Interim Joint Committee on Health and Welfare


Minutes of the<MeetNo1> 6th Meeting

of the 2004 Interim


<MeetMDY1> November 17, 2004


The<MeetNo2> 6th meeting of the Interim Joint Committee on Health and Welfare was held on<Day> Wednesday,<MeetMDY2> November 17, 2004, at<MeetTime> 1:00 PM, in<Room> Room 129 of the Capitol Annex. Representative Tom Burch, Chair, called the meeting to order at 1:13 PM, and the secretary called the roll.


Present were:


Members:<Members> Senator Julie Denton, Co-Chair; Representative Tom Burch, Co-Chair; Senators Charlie Borders, Tom Buford, David K. Karem, Ernesto Scorsone, Katie Stine, Damon Thayer, Elizabeth Tori, and Johnny Ray Turner; Representatives John Arnold Jr, Bob DeWeese, Mike Harmon, Jimmy Higdon, Joni Jenkins, Mary Lou Marzian, Ruth Ann Palumbo, Jon David Reinhardt, Kathy Stein, and Susan Westrom.


Guests:  Bill Doll and Marty White, Kentucky Medical Association; Tim Veno, Kentucky Association of Homes and Services for the Aging; Rita Brockmeyer, Trudy Abshire, Laurie Spezzano, Melanie Tyner Wilson, Dan Inabritt, and Charla Dewitt Autism Spectrum Disorder Advisory Consortium; Helen Donaldson, Stacy Woodrum, and Lisa Spoden, KAHPC; Trevor Marsh and Rebecca Gran, KATC; Trista Chapman and Michael Auslander, Department for Public Health, Cabinet for Health and Family Services; Rebecca Garrett, SIAC Parent Representative; Tom Doyle, Department for Community Based Services and Kate Brown, Cabinet for Health and Family Services; Susan Hunt, Community Hospice; Gail McGillis, Hospice Care Plus; Krista Wood, Kentucky HIV/AIDS Advocacy and Action Group; Kristen Frarey and Shawn Henry, Kentucky Autism Training Center; John Brazel, Kentucky Pharmacists Association; Jim Dailey, National Alliance for the Mentally Ill; Ellen Kershaw, Alzheimer's Association; Lisa Ruble, University of Louisville pediatrician; Paul McElwain, Kentucky Department of Education; Jan Gould, Kentucky Retail Federation; Heidi Schissler and Camille Long, Protection and Advocacy; Mike Porter, Kentucky Dental Association; S. Cunningham, MHA of Kentucky; A. Stein, Epilepsy; Debbie McGrath, Epilepsy Foundation; Sarah Nicholson and Nancy Galvagni, Kentucky Hospital Association; Michele Finn, Brain Injury Association; David Lane, parent of child with autism; Donna G. Brown, Kentucky Association for Health Care Facilities and Kentucky Association of Chiropractors; and Prentice Harvey, Norton Healthcare.


LRC Staff:  Robert Jenkins, CSA, Barbara Baker, Eric Clark, DeeAnn Mansfield, Gina Rigsby, and Murray Wood.


A motion to approve the minutes of the September 15, 2004 and October 19, 2004 meetings was made by Senator Karem, seconded by Senator Denton, and approved by voice vote.


The first order of business was an update on Medicaid Modernization given by Dr. James Holsinger, Secretary of the Cabinet for Health and Family Services, Mark Birdwhistell, Undersecretary for Health, and Shannon Turner, Acting Commissioner of the Department for Medicaid Services. The secretary, undersecretary for health, and the commissioner testified about the cabinet's efforts to implement innovative practices in the Medicaid program that have proven successful in other states and the commercial sector. Three basic components of this modernization effort are benefit management, care management, and improvements in technology.


The current pharmacy claims payment system is inefficient and continues to be a problem between pharmacy "switch vendors" and the Medicaid Management Information Service (MMIS). As a result, a pharmacy benefit administrator has been retained.


The undersecretary said that the Department for Medicaid Services contracts with National Health Services to provide Peer Review (PRO) services such as prior authorization, pre-admission screening, concurrent review of admitted patients, and utilization review. In 2003, there were over 29,000 cases with a yearly cost of approximately $25,000 each.


In July, 2004, a pilot project in Clay and Fayette Counties was established to allow use of a new permanent plastic health eligibility card to replace the monthly Medicaid eligibility paper card. Eligibility and claims status information was accessible real-time through the web, consistent with commercial health insurance. The cabinet plans to expand this project to all Medicaid recipients.


The MMIS, through Unisys, manages and processes recipient claims and houses provider data. The current database prohibits the ability to quickly and easily extract and analyze data for decision support. An RFP was issued in July 2004 for a new MMIS system to utilize advanced technology.


Kentucky's Medicaid database is an aging mainframe system that calculates Medicaid eligibility and passes data to MMIS. It also supports TANF, food stamps, and state supplementation. Poor data quality and confusing user interface plague this system, leading to the department's plans to redevelop the system over the next five years.


The program plans to utilize two medical directors to communicate with physicians to find a solution to medical disputes. These medical directors would also serve as a supervisor for nurse case managers.


Medicaid currently services approximately 80,000 persons who are dual eligibles for both the Medicare and Medicaid programs. Effective January 2006, Medicare Part D will shift the responsibilities for pharmacy costs for the dual eligibles to the federal government.


Medicaid currently has an active procurement effort for an administrative agent to provide utilization review, provider enrollment, provider and member education, call center operations for members and providers, and disease and case management. The contract will be awarded March 1, 2005 and will become operational October 1, 2006. The Request for Proposal (RFP) emphasizes flexibility and the opportunity for system enhancement. The Kentucky Health Card pilot began July 1, 2004.


The cabinet has the following seven short term initiatives: reduce inappropriate use of prescription drugs in the ambulatory patient population; launch targeted physician education program; reduce inappropriate use of prescription drugs in the long-term care population; reinvent the fraud and abuse hotline; strengthen program integrity; strengthen pharmacy administration; and target case management for high cost recipients.


Representative Palumbo requested that the cabinet inform the General Assembly of provider abuses within the system.


Senator Scorsone asked about payment and incentives in regard to First Health Services (FHS).  Acting Commissioner Turner stated that FHS would be paid a fee for services since the Centers for Medicare and Medicaid Services prohibits incentive-driven contracts other than contracts for third-party liability recovery.  Senator Scorsone asked about performance outcomes.  Acting Commissioner Turner said that FHS would be monitored for performance and there are penalties associated with failure to perform quality services.  Senator Scorsone asked how the cabinet would decide if FHS's utilization review is appropriate.  Acting Commissioner Turner said that the department has contract monitors on staff who would perform audits and continuous quality review over the contractors.  Undersecretary Birdwhistell said that the cabinet would develop criteria for contractors to use when making decisions, and would monitor sample data to ensure that the criteria is adhered to.  Acting Commissioner Turner said that there is an appeals process where providers and/or members could question an outcome.


Senator Scorsone asked if case management was now considered an administrative duty and whether the cabinet would receive a lower federal match rate than if case management were a covered service.  Acting Commissioner Turner said that, currently, the department has case management as a covered service under the home and community based waiver system.  Undersecretary Birdwhistell said what is now being claimed as a benefit match rate will remain a benefit match rate.  Senator Scorsone asked how many other states had a private entity perform the administrative function.  Acting Commissioner Turner said that there are other states that have outsourced some aspects, but no state has consolidated all of the components as Kentucky is proposing. 


Senator Scorsone asked if there were any public input into the RFP.  Acting Commissioner Turner said that the cabinet talked to a variety of groups but not Medicaid advocates.  Undersecretary Birdwhistell stated that policy has not yet been set by the regulatory process.  Senator Scorsone stated that the RFP sets the parameters of operation, and everyone needs to have input.  Acting Commissioner Turner said that the RFP was written following the current policy and would only be an enhancement.


Senator Denton asked about the fraud and abuse hotline and in-depth follow-up procedures.  Acting Commissioner Turner said that the hotline would be staffed by the cabinet and improve follow-up. Senator Denton asked if, after the cabinet performed an audit of twenty-year old past records and found billing discrepancies, the provider would have to reimburse the cabinet.  Acting Commissioner Turner said that this sounded like an initiative undertaken by a subcontractor but that she would check.  Senator Denton said that there should be a statute of limitation for reimbursement of billing discrepancies.  Secretary Holsinger emphasized that the cabinet does not have procesecutorial authority.


Representative Burch asked about allowing Passport to manage the physical health and behavioral health components.  Acting Commissioner Turner stated that the cabinet is not bringing in someone to do what Passport is currently doing.  The behavioral health component of the Passport plan is administered by the Medicaid Program.  Senator Denton said that if Passport is already handling the physical health component it should be allowed to handle the behavioral health component within the region.  Undersecretary Birdwhistell stated that the contract states that FHS is paid per claims encounter or per member, and the cabinet has left flexibility in the contract to carve out components later.  Senator Denton asked about the affect of carving out one component on the integrity of the contract and the financial balance for the contractors and the Commonwealth.  Undersecretary Birdwhistell said it would be a substantial change to the Passport contract and an adjustment to the FHS contract.   Senator Denton stated that something should be put in the contract that would let the bidder know there could be a change in the contract.


Senator Buford asked if the administrative agent would provide member and provider education.  Acting Commissioner Turner said that this would be more like an informative newsletter that is provided by commercial health plans.


Next,   Teresa DiMarco, President, First Health Services (FHS) Corporation testified that her company was awarded the contract as the Medicaid Pharmacy Benefits Administrator and will begin operation on December 4, 2004. The Cabinet for Health and Family Services will maintain complete programmatic and policy control. Kentucky has high drug utilization at nearly twice the national average.  The goals of FHS are to improve patient safety by monitoring drug to drug interactions, stop duplicative therapies, use automated processes and sophisticated clinical analysis, and profile providers and recipients to stop the potential for fraud and abuse.


Representative Burch asked if medications were filled daily in nursing homes.  Rebecca Cecil, Deputy Undersecretary for Health, said that the majority of medications are packaged in unit dose but, generally, are filled in a month supply.  Representative Burch asked how a doctor can prescribe medications to someone in a nursing home without seeing the person.  Deputy Undersecretary Cecil stated that long-term care facilities are required once a month to have a pharmacist review drug therapy regimens.


Senator Karem was concerned about keeping a personal relationship between the patient and the doctor.  Ms. DiMarco stated that there is one master database that holds all the prescriptions for all Medicaid recipients.  She said that FHS would adhere to the doctor's protocol.


Next, Senator Stine, Co-Chair of the Families and Children Subcommittee, gave the subcommittee's report.  She stated that the subcommittee had received testimony that inadequate nutrition and obesity in the United States, especially among youth, have quickly become nationwide health issues.  The concerns for Kentucky have become critical.  Nearly two-thirds of Kentucky's adults are either overweight or obese.  Many of these adults also have a chronic disease such as diabetes, heart disease or arthritis. These diseases, and others, are directly related to weight.  The cabinet presented information that indicates that, if current trends continue, some 15 percent of Kentucky's youth will risk being overweight or obese as adults and an additional 15 percent will likely be obese as adults.


The data presented indicates that the impact on Kentucky is huge.  Kentucky has high health care costs that undoubtedly lower the quality of labor, the amount of productivity, and the size of the state tax base.  The Centers for Disease Control and Prevention estimated that Kentucky spent $1.2 billion on obesity costs alone in 1998.


The subcommittee also learned about some of the ambitious actions that are being taken across the state as more communities are trying to tackle this issue.  A major effort has been made by the Cabinet for Health and Family Services in conjunction with the Kentucky Injury Prevention Research Center to provide a picture of the problem.  The information presented shows that Kentucky has a higher rate of obesity than the United States as a whole and males are more likely to be obese than females.  However, the percentage of overweight and obese citizens is dangerously high across the state and across all education levels.


The Obesity and Chronic Disease Prevention Program, Cabinet for Health and Family Services, and the Governor's regional forums on obesity are addressing obesity in several ways. The forum found that mandatory physical education in K-12 and more organized recess were top priorities in all regions, and an increase in healthy choices and increased fruit and vegetables in vending machine were a priority in seven out of nine forums.


The subcommittee heard testimony on research that found that physical activity can be worked into the daily activities of children in many ways.  A video was shown from Strode Elementary School in Clark County that demonstrates some of the ways this can be achieved.  Research demonstrates that there is an added bonus that physical activity is positively correlated with learning. This seems to be particularly true for boys, for whom the larger obesity problem exists, than girls.


The Kentucky Department of Education (KDE) and the Kentucky Board of Education (KBE) have been very supportive of school efforts to integrate physical activity and nutrition programs into school curricula.  The KBE recently voted to support a joint resolution proposing that districts and schools establish coordinated school health committees and that KDE develop model policies to comply with requirements of the President's Child Nutrition and WIC Reauthorization Act of 2004.


In addition, organizations such as the Foundation for a Healthy Kentucky partner with the KDE to support Coordinated School Health programs.  For the 2004/2005 school year, competitive grants and technical assistance by the foundation totaled over $800,000.  Health Promotion Schools of Excellence (HPSE) started promoting health education in schools in Jefferson County in 1992.  HPSE has health programs in 48 schools in 2004 sponsored by several local community businesses and partners.


A motion to approve 900 KAR 5:020 & E, 900 KAR 6:030 & E, 902 KAR 2:070, 902 KAR 50:110, and 902 KAR 100:012 was made by Representative DeWeese, seconded by Senator Scorsone, and approved by voice vote.


Next, Krista Wood, Executive Director of Heartland Cares, a community services provider for persons with HIV or AIDS in Paducah, testified that the state faces a crisis with its HIV/AIDS drug funding. On June 23, 2004, the President announced the immediate availability of $20 million in drug therapies for ten states with waiting lists as of June 21, 2004. There are 1,750 available slots allocated to only ten states by the number of individuals on their respective waiting lists. As long as funding is available, new clients that join waiting lists in the ten states will be able to participate in the AIDS Drug Assistance Program (ADAP) initiative. However, there is no guarantee that individuals receiving medication through this program will remain in ADAP when the 2005 fiscal year begins on April 1, 2005 unless Congress allocates funding earmarked for the ADAP Supplemental Treatment Grants.


The legislature has appropriated $90,000 in funding for this program in previous years, but this funding should be much more. Increased funding will allow persons with HIV and AIDS to remain productive and tax-paying citizens. Elimination of the funding or the failure to increase it will require these persons to obtain much more costly state and federal assistance after they become totally disabled.


Next,   Carolyn Dennis, Action for Healthy Kids Task Force - Kentucky State Team testified about continued work towards improving food choices in schools and vending machines, promoting curriculum-based nutrition education, and increasing physical activity opportunities among students. The Task Force is collaborating with the Department of Education to implement a five-month pilot program in four elementary schools to incorporate physical activity in the classroom and integrate age-appropriate nutrition education throughout the general curriculum.


In partnership with the Kentucky School Board Association, the State Team is identifying schools and districts that have written a policy addressing food sold or served in schools. To further advance the importance of health food choices, the State Team has displayed healthy snack and beverage vending options at state meetings, provided expertise on negotiating healthier and more lucrative vending contracts, provided technical assistance on milk vending machines, and has advocated for changes in school vending policy. It has been documented that excessive increases in poor nutrition, inactivity, and weight problems adversely affect academic achievement and possibly cost schools millions of dollars each year.


Senator Stine stated that there is a difference between physical activity and physical education.  Ms. Dennis stated that she would like to see a change in the physical activity requirements in schools.


Next,   Charla DeWitt, Director of the Kentucky Consortium on Autism, stated that autism is more common than childhood cancer, diabetes, and Down syndrome. Data on the prevalence of autism from the Centers for Disease Control and Prevention and the National Health Institute indicated that, in 1990, approximately 1,472 Kentuckians were diagnosed with autism, while by 2003 the number had increased to 16,468. One child out of every 250 newborns will be diagnosed with autism. Autism is the fastest growing developmental disability, and the Autism Society of America calculates the annual cost will increase to $300 billion within the next ten years.


Representative Burch asked why more children were diagnosed with autism between 1992 and 2004.  Ms. DeWitt said that the federal government has directed the Centers for Disease Control and Prevention and the National Health Institute to conduct research on prevalence and causes.  Representative Burch asked how autism was diagnosed before 1992.  Rita Brockmeyer stated that it is unclear why there has been an increase, but research is being conducted to find the answer.


Representative Stein asked if some increases in reported cases could be attributed to increased mercury levels in children.  Ms. Brockmeyer stated that this issue is currently being researched but there is no conclusive evidence.


Next,   Debbie McGrath, Executive Director of the Kentucky Epilepsy Foundation, stated that the Foundation is the only non-profit 501(c)(3) health organization providing essential programs and services to meet the common and unique needs of persons with epilepsy or seizure disorders in Kentucky. Epilepsy is a chronic neurological condition characterized by the recurrence of unprovoked seizures. In most cases, it is difficult to pinpoint a specific cause, but with a daily regimen of medication most people can live with few limitations. Epilepsy is the third most common neurological disorder after stroke and Alzheimer's disease, with more than twice the number of persons affected than those persons with tuberculosis, cerebral palsy, muscular dystrophy, cystic fibrosis, Down syndrome, and multiple sclerosis combined. Epilepsy has been estimated to have an annual cost of $12.5 billion, and can happen to anyone at any time.


Next,   Helen Donaldson, President and CEO of Hospice of Louisville and Gail McGillis, President and CEO of Hospice Care Plus in Richmond, and Susan Hunt, Executive Director of Hospice of Ashland, testified that Executive Order 2004-122 disallows the processing of Certificate of Need applications filed by licensed hospice programs. This limited moratorium curtails hospice's ability to meet the needs of the dying in Kentucky. Hospice is uniquely designed to provide for the patient at the end of life by ensuring management of pain and symptoms. A growing number of hospice patients are in need of the full continuum of hospice care, which may include inpatient residential facilities. The availability of these beds would decrease the use of emergency room visits and inpatient hospital beds, thus decreasing Medicaid costs.


Federal hospice regulations established four separate levels of care in 1983, and these continue today: routine home care, continuous home care, inpatient respite care, and general inpatient care. Medicare mandates that all programs provide the full range of services. In 2003, Kentucky hospices cared for 12,237 patients for an average length of 27 days, and received 83.5 percent reimbursement for Medicare and 7.6 percent from Medicaid. Hospice programs typically receive approximately $98 per day to care for all of a patient's needs, including drugs, medical equipment, and supplies related to a terminal illness.


There being no further business, a motion to adjourn at 4:00 p.m. was made, seconded, and approved by voice vote.