BUFFALO, N.Y. -- The Medicaid 340B program allows safety net providers that serve low income and high risk communities to purchase prescription drugs at a discount and get federal reimbursements at full price.

Evergreen Health Chief Operating Officer Michael Lee said that difference amounts to roughly $14 million a year for his organization alone.

"There's not a doubt in my mind that health outcomes in Western New York are on the line if this carveout goes through," he said.

Gov. Kathy Hochul's proposed budget implements an already delayed transition in which the state would take over prescription purchasing. The governor's office said it will create efficiencies, decrease administrative burdens and reduce confusion for Medicaid recipients.

It is promising to reinvest the majority of the savings to support 340B providers.

"We know it's in her budget, part of it is, a portion of it, but we don't know how it's distributed. We don't know if it's subject to annual budget negotiations every year. It certainly doesn't account for growth. We know that," Lee said.

Safety net providers are warning of a fiscal cliff if this goes into effect on April 1. Lee said at minimum, Evergreen is not expecting immediate compensation, which means it will likely have to make cuts in the spring.

"There is absolutely a reduction in services and staff if this happens. There's no way around it," he said.

Lee said there is reason for providers to be skeptical of the administration's plan. He said California recently implemented a similar plan, and two years later, due to hurdles with federal approval and mechanisms to distribute the fund, organizations there still haven't seen any money.

"It's a promise that the state can't deliver on," Lee said.

He said Evergreen and other safety net providers that include Federally Qualified Health Centers, Ryan White Clinics and hospitals are pushing either for another delay or compromise that keeps the 340B mechanism in place.