get squeezed out of the new system. At this point we are getting ready to issue an RFP, which we expect to do this spring, said Department of Health spokeswoman Frances Tarlton. Then were looking at three months for the applications to come in. Our goal is to be able to license some SNPs by the end of the year. The federal government waiver under which New York is operating its Medicaid mandatory managed care system requires that the SNPs have to be in place; viable, up and running before we can mandate managed care for this population, Ms. Tarlton added. As a result, she said, It's likely that there will be some pilot programs set up. But likely participants are taking very much of a wait-and-see attitude until the state announces its rate structure, or even how much the total funding package will be. We've had conversations with some of those HMOs to see if they're interested in being the parent to a SNP,Ó said Dr. Clifford. At least two have made it clear they're not interested in getting involved in any more business arrangements of this type with the state. When the state negotiated its first mandatory managed care contracts, many HMOs complained that they were pressured into accepting less-than-adequate rates. In fact, the department raised many of them after outside auditors appointed by the Legislature reviewed the rates. We'd be very concerned about the rate structure before we made any decision, said David Rooney, a spokesman for Kaiser Permanente CHP, one of the HMOs that's been participating in the discussion process with the Health Department and other interested groups over SNPs. While the state has yet to announce its rate structure, department officials did brief managed care companies, health care providers, community service organizations and consumer groups on some financial and policy issues at a meeting in early February. We've heard they're going to base their rates on 1995-Õ96 utilization data and cost data, which is good, said Susan Dooha, director of Health Care Access for Gay Men's Health Crisis. Hospitalizations costs were higher during that period, because the new therapies have reduced the need for hospital admissions. The department also appears not to want to repeat the bidding process that created such a furor among managed care plans in the past. ÒDOH will set the rates, said Sarah Smith, director of managed care for the Greater New York Hospital Association. They will not be put out to bid. There probably will be no negotiating. But Ms. Smith said it will be no small trick to figure out an appropriate rate using the cost experience of treating HIV/AIDS patients on a fee-for-service basis. It will be a highly controversial endeavor. According to several participants in the February meeting, the state is also leaning toward creating risk corridors which would encourage both cost containment and maintaining adequate care. The department's current thinking is to have a 2% risk corridor; that is, if costs were more than 2% above a SNPs capitated rate, the state would share the extra expense. If they were more than 2% below the rate, the state would share in the savings. The state also discussed setting up a reinsurance program to protect SNPs from the million-dollar-cases those individual patients who require very expensive, intensive care. Despite the wariness of many of the organizations that would be expected to form SNPs, Dr. Clifford thinks there will be intense competition for the contracts, especially in New York City, unless the rate is set so low you just can't make any money. These are franchises in New York City, he said. You're looking at a potential 60,000 enrollees. That's so large you can spread the risk. Dr. Clifford is concerned that it may be impossible to form adequate networks upstate, where there are about one-tenth the number of HIV/AIDS Medicaid recipients, clustered mainly in Buffalo, Syracuse and Rochester. But in metropolitan New York, groups ranging from the public and non-profit hospitals to community organizations like Gay Men's Health Crisis all are expected to see forming SNPs as financially viable especially with start-up grants. GMHC's Ms. Dooha remains cautious, however: we're waiting to see the money. Harvy Lipman