ALAN D. AVILES
HHC PRESIDENT AND CHIEF EXECUTIVE
REPORT TO THE BOARD OF DIRECTORS
January 26, 2012

METROPLUS WINS TOP QUALITY INCENTIVE AWARD FROM NEW YORK STATE

MetroPlus, HHC's own Health Plan, has now been ranked #1 by the New York State Department of Health, under its Quality Incentive Awards program. MetroPlus' top ranking has secured the corporation the maximum incentive award that can be achieved by any plan with a 2.5% premium increase per member per month, excluding pharmacy revenue. This will bring an estimated bonus of more than $34 million to MetroPlus' revenue for 2012. MetroPlus is planning to use this revenue to fund Quality Incentives and Pay for Performance pools.

MetroPlus' exceptional performance will also improve the rate at which members are automatically assigned to us, since plans which achieve any level of the Quality Incentive Award will receive the quality preference in the auto-assignment formula.

For 2011, MetroPlus Health Plan was ranked as the top plan among over 15 public and private managed care plans in New York State, reaching the maximum score of 100 quality points. There are three tiers of awards based on the percentage of points earned by the plans. Plans are awarded a percent premium increase by achieving or exceeding the threshold for the respective tier. MetroPlus was the only plan in New York State to achieve the maximum 2.5% premium bonus.

The program is an initiative of the New York State Department of Health, Division of Quality Improvement and Evaluation, and was created to improve the care provided to Medicaid recipients by Managed Care Plans. The data used in determining the results included ratings from the State's 2010 Quality Assurance Reporting Requirements (QARR), a system designed to collect audited plan data on the quality of care provided to Medicaid managed care enrollees. The scoring is also impacted by the most recent Member Satisfaction survey results, and by Prevention Quality Indicators (PQI) obtained using 2010 inpatient admissions information. PQI measurements quantify hospital admissions from 2010 that most likely could have been avoided through high-quality outpatient care.

The 2011 Quality Incentive awards become effective for capitation rates and for auto-assignment preference on April 1, 2012. I know that the Board joins me in congratulating Dr. Saperstein and his entire team for this stellar accomplishment and for their excellent collaborative work with all of our facilities which contributed significantly to this #1 ranking.

ARTIST EXCHANGE PROGRAM LAUNCHED AT LINCOLN HOSPITAL

This past Monday I had the pleasure of attending the launch of the new Art Exchange program at Lincoln Medical and Mental Health Center in the Bronx. HHC Vice President Iris Jimenez-Hernandez and I were joined at the press conference by Tony and Grammy award winner Lin-Manuel Miranda, hip-hop artist Roxanne Shante, and representatives from The Actors’ Fund, the Bronx Council on the Arts, the Bronx Museum of the Arts, Teatro Pregones and Comunilife.

This program is an important partnership with these artists and arts organizations. It is a timely program for the growing number of artists who perform and reside in New York City, too many of whom lack health insurance. It will enable artists of all types -- who add immeasurably to our City’s vibrancy and cultural riches -- to access quality healthcare on the basis of their art and to live longer and healthier lives.

A similar "Artist Access" program initiated at Woodhull Hospital in Brooklyn in 2005 has seen more than 700 artists participate. Lincoln is the second HHC facility to implement this type of program and the only one in the Bronx to do so.

The inspiration for the Lincoln Art Exchange arose when The Fund for HHC, the public hospital system’s philanthropic arm, engaged seminal Bronx hip-hop artists as part of HHC’s STAT! 2011 performance and fundraising series. Some of the artists who gave their creative energy to HHC were uninsured and battling major health issues. Lincoln and The Fund for HHC saw an opportunity to do something about it.

We look forward to the continued success of this creative approach to afford access to high-quality, low-cost healthcare based upon an artist’s willingness to share his or her art and talent for the benefit of HHC’s patients.

HHC FACILITIES PLAN COMMUNITY OUTREACH DURING FEBRUARY

February is National Children’s Dental Health month and in recognition of this, HHC will be promoting its affordable pediatric dental health services and distributing educational materials at its hospitals and health centers across the city.

As most of you already know, dental care is available to children and adults at most HHC hospitals and larger health centers all year round. HHC dental services include preventive and restorative care, crowns, bridges, implants, oral surgery, emergency care, and jaw surgery and reconstruction.

In observance of next month’s special focus on children’s oral health, on Friday, February 3rd, Jacobi Medical Center will offer any infant, child or adolescent from local low-income families free dental services ranging from screenings and cleanings to fluoride treatment.

Other events include free dental screenings at Harlem Hospital on February 3rd and at Cumberland Diagnostic and Treatment Center on February 22nd. Bellevue, Metropolitan and Queens will be focusing on Dental Health Literacy and will have information tables set up in their lobbies throughout the month.

FEDERAL UPDATE

On December 23rd, both houses of Congress passed by unanimous consent, a compromise bill that would extend for two months the Social Security payroll tax holiday, emergency unemployment insurance benefits and current Medicare physician payments rates. This short term measure is funded through increased fees on Fannie Mae and Freddie Mac backed mortgages.

Congress has now re-convened and has only five weeks to agree on a 10-month extension of the payroll tax reduction and the physician pay rates as well as how to offset these spending issues with cuts. Without an extension there will be a 27.4 percent cut to Medicare physician payments.

Representatives from the House and Senate are now considering H.R. 3630, as passed by the House, which included onerous provider payment reductions which would greatly impact HHC, including:

• Severely reducing payments for hospital outpatient evaluation and management services, which could cost HHC $187 million over 10 years;
• Extending the Medicaid Disproportionate Share Hospital (DSH) reductions mandated by the Accountable Care Act (ACA), by one year, to 2021, which could cost HHC $421.8 million in lost revenue that year; and
• Reducing the allowable reimbursement for Medicaid bad debt payments from 70 percent to 55 percent, which could cost HHC an estimated $5 million over 10 years.

The hospital cuts included in the bill total more than $17 billion nationally.

To emphasize the harm of these proposals, I joined several other members of GNYHA’s Executive Committee to meet with Liz Fowler, Special Assistant to the President for Health Care and Economic Policy as well as with David Schwartz, the chief of health policy for Senate Finance Committee Chairman Max Baucus to express opposition to these proposed cuts.

GOVERNOR CUOMO RELEASES EXECUTVE BUDGET FOR SFY 2012-13

On January 17th, Governor Andrew Cuomo released his Executive Budget proposal for the 2012-13 State Fiscal Year (SFY). The proposed budget closes a $2 billion budget deficit. While we are still reviewing the details, it appears that the proposed budget does not contain any significant new funding cuts to HHC.

However, the proposed budget does continue the deep cuts that were enacted last year, most of which carry forward. To remind the Board, these cuts total approximately $174.5 million to HHC and include a two-year elimination of any trend factor and a two percent across-the-board rate cut. This figure does not include reductions that will result from recently enacted changes to the nursing home reimbursement system.

The proposed budget also extends the Global Medicaid Cap for one additional year, through the 2013-14 SFY. Although spending has remained within the cap to date, the state Department of Health would continue to be authorized to make unilateral rate reductions should spending exceed projections. This week, the State released data for November, which shows that spending is just 0.1 percent below projections. Medicaid enrollment continues to rise, albeit at a slightly slower pace than was reported in October. Growth was reported to be 1.9 percent since April 2011, compared to 2.7 percent in October.

The Executive Budget includes some of the Medicaid Redesign Team recommendations that required statutory changes, as well as those that can be implemented by regulation but carried a fiscal impact. We are reviewing these for potential impact on, or new opportunities for, the Corporation, as we will do when the final report of the Medicaid Redesign Team is released.

The Governor also indicated that he plans to pursue a new, five-year Medicaid 1115 Waiver from the federal government to secure resources for the “implementation of restructuring of the State’s health care delivery system.” I will be traveling to Albany next week to meet with the Governor’s representatives to discuss the possible contours of the 1115 waiver as it relates to HHC.

Finally, although the proposed budget did not contain any changes to the current Charity Care reimbursement methodology to respond to requirements under the Affordable Care Act for continued Disproportionate Share Hospital (DSH) funding, we think it is likely that this issue will discussed as part of budget negotiations.

HHC PROGRESS TOWARD MEANINGFUL USE OF ELECTRONIC HEALTH RECORDS TO QUALIFY FOR ENHANCED FEDERAL FUNDING

Earlier this month, HHC completed the registration process for the American Recovery & Reinvestment Act (ARRA) incentive funding program to achieve "meaningful use" of electronic health records. This program will enable HHC to gain close to $120 million in incentive monies under the hospital program and another $70 million under the Eligible Provider Category.

HHC has completed installation of certified electronic health record technology as required for the hospital program participation. Furthermore, HHC is meeting or exceeding nearly all of the 14 core and 5 menu requirements necessary to attest to meaningful use and receive the first meaningful use payment for this Federal Fiscal Year. We anticipate the 90-day attestation periods will begin shortly. Once meaningful use has been achieved for our hospitals, we will turn our focus towards readiness for the eligible provider program under Medicaid. This program was officially launched at the end of 2011.

NEW AFFILIATION AGREEMENT TO PROVIDE PROFESSIONAL CARE IN QUEENS HEALTH NETWORK

On your agenda today, for your review and approval is a three-year agreement with the Mount Sinai School of Medicine for the provision of general care and behavioral health services at Elmhurst Hospital Center and Queens Hospital Center. The proposed agreement will commence on July 1, 2012 and terminate on June 30, 2015, consistent with the general terms and conditions outlined in the Resolution. The proposed costs for the three-year period total $618.648 million. This amount includes annual baseline funding that is the same as the last year of the current contract and held steady over the three-year term with modest adjustments to some sessional rates to bring them on par with rates paid at our other facilities. There is $4.5 million annually ($13.5 million over the life of the agreement) available for disbursement to the affiliate if and when they meet established goals specified per the performance indicators outlined in the agreement. We will detail these performance indicators during our discussion of the Resolution.

This affiliation contract, which does not include automatic cost-of-living-adjustments over its term, establishes our approach for this next round of affiliation contract negotiations where any funding over a flat baseline amount must be performance based and tied to performance goals that generate additional income for HHC and/or result in cost avoidance.

MAYOR'S OBESITY TASK FORCE

In December, the Mayor announced the creation of an interagency Obesity Task Force which will make recommendations by mid-March to expand and develop anti-obesity initiatives city-wide. The City has made progress recently in reducing childhood obesity rates, but there is still much more to be done. HHC has been invited to join the Task Force that is co-chaired by Deputy Mayor Linda Gibbs, an HHC Board member, and Deputy Mayor Cas Holloway. HHC is proud to be part of these efforts, which will supplement the growing number of anti-obesity and healthy lifestyle initiatives underway within our networks and facilities.

FINAL PUBLIC MEETINGS HELD FOR FISCAL YEAR 2012

HHC held its final public meetings for the community for Fiscal Year 2012 at Sea View Hospital on January 18th and Harlem Hospital on January 24th. The meetings are an opportunity for us to report on HHC activities in each borough and give members of the public an opportunity to voice their views and concerns to members of the Board of Directors and to HHC leadership.

DR. ERIC MANHEIMER STEPS DOWN AS BELLEVUE HOSPITAL
MEDICAL DIRECTOR

After more than 14 years as Medical Director of Bellevue Hospital, Dr. Eric Manheimer has decided to take a position at NYU related to helping the hospital meet the challenges of healthcare reform. His positive impact over the years at HHC has been notable, and extends beyond his leadership at Bellevue. Before arriving at Bellevue, he served as Chief resident at Kings County and Chief of Medicine at Gouverneur. Dr. Manheimer's experience includes roles as an associate professor of medicine at Dartmouth Medical School, a staff attending physician at Dartmouth-Hitchcock Medical Center, and a community based clinic physician. Work at Dartmouth included developing its reputation as a leading center for health policy and clinical practice research. He has received many awards and has worked as Principal Investigator on numerous research studies that have contributed to the reduction of healthcare disparities, improvement of healthcare quality and reduction of costs. He has authored many scholarly articles and has presented at numerous international symposia. Eric Manheimer is admired as a champion, an innovator, and a pioneer in patient safety and patient-centered care.

Dr. Machelle Allen has graciously agreed to act as interim Medical Director at Bellevue while HHC leadership conducts a national search for Dr. Manheimer's successor. His shoes will be difficult to fill, but we are deeply grateful for his many years of dedicated service to our mission and our patients, and we wish him well in his new role with NYU.

THE JEOPARDY BATTLE OF THE NETWORKS SET TO SHOWCASE HHC'S COMMITMENT TO PATIENT SAFETY

HHC employees have repeatedly proven our commitment to making patient safety one of our top priorities. Now we'll have an opportunity to showcase the expertise of our staff as our greatest patient safety champions go head to head in a battle of knowledge and showmanship in HHC's first Patient Safety Jeopardy Battle of the Networks.

The Patient Safety Jeopardy: Battle of the Networks 2012 challenge is a corporate-wide Patient Safety event to promote learning, fun and teamwork among our networks. HHC facilities have worked hard over the past five years to work toward our goal of becoming one of the safest healthcare systems in the nation. With this event we recognize our teams' efforts and seek to inspire their continued enthusiasm.

The six HHC Networks as well as HHC Health and Home Care are invited to battle against each other to get to the Final Jeopardy game, in which the finalists will battle for the grand prize during National Patient Safety Awareness Week in early March. The Winner of the final Jeopardy game will receive HHC's Patient Safety Trophy for 2012.

NEW BABIES USHER IN THE NEW YEAR AT HHC HOSPITALS

Mother-to-be Blanca Chano welcomed the New Year at 12:02 am, by delivering HHC’s first baby of 2012 in Metropolitan Hospital. Weighing in at 8 lbs 5 oz., baby Dante Jeremiah Chano will be the first of more than 20,000 babies expected to be born in HHC hospitals this year. Dante's birth follows a family tradition. Siblings Adrian Justis, age 10, Brianna Justinem age 4, and Chastity Jaylene, age 1 were all born at Metropolitan Hospital. All HHC hospitals hosted festive births on New Year's Day, with the final New Year's baby born at Jacobi Medical Center at 1:58 pm.

HHC IN THE NEWS HIGHLIGHTS

Broadcast

• New Yorker's Life Expectancy, Dr. Melissa Schori, Lincoln Hospital, News 12 Bronx -TV, 12/27/11
• NY JETS Dustin Keller Visit, Woodhull Hospital, News 12 Brooklyn-TV, 12/27/12
• NY JETS Dustin Keller Visits, Woodhull Hospital, CBS 2 News-TV, 12/27/11
• New Yorker's Life Expectancy, Dr. Zoila Velastegui, Lincoln Hospital, NY1 Noticias-TV, 12/27/11
• New Yorker's Life Expectancy, Dr. Zoila Velastegui, Lincoln Hospital, Telemundo 47-TV, 12/27/11
• Holiday Concert & Healthy eating Fair, Gila Daman, Dietician, Jacobi Medical Center, News 12 Bronx –TV, 12/14/11
• Toy Distribution at Cumberland Diagnostic & Treatment Center, George Proctor, News 12 Brooklyn –TV, 12/14/11
• Magician David Blaine Visit, Lincoln Hospital, News 12 Bronx-TV, 12/27/11

Lincoln’s Art Exchange Program

• Lincoln Hospital Art Exchange, News 12 Bronx –TV, 1/23/12
• Beneficios de salud por talento, Health benefits in exchange for talent, Lincoln Hospital, NY1 Noticias-TV, 1/23/12
• Art For Health Services Exchange, Lincoln Hospital, Myfoxny.com -TV, 1/23/12
• Artful way to get free healthcare, Lincoln Hospital, New York Post, 1/24/12
  (Also covered in the Wall Street Journal, NY Daily News, DNAinfo, El Diario, Metro News, Playbill.com)
• Healthy outlook for artists, Lincoln Hospital, New York Daily News, 1/23/12

More News

• Bellevue Marks 275 Years of Taking Care, Bellevue Hospital, The New York Times, 11/15/11
• New York designates HHC-MetroPlus Medicaid Health Home, HHC, Nurse.com, 1/23/12
• New Yorkers live longer than ever, , Lincoln Hospital, New York Daily News, 12/28/11 (Also covered in NY Times, Wall Street Journal and others)
• Sincerest form of flattery, HHC, Dr. Ross Wilson, Modern Healthcare, 1/9/12
• New Hospital Interpreters Give HHC a Key Bridge, HHC, The Chief, 12/23/11
• Program Meshing Mental Health, Primary Care Meets Key Goals, Kings County, Psychiatric News, 12/02/11
• Meet the first babies born in NYC, Metropolitan Hospital, NY Daily News, 01/01/12
• Gotham’s first 2012 baby — born in Brooklyn!, Kings County, The Brooklyn Daily, 1/6/12
• Supportive Steps After a Sexual Assault, Bellevue Hospital, The New York Times, 12/20/11
• Coney Island Hospital Marks Milestone In ER Expansion, Sheepshead Bites, 12/13/11
• Pets and Hospice Care: 'The Warmth of Touch', Bellevue Hospital, The Huffington Post, 12/13/11
• Med Center Still Serving Area In Need, Queens Hospital, Queens Tribune, December 9-15, 2011
• Seasonal flu: important facts, Dr. Melissa P. Schori, Lincoln Hospital, The Bronx Free Press, 1/11/12
• Toy Safety Tips for the Holidays, Iris R. Jiménez-Hernández, The Bronx Free Press, 12/14/11
• Healthy Resolutions for 2012, Iris R. Jiménez-Hernández, The Bronx Free Press, 12/29/11
• Santa Claus pasa por hospital de Manhattan, Santa Claus visits Manhattan hospital, Metropolitan Hospital, El Diario, 12/18/11
• Eager to Emerge From Its Slumber, but Seeing a Threat to an Idyllic Life, Coler-Goldwater, The New York Times, 12/19/11
  (Also covered in NY Post, WNYC)
• HOT 97 donates hundreds of toys to kids, Harlem Hospital, Radioink,com, 12/20/11
• For Illegal Immigrant, Line Is Drawn at Transplant, Bellevue Hospital, The New York Times, 12/21/11
• A Few Centuries, New Money Woes for Bellevue, Bellevue Hospital, Our Town, 12/14/11
• New Program to Target Medmal Cases for Early Settlements, HHC, New York Law Journal, 12/27/11
• Nowhere to Go, Patients Linger in Hospitals, at a High Cost, HHC, Coler-Goldwater, The New York Times, 1/2/12
• Que no te agarre la depre de enero, Combating post-holiday depression, Dr. Edward Fernandez, Lincoln Hospital, El Diario, 1/9/12
• HHC board of directors to host fiscal year meeting at Sea View Hospital Rehabilitation Center and Home, HHC, Staten Island Advance, 1/16/12
• Harlem Hospital's new patient pavilion nears completion, Harlem Hospital, New York Amsterdam News, 1/19/12
• Sin seguro médico y desinformados, Uninsured and uninformed, Lincoln Hospital, El Diario, 1/24/12