Call to Order and Roll Call
The fourth meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, December 2, 2010, at 1:00 PM, in Room 154 of the Capitol Annex. Senator Bob Leeper, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Bob Leeper, Co-Chair; Representative Rick Rand, Co-Chair; Senators David E. Boswell, Denise Harper Angel, Jimmy Higdon, Ray S. Jones II, Vernie McGaha, R.J. Palmer II, Joey Pendleton, Tim Shaughnessy, Brandon Smith, Robert Stivers II, Gary Tapp, Elizabeth Tori, and Jack Westwood; Representatives Royce W. Adams, Dwight D. Butler, Jesse Crenshaw, Mike Denham, Bob M. DeWeese, Danny Ford, Derrick Graham, Jimmie Lee, Reginald Meeks, Harry Moberly Jr., Lonnie Napier, Fred Nesler, Don Pasley, Marie Rader, Jody Richards, Charles Siler, Arnold Simpson, Tommy Thompson, Tommy Turner, Jim Wayne, and Brent Yonts.
Guests: Dr. Barbara Veazey, President, West Kentucky Community and Technical College; Ms. Donna Wear, Principal, Commonwealth Middle College; Cole Riley and Alex Clark, senior students at Commonwealth Middle College; Stewart Owen, Dept. for Medicaid Services, Cabinet for Health and Family Services; Neville Wise, Acting Commissioner, Dept. for Medicaid Services, Cabinet for Health and Family Services; Bill Riggs, Chief of Staff, Office of the Secretary, Finance and Administration Cabinet; Don Speer, Executive Director, Office of Procurement Services, Finance and Administration Cabinet; Tammy Branham, Executive Director, Office of Budget and Fiscal Management, Transportation Cabinet; Jennifer Chandler, Deputy Executive Director, Office of Budget and Fiscal Management, Transportation Cabinet; Pete Galloway, Superintendent, Graves County Schools; Greg Butler, son of Representative Dwight D. Butler; and Tammy Nesler, wife of Representative Fred Nesler.
LRC Staff: Pam Thomas, John Scott, Charlotte Quarles, Eric Kennedy, Jennifer Hays, Bart Hardin, and Spring Emerson.
Chair Leeper mentioned those committee members who would be leaving the General Assembly at the end of December. They were: Senators David Boswell, Gary Tapp, and Elizabeth Tori; Representatives Scott Brinkman, Harry Moberly, Don Pasley, Charlie Siler, and Ron Weston. Chair Leeper and Co-Chair Rand presented them with resolutions in honor of their years of service to the General Assembly.
Chair Leeper asked the members with guests in the audience to introduce them. Representative Nesler introduced Pete Galloway, Superintendent of Graves County Schools. He also introduced his wife, Tammy Nesler. Representative Dwight Butler introduced his son, Greg Butler.
Consideration of 907 KAR 1:479 as Amended November 9, 2010
Chair Leeper asked Stewart Owen, Dept. of Medicaid Services, Cabinet for Health and Family Services, to provide an explanation of Administrative Regulation 907 KAR 1:479 as amended November 9, 2010 regarding durable medical equipment covered benefits and reimbursement. A motion to amend the regulation was made by Senator Boswell, seconded by Senator Pendleton, and the motion carried without objection.
Commonwealth Middle College
Chair Leeper invited Dr. Barbara Veazey and Ms. Donna Wear to provide a brief overview of the Commonwealth Middle College (CMC). Dr. Veazey, President of West Kentucky Community and Technical College, explained that there are four middle colleges across the Commonwealth, all connected to the Kentucky Community and Technical College System. The CMC allows students to take core high school courses and receive their high school diploma while taking college classes. CMC students remain enrolled at their high school but take all classes (high school and college) on the campus of West Kentucky Community and Technical College. The college courses are tuition free. When students complete Middle College, they will have received their high school diploma as well as had an opportunity to earn a minimum of 36 college credit hours.
Dr. Veazey noted that the CMC has been very successful. The first 50 students earned between 18 and 33 credit hours during the first year of the program. Several students are scheduled to receive their associate's degree (60 hours) when they graduate from high school in May 2011. The first class posted a 3.6 grade-point average in their college classes in 2009-10 and earned an average high school GPA of 3.4. Members of the current senior class scored a composite of 22.2 on the ACT in March 2010, besting the national, state, and regional averages.
Cole Riley and Alex Clark, both seniors in the CMC program, provided a brief overview of student life at the CMC and stated how the program has helped them.
In response to a question from Representative Graham, Dr. Veazey stated that transportation for CMC students is provided by the high schools in the participating districts. Representative Graham said he is very impressed with the CMC program and the great opportunity it provides to its students.
In response to a question from Senator Pendleton, Dr. Veazey stated that additional funding would be required to expand the program. There are other similar programs in Kentucky, such as the Discover College in Owensboro, the Opportunity Middle College of Bluegrass Community College in Fayette County, and Western High School in Jefferson County.
In response to an inquiry from Representative Meeks, Mr. Clark explained that before entering the CMC program, he did not have a love for high school and only attended because it was a requirement. He was not challenged, even though he made good grades. Mr. Riley explained that before entering the CMC program, his grades were not as high as they could have been. He said he received counseling and tutoring with the CMC, and as a result his grades have improved greatly. Ms. Wear stated that both seniors had above a 3.0 grade point average. She said that many high school students were not engaged, not really interested, and may not pursue more education. In response to a question from Representative Meeks, both Mr. Riley and Mr. Clark stated they had not considered dropping out of high school before enrolling in CMC.
In response to a question from Representative Moberly, Dr. Veazey said the new criteria for admission will be more heavily weighted toward first generation college students and students identified by their principals as being at a greater risk for dropping out. Ms. Wear added that 32 percent of CMC students are participating in the free or reduced lunch program. She said three of her students did not live with their parents and one student was pregnant, indicating that those typical things that happen at the high school level happen with CMC students as well. Representative Moberly commended them for their good works and stated that Eastern Kentucky University plans to start a middle college in conjunction with the Madison County Schools in the fall of 2011. He said alternatives to the traditional high schools are becoming more and more necessary.
In response to a question from Representative Yonts, Dr. Veazey stated that House Bill 160 addresses the issue of transferability for general education classes, but will not necessarily cover more technical courses such as the culinary arts or physical therapy.
In response to a question from Chair Leeper, Dr. Veazey stated that the junior students they accepted this year will complete next year under current grants, which will then expire. Since the students were not high school graduates, they are not eligible for KEES money. KEES money could be a possibility for gap funding.
Cabinet for Health and Family Services
Chair Leeper next invited representatives from the Cabinet for Health and Family Services to address reports mandated by House Bill 1.
Mr. Neville Wise, Acting Commissioner, Department for Medicaid Services, provided an overview of the report mandated by House Bill 1 concerning Medicaid security measures, and evaluation of benefits and efficiencies. As part of the efficiency measures, the Cabinet has placed additional limitations on prescriptions by providing Medicaid reimbursement only for prescriptions written by active Medicaid-enrolled providers. The Cabinet has also refined the over-the-counter drug list, requiring that some over-the-counter drugs be provided as a less-expensive alternative to certain prescription medications. Prescription medications will also be dispensed at the least expensive generic option available. The requirements for early refills of medications were also strengthened. Ninety percent of the medication must be used before refills will be allowed, to prevent a surplus of medications being built up. The lock-in program was enhanced through utilization monitoring of recipients and assignment of physician case managers and other providers. Mr. Wise also mentioned the health insurance payment program which would allow the Cabinet to buy group insurance that Medicaid recipients have access to, if it will be less costly than Medicaid-provided services through the normal program. He stated that the Cabinet has followed the Medicare program's lead in eliminating reimbursement for hospital-acquired conditions. In addition, the Cabinet has enhanced its funding activities for preventive health services, and has implemented a revenue intercept program. The Cabinet has entered into a new contract with a program integrity vendor to analyze utilization patterns and look for potential fraud.
In response to a question from Representative Wayne, Mr. Wise replied that pharmacy audits are conducted on a quarterly basis. The audits are based on a set of criteria used to determine which providers to audit each quarter. He said there are some selective audits conducted as well. In response to another question from Representative Wayne, Mr. Wise replied that the program integrity vendor is an outside contract, adding that the company is Ingenix. Representative Wayne inquired about their rate of recovery. Mr. Wise said he would provide that information at a later date. He added that Ingenix operates on a contingency fee basis and will not get paid until the discrepancy is identified and recovered. Representative Wayne said he thought their recovery rate was between one and one-half percent, with the national average being between five and seven percent. He asked how the bid was let. Mr. Wise replied it was a competitive bidding process. Representative Wayne asked why the contract had not been reviewed by the Government Contract Review Committee. Mr. Wise stated that he would investigate and reply back to the committee.
In response to a question from Representative Napier, Mr. Wise noted that the only case where benefits would be reduced would be if the patient is in a nursing home or on a waiver program as an alternative to being in a nursing home.
In response to a question from Senator McGaha, Mr. Wise explained what hospital-acquired conditions are. These conditions occur due to poor hospital care, and include acquired infections, and sponges or instruments being left in the patient after surgery, as examples. Senator McGaha asked if there was a state reporting system in place for hospitals regarding hospital-acquired infections. Mr. Wise said hospitals are required to document the condition of the patient upon admission.
In response to a question from Representative Yonts, Mr. Wise responded there is no mechanism in place for tracking prisoner dumping.
Chair Leeper inquired about a report provided to the General Assembly from the Cabinet for Health and Family Services which had been mentioned by the Cabinet Secretary in a previous meeting. Mr. Wise said the report had been provided in February of 2010, and included a comparison of costs for recipients of services provided by Passport to that of services provided in other parts of the state.
Senator Shaughnessy commented that roughly 52 percent of Passport is owned by University Physicians Associates, which is comprised of the medical staff of the medical school at the University of Louisville. Mr. Wise said their faculty has a medical practice which is part of the medical school. In response to a question from Senator Shaughnessy, Mr. Wise said that the remaining ownership of Passport is comprised of 12 percent Norton Hospital, 12 percent Jewish Hospital, 12 percent University of Louisville Hospital, and the remaining percentage was owned by Jefferson Primary Care Association. Senator Shaughnessy stated that with Passport being affiliated with the university, it seems to be part of the university and certainly would be controlled by the university, not the medical school. He stated that the University of Louisville contributed nearly $5.3 million to fund the capital contribution to Passport. He commented that it should be acknowledged that the appropriate people should be held responsible, and accountability comes with responsibility.
In response to a question from Chair Leeper, Mr. Wise said that the Passport board was formed by various provider groups and associations nominating people to represent them on the board. He added Passport is required by contract to have broad representation of provider groups and geographical areas in order to understand the needs and efficiencies involved.
Representative Wayne requested more information regarding the Ingenix contract. Mr. Wise stated he would provide that information at a later date.
Chair Leeper thanked Mr. Wise for appearing before the committee.
Finance and Administration Cabinet
Mr. Bill Riggs, Chief of Staff, Office of the Secretary, introduced Mr. Don Speer, Executive Director, Office of Procurement Services. They gave a brief explanation of the Contract Reductions for FY 2011 report, which was mandated by House Bill 1.
In response to a question from Representative Wayne, Mr. Speer replied that all contracts go through the Finance and Administration Cabinet, adding that bids for personal service contracts and memoranda of agreement were issued and procured by the individual agency seeking those services, and they were reviewed by the Government Contract Review Committee. Bids for all other commodities and non-professional services were issued by the Finance and Administration Cabinet.
Representative Wayne asked why the Ingenix contract was not considered a personal service contract and did not go before the Government Contract Review Committee. Mr. Speer replied that it had been considered by the Cabinet for Health and Family Services as a non-professional contract, which was an administrative contract.
Senator McGaha commented that the Government Contract Review Committee should review more contracts. Representative Yonts agreed.
Chair Leeper asked if personal service contracts were reviewed to determine if those services could be performed in-house in order to save money. Mr. Speer replied that the Finance and Administration Cabinet and other agencies were doing that as part of their reviews.
Chair Leeper pointed out the option for fast-pay in the Workers Compensation Program in the Personnel Cabinet, and asked if that option had been considered by other departments. Mr. Riggs said every cabinet and every department were being challenged daily to reduce contracts. He said reductions would continue to be made in order to reduce spending.
Chair Leeper thanked them for appearing before the committee.
Transportation Cabinet
Tammy Branham, Executive Director, Office of Budget and Fiscal Management, introduced Jennifer Chandler, Deputy Executive Director. They provided a brief overview of the report mandated by House Bill 3 concerning the review of contract expenditures.
Chair Leeper requested a detailed list of contracts with precise numbers and a list of those contracts that would be rebid. Ms. Branham stated the information would be provided to the committee at a later date. Chair Leeper asked for clarification regarding maximization of the use of $11.4 million in total funds. Ms. Branham replied that those funds would be utilized in other areas rather than putting them away for a rainy day.
Chair Leeper thanked them for the information provided to the committee. There being no further questions, he asked for a motion to adjourn. A motion was made by Representative Nesler and seconded by Representative Pasley, and the meeting was adjourned at 3:25 PM.