Medicaid Managed Care Oversight Advisory Committee (HB 785)




<MeetMDY1> June 28, 2004


The<MeetNo2> Medicaid Managed Care Oversight Advisory Committee (HB 785) meeting was held on<Day> Monday,<MeetMDY2> June 28, 2004, at<MeetTime> 10:30 AM, in<Room> Room 131 of the Capitol Annex. Senator Richard Roeding, Co-Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Richard Roeding, Co-Chair; Senators Walter Blevins, Tom Buford, Julie Denton, and Dan Seum; Representatives Jack Coleman, Stephen Nunn, and Dottie Sims.


Guest Legislators:     Representatives Tom Burch and Jimmie Lee.


Guests:  Bill Doll, Patrick Padgett, and Tim Schneider for the Kentucky Medical Association; Brenda Jones for the Cabinet for Health and Family Services Ombudsman's Office; Jan Gould for the Kentucky Retail Federation; Cathy McGeehan for Novartis Pharmaceutical; David Vance for Cull, Hayden and Vance; Jenny Mitchell for the Office of Inspector General; Ralph Bouvette for American Pharmacy Services; Ellen Kershaw for the Alzheimer's Association; Marybeth Crouch for Doral Dental; Karen Thomas Lentz for Long-Term Care Pharmacy; Mike Mayes for the Kentucky Pharmacists Association; and Ron Coleman for Schering.


LRC Staff:  Barbara Baker, Eric Clark and Cindy Smith.


The minutes of the October 20, 2003 meeting were approved without objection.


The first item on the agenda was a presentation on the Pharmacy an Therapeutics (P&T) Committee by Mark Birdwhistell, Undersecretary for Health and Shannon Turner, Deputy Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services.  Secretary Birdwhistell said that the Cabinet filed an amendment to 907 KAR 1:019, on April 5, 2004 to bolster the effectiveness of the P&T Committee. He reported that the P&T Committee has taken action on 53 drug claims.  These amendments will enhance the ability to negotiate supplemental rebates. Amendments to  907 KAR 1:019 will be heard before the regulation review subcommittee on July 11, 2004. The Cabinet has received feedback from the pharmaceutical industry as well as key legislators on the lack of presentation to the P&T committee; and in response, an amendment will be offered at the committee hearing.  Mr. Birdwhistell projected a savings of $32 million from supplementary rebates.


Deputy Commissioner Turner emphasized training with the pharmaceutical industry and legislators to make it a more workable committee. 


The next item on the agenda was a presentation on Pharmacy Benefits Management by Mark Birdwhistell, Undersecretary for Health, and Shannon Turner, Deputy Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, and Ralph Bouvette, R.P.H, Ph.D, J.D., American Pharmacy Services Corporation.  Secretary Birdwhistell said the current pharmacy claims payment system is inefficient.  This continues to be a problem between pharmacy "switch vendors" and the MMIS system.  Pharmacists also have to continually resubmit claims.  In regard to clinical issues, data is not analyzed for drug interactions or drug abuse patterns.  Also, high utilizers of services are neither identified or managed.  The prior authorization process is cumbersome and time-consuming for providers. In regard to benefit management, he said to operate Medicaid efficiently and to bring it into balance, both utilization and pharmacy costs will have to be managed in a manner more consistent with the commercial market sector.  In regard to factors influencing drug cost, he said medication expenses for Medicaid fee-for-service recipients was $703 million, an increase of 4 percent during FY 2003, compared to the national average of 14 percent.  Also, medication expense is a function of utilization rates, the number of eligibles and the costs to acquire medications.  In regard to Medicaid state comparisons, he said prescription utilization among all Kentuckians is near the highest in the United States, particularly among high cost therapeutic drug classes.  Also, 38,000 Kentucky Medicaid recipients have 8 or more prescriptions per month.  Four or more prescriptions per month creates  a 50 percent chance of drug interaction. Eight or more prescriptions per month creates a 100 percent chance of drug interaction.  In regard to Kentucky Medicaid quality and cost control measures, he said prior authorization was changed from a call center approach to a fax system.  Also, generic drug initiatives have increased usage of these drugs, and the $1.00 co-pay for select recipients generates over $70,000 per month.  He said Kentucky is over double of the nation Medicaid average in the number of prescriptions written.  Kentucky's goal is to approach the national average.


Representative Nunn said Kentucky has a prescription problem that the Board of Medical Licensure needs to address.  Secretary Birdwhistell said it is a two fold problem.  They need to find out who is writing the most scripts and who is using them.  They also need to do on-site education for the physicians and pharmacists.  Representative Nunn said the University of Kentucky is doing that with their School of Pharmacy.


Representative Nunn asked if UNISYS has been asked to monitor drug utilization.  Secretary Birdwhistell said UNISYS is a claims payor, and their has been a modification to the contract to do pharmacy benefits management (PBM) consultation work.  It is not a full blow administrative piece.  They pay on a per claim basis.  Representative Nunn asked if that contract would be renegotiated.  Secretary Birdwhistell said they are writing an request for proposal (RFP) to renegotiate the contract and there should be a new contract in December, 2005.


Senator Denton asked if the Kentucky vs. national data includes data from Passport.  Secretary Birdwhistell said it doesn't, and he is not sure of the Passport averages.  Senator Denton said it would be interesting to see Kentucky vs. national vs. Passport data. 


Representative Coleman said the Program Review and Investigations Committee completed a report on UNISYS in 1997 relating to what they were supposed to do and how they were supposed to do it.  Representative Coleman suggested the members take a look at that study, and work together with the Cabinet and look into UNISYS, because things were not followed. Secretary Birdwhistell said the timing could not be better, because they are writing the RFP now.  He believes what was needed in 1997 is much different that what is needed now.

            Senator Roeding asked if the Cabinet was going to integrate problems from 1997 to the RFP now.  Secretary Birdwhistell said they will have addressed 99 percent of those problems.

Senator Denton asked if the RFI for the RFPs are finished.  Secretary Birdwhistell said yes, they are finalizing the RFP drafting for the MMIS system now.  The RFP for pharmacy has been issued and the responses have been received.


Representative Burch said it is going to take leadership to get all areas on board for  managed care.  He said when bills come in, the doctor writing the scripts may not be known, but it would be easy to find out what region the scripts are coming from.  It is a matter of getting that information and doing something about it.  Kentucky doctors need to be educated.   Secretary Birdwhistell said there needs to be medical leadership, and they are in the process of recruiting two medical directors.  Data can be obtained, but it is not readily available.  The Cabinet will get the medical directors to provide education, and they will also have pharmacy directors who will be able to coordinate with the medical directors on educating people.


Mr. Bouvette said he was present to speak on the issue of the RFP that has been issued for the purpose of engaging a PBM, to assist in management of the Medicaid pharmacy program.  He said it is important to remember that a PBM is a pharmacy management tool, Medicaid must retain responsibility for the pharmacy program with appropriate oversight by the General Assembly. PBMs have recognized expertise in claims processing, and in formation and administration of pharmacy provider networks.  The technological infrastructure they have developed allows them to efficiently communicate with pharmacy providers on issues of patient eligibility and program administration.  Pharmacy providers are the most technologically advanced health care providers in this regard.  Improving Medicaid's ability to process claims and communicate with its pharmacy providers will allow their pharmacies to take advantage of the technology they already possess.  Recently, PBMs operating in this limited role have begun to refer to themselves as "pharmacy benefit administrators" or PBA.  The American Pharmacy Services Corporation supports the use of PBMs or PBAs for this limited role.  Over the past decade, PBMs have attempted to diversity their businesses by entering into the areas of benefit design and formulary management.  In this expanded role they have inserted themselves into the processes of determining the drugs to be covered under the health care plan, whether or not recipients are eligible for the medicines they are prescribed and the fees to be paid to providers.  The American Pharmacy Services Corporation believes decisions such as these are policy decisions and  best left to the province of the Kentucky General Assembly.  Therefore, they do not support the use of PBMs in this expanded role.  The Corporation urges legislators to closely scrutinize the PBMs participation to assure themselves and Kentucky citizens that both are receiving the maximum benefit that can be extracted from that participation.  Serious questions have been raised about PBM revenues and whether some streams of revenue currently being retained by PBMs are monies that should have been returned to the plan sponsors paying for the benefits.  These questions have not yet been answered, and in fact, are the subject of multiple lawsuits in multiple jurisdictions across the United States.  The Corporation also believes that decisions concerning what medications are provided to plan recipients should be based on sound medical judgement, not the amount of the fee or rebate to be paid to the PBM.  They also believe the Medicaid P&T Committee is uniquely qualified to make this determination, without prejudice or undue influence.  One of the distinguishing differences between the PBM and PBA form of pharmacy benefit management is that the latter provides full disclosure of the rebates and fees associated with the management of the benefit. 


Senator Denton said the Pharmacy Benefits Administrator needs to be an administrative arm, and noted that the P&T Committee makes recommendations to the Secretary about drugs covered.  She asked if the state retaining the rebate contract would diminish the amount of rebate.  She asked if the rebates would be higher with a broader network of individuals.  Deputy Commissioner Turner said they have kept the balance to emphasize the P&T Committee as a decision maker.  They are gaining administrative efficiency, and currently one PBM is involved in that process.  Mr. Birdwhistell noted that he Cabinet would provided additional information to Senator Denton regarding the potential effort of the Cabinet retaining the contract for rebates as opposed to the PBM.


Senator Buford said the PBMs should bear the risks.  Mr. Bouvette said they are opposed to that.  The project cost increases the original projection.


The next item on the agenda was an update on Medicaid Modernization by Mark Birdwhistell, Undersecretary for Health, Shannon Turner, Deputy Commissioner, Department for Medicaid Services, and Duane Kiltey, Ph.D., Undersecretary for Administrative and Fiscal Affairs, Cabinet for Health and Family Services.  Secretary Birdwhistell said the Department for Medicaid Services contracts with National Health Services to provide Peer Review (PRO) services, including, prior authorization, pre-admission screening, concurrent review of admitted patients, and utilization review. A comprehensive medical management RFP will be released within 30 days to procure an improved PRO.  On March 16, 2004, a Request for Information released seeking best practices for disease management, medical management and peer review activities.  April 5th week vendor presentations were made by nine nationally known companies.  The RFP release will be in July , 2004, with responses due August, 2004, and the contract state date is in September, 2004. He reported that Medicaid has over 29,000 recipients with yearly costs exceeding $25,000.  Less than 5 percent of the population spends 46 percent of the Medicaid dollars. He reported that on June 16, 2004 a Division for Quality Assurance and Medical Management was created through reorganization. 


Senator Blevins asked about KENPAC and why the Cabinet didn't use it more.  Secretary Birdwhistell said KENPAC was never truly developed to include disease management.


Dr. Kilty spoke briefly about technology issues.  He said the Kentucky Health Card pilot program replaces the monthly Medicaid eligibility paper card with a permanent "Health Plan Card".  A launch of July 1st is expected for this card.  In regard to progress, they are issuing a RFP for new MMIS system utilizing advanced technology.  Also, the KAMES system is an aging mainframe system that calculates Medicaid eligibility and passes data to Medicaid MIS.


Due to time constraints, the last item on the agenda relating to Nursing Facility Level of Care will be placed on the next meeting agenda.  Senator Roeding indicated that the next agenda would include content related to KASPER (Kentucky All Schedule Prescription Electronic Reporting).


The meeting was adjourned at 12:30 p.m.