Interim Joint Committee on Health and Welfare


Minutes of the<MeetNo1> 1st Meeting

  of the 2008 Interim


<MeetMDY1> June 18, 2008


The<MeetNo2> 1st meeting of the Interim Joint Committee on Health and Welfare was held on<Day> Wednesday,<MeetMDY2> June 18, 2008, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Senator Julie Denton, Co-Chair, called the meeting to order at 1:12 PM, and the secretary called the roll.


Present were:


Members:<Members> Senator Julie Denton, Co-Chair; Senators Tom Buford, Perry B. Clark, Denise Harper Angel, Joey Pendleton, Ernesto Scorsone, Dan Seum, Katie Stine, and Johnny Ray Turner; Representatives Scott W. Brinkman, James R. Comer Jr., Bob M. DeWeese, Joni L. Jenkins, Mary Lou Marzian, Reginald Meeks, Ruth Ann Palumbo, Susan Westrom, and Addia Wuchner.


Guests:  Dennis Wallace and Fred William, family members of resident at Oakwood; Denise Spratt, National Alliance on Mental Illness, Kentucky, CIT Program; Bernie Vonderheide, Kentuckians for Nursing Home Reform; Charlotte Reese, Nola Sewell, and Helen Radcliffe, P.R.O.O.F.; Clyde D. Lang, Kentucky Association for Mental Health/Mental Retardation Programs; Bob Kelley, Merck & Co.; Elizabeth Caywood, Department for Community Based Services, Cabinet for Health and Family Services; Makeda Harris, Kentucky Youth Advocates; Gene Huff, CHI; Sarah S. Nicholson, Kentucky Hospital Association; Anne Joseph, Covering Kentucky Kids & Families; Tony Sholar, TRG; John Burt, Commissioner and Betsy Dunnigan, Deputy Commissioner, Department for Mental Health and Mental Retardation Services; Beth Jurek, Policy Director, and Kerry Harvey, General Counsel, Cabinet for Health and Family Services; Carol Muldoon, Deputy Commissioner, Reina Diaz-Dempsey, Deputy Commissioner, and Neville Wise, Director of Finance, Department for Medicaid Services, Cabinet for Health and Family Services.


LRC Staff:  DeeAnn Mansfield, CSA; Miriam Fordham, Ben Payne, Gina Rigsby, Jonathan Scott, and Cindy Smith.


The following administrative regulations were referred to the committee for considerations:  201 KAR 20:110 - establishes the requirements for licensure by endorsement and establishes the requirements for a temporary work permit for an applicant to practice nursing while the application for a license is being processed; 201 KAR 20:161 - establishes the procedures for the investigation and disposition of complaints received by the Kentucky Board of Nursing; 201 KAR 20:225 - establishes procedures for reinstatement of a license that has lapsed or has been subject to disciplinary action by the Kentucky Board of Nursing;            908 KAR 3:060 - establishes the "Means test" for determining the ability to pay of the patient or person responsible for the patient for board, maintenance and treatment at a facility operated or utilized by the Cabinet for Health and Family Services, for the mentally ill or mentally retarded;       922 KAR 2:170 - establishes criteria for implementation of the voluntary quality rating system for Type I licensed childcare centers, and establishes the amount of each monetary incentive awarded to a participant in the STARS for KIDS NOW Program; 922 KAR 2:210 - establishes criteria for implementation of the voluntary quality rating system for Type II licensed child-care centers and certified family child-care homes and establishes the amount of each monetary incentive awarded to a participant in the STARS for KIDS NOW Quality Rating Program.


Denise Spratt, retired Louisville Metro Police officer and Crisis Intervention Training Program Coordinator, gave an update on the CIT Program. She said that Dr. Rif El-Mallakh with the University of Louisville has calculated that for every officer trained, the community savings will be $10,000, because it lessens injuries to consumers and officers alike. In this first year of the CIT Program, in seven classes over 200 officers from 81 statewide law enforcement agencies were trained. The calculated savings the state saved was approximately $2 million. The figure does not take into account the amount of money saved by diverting people from overloaded jails and courts and helping them get the necessary treatment. She stated that this program is the first line of defense to combat the result of budget cuts because police will be dealing with more and more consumers who do not have services. In Jefferson County over 3,400 runs were made on the mentally ill last year. This means, on average, law enforcement personnel will respond to over 20,000 calls on the mentally ill per year in Kentucky. She stated that the program is intended to be self-supporting after several years. The goal is to have local law enforcement instructors in each region teaming with the local community mental health center to train additional officers in that region. This would eliminate the need to bring in outside law enforcement. She read some of the letters she had received from officers who had participated in the CIT classes and their positive experiences. She said that the classes had helped them understand how to handle and recognize people with mental illness and know how to deal with the situation calmly and resolve the incident, more times than not, without harm to anyone involved.


Representative Marzian stated that the program has been a huge success and should continue to be funded. She said she was pleased to see that partnerships had been developed with mental health professionals.


Representative Westrom asked that the outline of the course be provided to the members of the committee. Ms. Spratt said that the course was taught in Somerset, Bowling Green, Hopkinsville, Lexington, Paducah, and Hazard. The police instructors partner with mental health professionals who teach the signs and symptoms of mental illness. There is a 50/50 split of police instructors and mental health instructors in the program.


Senator Seum asked if the CIT class was a KLEPF (Kentucky Law Enforcement Foundation Program Fund) approved training, and she said yes. He asked if the training was mandated, and she said no.


Senator Denton asked what needed to be done to have regional instructors, and Ms. Spratt said that it has been a challenge getting more police instructors through the instructor’s course at the Department of Criminal Justice training. Police officers have to finish an 80-hour Kentucky Law Enforcement Counsel’s Police Instructor’s course. Then they would have to finish a one-day course to be a certified CIT trainer.


John Burt, Commissioner, Betsy Dunnigan, Deputy Commissioner, Department for Mental Health and Mental Retardation Services, and Kerry Harvey, General Counsel, Cabinet for Health and Family Services gave an update on the recertification of Oakwood. Commissioner Burt stated that in September 2005, the cabinet received a notice of termination of federal participation and funding from the Centers for Medicare and Medicaid Services (CMS). The cabinet immediately appealed the decision until April 2008. In November 2007, CMS conducted a survey and found progress with client safety and protection, but the facility did not meet Conditions of Participation. On April 15, 2008, the cabinet received a negative decision from the Administrative Law Judge. The cabinet submitted assurance to CMS and received an additional 30 days of federal funding, but federal funding was officially terminated May 15, 2008 for noncompliance. On June 13, 2008 the cabinet appealed the Administrative Law Judge’s decision and plans to reapply for CMS certification as soon as possible. Upon receipt of the new application, CMS will conduct the required surveys. The surveys will be unannounced and can occur at any time after receipt of the application. The second survey will occur 30 to 120 days later to see if Oakwood meets all Conditions of Participation and federal regulatory requirements. Funding will be restored back to the date of the full survey if all compliance requirements are met.


The department immediately placed a team on-site at Oakwood to work with Bluegrass Mental Health Mental Retardation staff to prepare for the CMS survey process. As recommended by CMS, the cabinet hired two independent consultants to assist with a review of the facility’s readiness for the certification surveys and for compliance with Conditions of Participation. The cabinet will submit the new application requesting recertification when it believes the facility is ready. Staff on-site will implement a plan to address the issues necessary to meet compliance standards. Staff continue to implement the statewide transition process that has been in place since 2005, treatment teams continue to identify barriers to community place for each individual residing at Oakwood, clients continue to receive education regarding community support options and the needed training to remove the barriers to community placement, and as appropriate, clients will continue to transition from Oakwood into community-based settings through a comprehensive and planned transition process. Parents and guardians will continue to be educated regarding community-based support options in an effort to assist them and their loved one to reside in the least restrictive environment to meet their needs. The cabinet and department staff have meet with P.R.O.O.F., the Oakwood parent organization, and will continue to meet with parents to keep the apprised of the process.


The department has a $72 million contract with the Bluegrass Regional Mental Health Mental Retardation Board with $42 million being federally funded through the Medicaid program. The SFY 2008 revenue loss resulting from Oakwood’s decertification is $1.8 million in federal funds and $700,000 in Medicaid state general funds. The department anticipates being able to manage the SFY 2008 revenue loss within existing resources. A monthly revenue reduction of $3.5 million in federal funds and $1.5 million in state general funds in SFY 2009 is expected as a result of Oakwood’s decertification. The anticipated restricted funds revenue loss in SFY 2009 is significant to the department because it represents approximately 30 percent of the budgeted restricted revenues for facilities. As part of the contingency plan, the department has requested to “front-load” state general fund quarterly allotments in SFY 2009 to continue operations for several months. The options are more limited should the department’s state general funds for residential program become exhausted.


Resources expended at Oakwood have increased significantly over the past several years. The increases incurred under the Bluegrass contract are attributed to enhanced professional and program staffing levels, increased across-the-board operating expenses, and compliance activities related to the Department of Justice settlement agreement.


Senator Buford asked about the timetable for recertification, and Commissioner Burt said that no date had been set. Senator Buford asked about requirements to “front-load” funds. Commissioner Burt stated funds from FY 2009 September and October budget would be used during FY 2008. Senator Buford asked if there would be funds available in the budget. Ms. Jurek stated the cabinet has received permission from the Governor’s Office of Policy Management (GOPM) to front-load general funds for mental health and mental retardation services. She said they cannot assess the amount of funds needed until they know the timeframe of recertification.  Senator Buford asked if the cabinet would be subject to fines, and Mr. Harvey said that CMS had not told them of any intent to recoup any funds received by Oakwood. Senator Buford asked about centralizing facilities, and Mr. Harvey stated that the cabinet had not been given any direction from CMS.


Senator Scorsone asked why the cabinet was not ready for recertification. Deputy Commissioner Dunnigan stated that once a facility has lost certification, reentry into the program is more difficult than the on-going monitoring and certification process. The recertification process entails not only that you have policies in place but that staff can articulate the policies, staff can demonstrate implementation of the policies, and the documentation matches what is occurring at the facility. She said that the facility must demonstrate that the issues that led to termination of funding no longer exist and that the Conditions of Participation in these areas have been met. He asked how long Bluegrass had been at the facility, and Deputy Commissioner Dunnigan said since November 2006. Senator Scorsone asked why Bluegrass had not been able to get the facility ready to be recertified. Deputy Commissioner Dunnigan stated that the first focus of Bluegrass was client protection. The majority of the first year was spent on hiring, recruiting, and training staff and putting measures in place to address the client protections. Once the client protection issue was addressed, Bluegrass then started working on the active treatment issue. He asked what percentage of the staff is still inadequately trained and how much documentation is still missing. Deputy Commissioner Dunnigan said they are going from home to home and record by record and addressing the issues. Currently it is between 80 percent to 95 percent accuracy in the documentation. He asked about the timeline for recertification, and Deputy Commissioner Dunnigan said that the cabinet does not want to apply for recertification until they are positive they will pass the survey the first time and that the cabinet has no intention to close the facility. Senator Scorsone said a strategic plan needs to have a timeline in order for staff to know when to meet goals. Deputy Commissioner Dunnigan stated that there is constant staff turnover and constant changes, and you have to continue mentoring and training.


Senator Harper Angel asked about the process to move an individual into the community. Deputy Commissioner Dunnigan stated that an in-depth review and assessment has been conducted on every individual at Oakwood. All individual treatment plans include specific barriers for each individual for placement in community and have skills training. Since September 2005, 70 individuals have moved into the community and 24 individuals are in the process of finding a community provider and starting the planning process to transition. The cabinet is also recruiting new providers for individuals transitioning into the community. The cabinet is also developing the on-site resources at Oakwood for individuals in the community to access that would not require an admission to the facility. Senator Harper Angel asked about the total population at Oakwood, and Deputy Commissioner stated they are down from 288 to 221 (including deaths).


Representative Westrom asked about working with consultants on intensive work the facility needs prior to the surveys. Deputy Commissioner Dunnigan said that the intensive work being accomplished is focused on the consistency and accuracy of documentation, refinement and improvement of active treatment, and mentoring and training of staff on appropriate implementation of active treatment and the survey process. Representative Westrom asked if facility meant the building, and Deputy Commissioner Dunnigan said no, the programmatic pieces at the facility.


Representative Wuchner asked about deficiencies centered on patient safety. Deputy Commissioner Dunnigan stated during the November 2007 completed by CMS staff, they felt clients were safe and could tell from observations that it was a safer environment, that policies and practices had been put in place but needed further refinement, and the documentation of the implementation needed to be clearer. The cabinet feels comfortable with the client safety piece, and is still working on the documentation piece. Next the cabinet worked more in-depth on the active treatment programs and is now focused more on the individualized development stage making sure each individual is receiving individualized skills training instead of group training. Representative Wuchner asked if each deficiency has an action plan and a timeframe for completion. Deputy Commissioner Dunnigan stated that sub-teams were formed to develop a plan. Representative Wuchner asked about the timeframe for the work plan, and Deputy Commissioner Dunnigan stated this week.


Representative Meeks asked about meetings with parents. Commissioner Burt stated there was a meeting on May 1 in Lexington where 45-50 parents and guardians attended and approximately 30 parents attended a June 5 board meeting. Representative Meeks asked if all parents had been contacted to let them know of the progress of recertification of the facility, and Commissioner Burt said no. Representative Meeks asked about the impact and results of the revenue losses to the department. Commissioner Burt said that in the short timeframe it can be workable; otherwise the department would have to come back to the General Assembly to request more funds.


Senator Denton said that no timeline has been given as to when it becomes a financial crisis. She asked for a copy of the action plan of each deficiency to be given to Health and Welfare staff to be distributed to committee members. She stated that because there are no timelines, many are afraid there is a conspiracy by the cabinet to shut down Oakwood. A motion that the cabinet set timelines within the next ten days to address each deficiency for recertification at Oakwood was made by Senator Scorsone, seconded by Senator Wuchner, and approved by voice vote.


Representative DeWeese stated that the bottom line is still the quality of care for the patients. Deputy Commissioner Dunnigan stated that it is not just training and mentoring the staff on mentoring the questions, it is also asking the staff what they think they need to do to learn a skill as independently as possible. Then the documentation has to reflect what is actually happening with the individual. Representative DeWeese asked how long the intense training had been occurring. Deputy Commissioner Dunnigan said several months.


Representative Westrom asked about the worst case scenario for recertification, and Commissioner Burt said if the facility cannot be recertified by CMS. He said that the legislature only has the authority to close the facility.  She asked what would happen to the residents, and Deputy Commissioner Dunnigan stated they would have to look at other options and alternatives.


Representative Marzian stated that the department has a contract with Bluegrass for $72 million which averages out to approximately $360,000 per client. She stated that more funds need to be shifted from institutions to community programs. Deputy Commissioner Dunnigan stated that the expenses will be less than the $72 million. A long-range plan was developed as part of the settlement agreement with the Department of Justice for education and development of community services. The Supports for Community Living waiver slots were increased, and individuals can move into the community as they choose and provide support services.


Senator Harper Angel asked about the timelines of the 24 individuals waiting to be transitioned into the community. Deputy Commissioner Dunnigan stated that the individuals have to select a provider and the provider has to accept the individual. The average timeframe once an individual selects a provider is 80 days.


Senator Buford stated that it is hard to see cost savings, because when one individual transitions to the community, one comes into the facility.


Senator Denton asked if consultant contract fees are tied to successful surveys. Mr. Harvey said, no, they are hired on a $50,000 contract for an objective to make suggestions but no do have authority for directing the deficiencies. She asked if the Bluegrass contract contained penalties if the survey is not passed. Mr. Harvey stated he did not believe there is anything specific in the current contract.


Dennis Wallace testified that after his father died, his mother was no longer able to take care of his brother, Dan, who has Downs Syndrome and had to take him to Oakwood where he has been for the past 28 years. He said that there is always going to be ten percent of the residents who are going to be abused or hurt, but there has to be a happy medium. In his opinion, the problem is not as big as it is being portrayed, and community homes are not always a safer alternative. He stated that the government looks at progress 50 years down the road, while parents look at progress in the present and near future. Oakwood sits on prime real estate, and he hopes that is not the reason the state wants to close the facility.


Neville Wise, Director of Finance, Carol Muldoon, Deputy Commissioner, and Reina Diaz-Dempsey, Deputy Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, gave an update on the Medicaid budget. Mr. Wise stated that the cabinet would finish FY 2008 near the forecasted budget amount of $4.946 billion. Approximately 50 percent of outstanding Centers for Medicare and Medicaid Services issues have been addressed, but some expenditures have been postponed pending approval. He said that Medicaid continues to have the ability to transfer funding between administration and benefits as needed and/or as available funding exists. Meeting current contract funding requirements and effectively administering the program will require a reevaluation of current contracts and business practices. Service is still being continued for 729,000 individuals. Even adding $388 million in FY 2009-2010, program expenditures are projected to exceed this appropriation by $365 million. The addition in revenues provides services to support individuals in the community, expand long-term goals of diverting individuals from institutional settings and providing community based services; and include the Michelle P Waiver, the Long Term Care Acquired Brain Injury Waiver, Money Follows the Person, and additional Supports for Community Living slots.


The department will achieve cost avoidance through program integrity through the Pharmacy Management Program and Patient Care Management initiatives. The program integrity function has been relocated from the Office of Inspector General (IG) to the Department for Medicaid Services. The cabinet contracted with Health Care Excel (HCE) to assist in program integrity functions. HCE will provide on-site and desk audits of Medicaid providers, conduct claim analysis of Medicaid payments, perform other recovery functions, and identify potential cases of error, abuse, and fraud.


The Pharmacy Management Program enhanced preferred drug list management, improved generic utilization and substitution rate, implementation of on-site pharmacy audits, developed case and disease management interaction with the pharmacy program, enhanced program integrity oversight, strengthened lock-in program coordination and oversight, implementation of academic detailing program to educate providers on the use of prescription drugs, enhance reporting and analysis of pharmacy data, engaged Kentucky Pharmacy Association representatives in identifying and confirming opportunities, expand enrollment in the Health Insurance Premium Payment (HIPP), develop a KenPac Partnership Program to control costs of providing services, improve the quality of those services, and increase member and provider satisfaction


The department will implement statewide disease management/case management programs for specific disease states and chronically ill individuals who are high cost. The statewide disease/case management programs will ensure that members have the most appropriate care and positive outcomes, decrease and control the amount of Medicaid dollars spent, empower members with health education and clinician contacts, so they will be able to take a more active role in improving their health status, and involve providers and partners in health ensuring that the members’ needs are met appropriately.


The department plans to review areas where reimbursement for the same service varies across programs, review areas where there are less costly alternatives to the services for which we are currently paying, and engage Passport in partnering with Medicaid to develop cost-containment strategies.


Representative Wuchner asked about pharmacy management financial data projected savings of $95 million and the actual savings $8.3 million. Ms. Muldoon stated that it was a carryover of allot of the implementations that were designed in the original KyHealth Choices program.


Representative Brinkman asked if there are currently any plans to add other counties covered by Passport and any plans to replicate the Passport model in other areas of the state. Mr. Wise stated that Passport is the only managed care entity serving recipients in that region. Most other states offer multiple managed care plans within a region. While CMS saw the success of Passport, they were not ready to authorize expansion beyond the current counties. KenPac Enhancement and Partnership program will help implement Passport’s concept into the Medicaid program.


Senator Harper Angel asked if the department had renewed the contract for Passport, and Mr. Wise said it would be finished this week.


Senator Denton asked if contract amount had been agreed upon by both sides, and Mr. Wise said yes.


Representative Comer asked about fraud and abuse problems. Mr. Wise stated that the Program Integrity Program analyzes data for billing pattern abnormalities and normal health care utilization. Representative Comer asked how many disabled Kentuckians receive Medicaid, and Mr. Wise said 150,000 individuals. Representative Comer asked about the Medicaid fraud hotline, number of calls received, and number of inspectors. Mr. Wise stated that he did not know the number of calls that are received or the number of inspectors because the Medicaid fraud abuse hotline is located within the Office of the Inspector General.


Representative Brinkman asked what practices utilized by Passport does the department want to expand to the other areas of the state. Ms. Muldoon said that in the case and disease management, data coordination, and quality improvement programs.


Senator Buford asked why the department would not expand Passport to other areas of the state. Mr. Wise stated that CMS would allow the department to expand Passport if there was a choice between Passport and another management care plan. Representative Brinkman asked if CMS could stop Kentucky from offering Passport in another area, and Mr. Wise stated yes.


Senator Denton asked with so many people retiring, is anything being done with information technology to replace the knowledge and experience of those retiring, and Mr. Wise stated the new management information system, contracted by EDS is almost implemented and awaiting federal certification. She asked if EDS was fully functional, and Mr. Wise stated at least 99 percent. On July 28, CMS will come to review EDS.


Representative DeWeese asked if the department was still working with the present pharmacy benefit management group. Ms. Muldoon stated the contract with the present pharmacy benefit management group has been extended until the end of 2008, and a new Request for Proposal (RFP) has been released to procure a new pharmacy benefit management group. Representative DeWeese asked if another region could start a program like Passport. Mr. Wise stated not currently.


Senator Buford asked if the projected program expenditures expected to exceed $183 million in FY 2009 and $182 million in FY 2010 included the “front-loaded” funds for Oakwood. Mr. Wise said they do not reflect those funds.


Senator Denton asked the amount of the Passport contract. Mr. Wise stated approximately $712 million.


The committee accepted the SFY 2009 Social Services Block Grant that was referred by the Legislative Research Commission.


A motion to accept Executive Order 2008-504, relating to the reorganization of the Cabinet for Health and Family Services, was made by Senator Buford, seconded by Senator Harper Angel, and accepted by voice vote. Beth Jurek, Policy Advisory, and Budget Director, Cabinet for Health and Family Services, gave a brief overview of the executive order and was available for questions. Bernie Vonderheide, Kentuckians for Nursing Home Reform, complimented the cabinet for relocating the Long-Term Care Ombudsman to the Department for Aging and Independent Living and making the position a merit position.


Senator Denton asked about the new transportation contract for the Passport area. She said that the contractor was going to lower the reimbursement to a flat $18 and not all the previous providers will be participating. She said to please let it be a smooth transition. Mr. Wise stated that every four years the cabinet has to rebid the contract.  The reimbursement rates can be reviewed quarterly and are negotiated between the Transportation Cabinet and the broker. Transportation is not an area Medicaid will be able to save funds in the budget because of high gas prices.


There being no further business, the meeting was adjourned at 3:37 p.m.