Here’s How It Works…

MediStateNY follows Medicare as closely as possible. Doctors, hospitals and other providers are compensated in accordance with the Medicare Physician Fee Schedule (PFS), payment rates, and other provisions for services. Rules are as identical as possible to Medicare. As Medicare revises and adjusts its fee schedule, policies and provisions, Medistate follows suit. Medicare does the footwork and research on compensation.

People enrolled in, or eligible for, Medicare are not eligible for Medistate coverage. People enrolled in or eligible for Medicaid are not eligible for Medistate coverage. MediStateNY shall cover ALL STATE CITIZENS WHO DO NOT QUALIFY FOR MEDICAID OR MEDICARE, who are younger than 65 years of age.  As Medistate is nearly identical to Medicare, there will be little disruption to Medistate enrollee expectations and experiences as they age and move onto Medicare. Ideally, future cooperation between Medistate and Medicare can result in a nearly seamless transition.

Medistate is to be funded entirety from payroll deduction taxes, percent to be determined. Formula for employer contribution, i.e., matching, 50%, or some other, is to be determined and fixed in the charter. Payroll cap, if any, must also be determined. Working Medicare and Medicaid enrollees and their employers would not be subject to payroll deduction. No contribution is intended to be derived from any other form of state revenue, although this is worth discussing further (Gambling taxes? Lottery?). System must be self sustaining and segregated from other state financing and operations with exception of payroll tax and premium collection, and ancillary support services currently provided by federal government to Medicare. Program must be able to collect payroll deductions from those enrolled in Medistate working for out of state companies. State must be prepared to crack down on employers paying workers “off the books” so all workers and employers pay their fair share.

Medistate will establish a state pharmacy that buys or contracts for all prescription pharmaceuticals and negotiates pricing seeking to purchase pharmaceuticals at lowest possible price. Formulary shall be the same as Medicare, although some expansion may be permitted if Medicare formulary is considered too restrictive. Local private pharmacists who enroll with the state pharmacy may dispense from the state pharmacy inventory and receive a modest fee for services. Enrollees may deal directly with the State Pharmacy by mail or electronically. Statewide Pharmacy operation is funded by initial state contribution and small commission over the paid for price of their pharmaceuticals. This initial contribution will be refunded to the state from commissions over first 5 years of operation. Funding does not come out of Medistate payroll taxes. It is a passthrough operation. Medistate Part D would pay for some pharmaceutical costs for enrollees as Part D does for Medicare. As in Medicare, Medistate Part D would be premium based. This program is open for discussion as other more advantageous schemes for reducing pharmaceutical costs to enrollees may be devised. Objective is to reduce pharmaceutical costs by 50% or more from current Medicare pricing. State pharmacy system could be expanded to the acquisition of prescribed medical devices with comparable savings.

Doctors, hospitals, and providers must apply to be in the Medistate network. Nearly all providers will apply and accept assignment as Medistate will be, for most providers, the only game in town. Rejection of provider is a serious penalty and a method of adjudication of such decisions as well as a system for disciplinary actions against providers who cheat system must be created. Medistate may accept providers from states outside of those whose citizens are covered or in other ways provide emergency coverage for Medistate enrollees who are travelling or temporarily out of state.

Medistate Advantage Plans and State Medigap insurance plans may be offered to enrollees by insurance companies similar to the Medicare Advantage Plans and Medigap insurance plans authorized under Medicare Part C.

Medistate is envisioned to grow to be a multistate operation to include Connecticut, New Jersey, Vermont, New Hampshire, Massachusetts, Rhode Island, Maine, Pennsylvania, etc. In the future, contiguous states like Ohio, Maryland, Delaware, West Virginia and Virginia my also join. The greater the number of states and enrollees, the greater the negotiating power of the system and the number of people with access to healthcare.

Medistate is to be governed by a Board whose members are appointed by the Governors and the State Legislatures of the member states. This Board hires the executive director and key employees and the State Pharmacy director. Medistate shall be mandated to hold overhead to 3% or less of provider payments or collected revenue, whichever is less. As Medistate is patterned after Medicare, any variation in provisions of Medistate from Medicare must be approved by this board within the limitations of the charter.

A charter must be written that will specify how the organization shall operate. A method of state approval, oversight, and amendment of the charter must be agreed to. The charter shall specify the requirements and procedures governing how states may join and leave the Medistate program. The 3% overhead limiting provision shall be specified in the charter and cannot be changed by the board more than 1% up or down. This provision may only be changed by amendment of the charter. The charter shall provide for the dissolution of Medistate if a single payer healthcare system is created by the federal government that provides the same or better coverage than Medistate.


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