Charles King, CEO of the nonprofit Housing Works, was arrested along with other demonstrators at a state health budget hearing in Albany on Tuesday, a dramatic start to a long day of policy discussions.

King and the other protesters were there to denounce upcoming changes to the state’s Medicaid pharmacy program, one of the more contentious health care issues on the budget agenda this year. The change, currently set to take effect April 1, would switch most Medicaid members off of their current drug benefits – which are operated by an array of private entities – onto a new plan known as NYRx, which would be administered by the state Department of Health.

The switch would save the state nearly $1 billion in its first two years and make it easier to track pharmaceutical spending, according to Gov. Kathy Hochul’s executive budget. Pharmacy reps also say the new system would direct more money to pharmacies, making it easier for independent mom-and-pop operations to survive.

But Housing Works and other safety-net organizations that run clinics for low-income New Yorkers say the pivot will limit their ability to access 340b, a federal program that allows hospitals and clinics that serve vulnerable populations to benefit from steep discounts on prescription drugs. The health care providers say these savings are reinvested into a range of different services, from diabetes management to HIV care.

King was scheduled to testify at the hearing later in the day, but defied pleas from state Sen. Liz Krueger to wait his turn to speak. Krueger ordered a recess while the protest was subdued and most protesters left. But King and four others refused and were taken into custody for trespassing, according to New York State Police spokesperson Stephanie O’Neil. She said they have since been charged with trespassing, issued court appearance dates and released.

“We hope you enjoyed the entertainment part of the day,” Krueger quipped when the hearing resumed a half hour later.

Hochul’s executive budget promises to reimburse hospitals and clinics for the losses caused by switching off 340b. Her pledge includes a 5% boost to Medicaid rates for hospitals and a promise of $250 million per year in supplementary Medicaid funding for community health centers, split between the state and federal governments.

But at Tuesday’s hearing, some state lawmakers questioned how the supplementary funds for community health centers will be distributed and whether it will be a permanent funding stream or a temporary boost – concerns that have also been raised by the health centers themselves.

“We are reinvesting every single dollar the health centers have stated they need directly back to them in such a way we believe they will be getting a benefit and not taking a cut,” said Amir Bassiri, the state's Medicaid director.

Bassiri admitted that New York is still waiting for the federal government to sign off on its plan to provide health centers with this supplementary funding. But he said once that happens, the new funding stream would be permanent.

Bassiri said the state health department has been preparing for the NYRx changes to take effect as scheduled on April 1. But some critics are still holding out hope that the Legislature and governor can agree on an alternative in the next few weeks.

State Sen. Gustavo Rivera, who chairs the Senate’s health committee, introduced a compromise bill last week. The legislation would reverse the plan for the health department to completely take over Medicaid pharmacy benefits – an idea that was first put in motion under former Gov. Andrew Cuomo – while still making some of the changes the state has said it hopes to achieve.

For instance, Rivera’s legislation would set a minimum fee that pharmacies must be paid for dispensing medications. Under the current system, pharmacies get paid an average of 50 cents for each Medicaid prescription they fill, according to written testimony submitted in Tuesday's hearing by Heather Ferrarese, president of the Pharmacists Society of the State of New York.

Housing Works CEO Charles King speaks during a press conference at the opening of Housing Works Cannabis Co, the first recreational cannabis dispensary in New York on Dec. 29, 2022.

Ferrarese blamed the low rates on each Medicaid plan having its own intermediaries to negotiate with drug manufacturers – a system that she said allows them to siphon money away from pharmacies. Her group is urging the state to move ahead with the pharmacy benefit overhaul.

Rivera’s legislation would also create a single list of “preferred” drugs for Medicaid patients – something the state said will result in less confusion and give New York greater bargaining power with drug manufacturers.

During the hearing, lawmakers also pressed state health officials on a range of other issues, including funding for safety-net hospitals, health coverage for undocumented immigrants and ongoing efforts to bolster the health care workforce.

State Sen. Jo Anne Simon was among those who raised concerns about wages for home health aides. Last year’s budget included a $3 per hour increase to the minimum wage for home care workers, in an effort to make the job more appealing than other minimum-wage gigs. But Hochul’s executive budget for the coming year includes provisions to tie the general minimum wage to the rate of inflation – without applying those increases to home care.

“You’re raising the minimum wage and freezing home care wages,” Simon said.

State health officials said it wouldn’t make sense to peg home care pay to inflation at this time.