The 1st meeting of the Interim Joint Committee on Health and Welfare was held on Tuesday, September 25, 2001, at 1:00 PM, in Room 129 of the Capitol Annex. Senator Julie Denton, Co-Chair, called the meeting to order at 1:15 PM, and the secretary called the roll.
Present were:
Members: Senator Julie Denton, Co-Chair; Representative Tom Burch, Co-Chair; Senators Charlie Borders, Tom Buford, Paul Herron, Jr., Ed Miller, Daniel Mongiardo, Joey Pendleton, Richard Roeding, and Katie Stine; Representatives Paul Bather, Kevin Bratcher, Brian Crall, Robert Damron, Bob Heleringer, Stephen Nunn, Ruth Ann Palumbo, Jon David Reinhardt, Kathy Stein, and Susan Westrom.
Guests: Shannon Dun, Lexington-Fayette County Health Department, Healthy Start in Child Care, Lexington; Patricia Bausch and Brian Bishop, Kentucky Board of Emergency Medical Services, Frankfort; Shirley Eldridge, Joyce Lea, Patti Smith-Glover, Debbie Salleng, Cheryl Bentley, Marian Love, Diane Sowards, Sissy Cawood, and Dietra Paris, Department for Community Based Services, Cabinet for Families and Children; Johnna Reeder, United Way of Northern Kentucky, Florence; Paula Bendle Smith and Betty R. Underwood, Kentucky Association of Child Care Resource and Referral Agencies, Frankfort; Keith Valade, Metro Human Needs Alliance; Robyn Zapp-Basil, B.J. Jacobs, and Cathy Mobley, Cabinet for Families and Children; Joe Spalding, Jefferson County Human Services, Louisville; Mary Ann Myher, Lexington-Fayette County Health Department, Lexington; Maresa Fawns and Penny Gold, Kentucky Academy of Trial Attorneys; Leighann Thacker, The Commonwealth Group; William McElwain, Kentucky Medical Association, Mt. Vernon; J. Scott Judy, Health Kentucky, Louisville; Todd D. Sicoky, CHA Health, Lexington; Laura Harrod, Department for Public Health, Cabinet for Health Services; Jean Rosenberry, Prestonsburg; Billie Jean Cole, Ready to Work/Kentucky Community and Technical College System, Pikeville; Bob Barnett, American Pharmacy Services Corporation, Frankfort; Jennifer Graham Brown, University of Kentucky, Lexington; Jack Couch, Kentucky Council of Area Development Districts, Frankfort; Bart Baldwin, Children’s Alliance, Frankfort; Cathy Allgood Murphy, Center for Accessible Living, Louisville; Dianna McClure and L.E. Chapple, Department for Medicaid Services; John Brazel, Kentucky Pharmacists Association; Ronny Pryor, LifePoint Hospital; Bill Bowers, Astra Zeneca, Loveland, Ohio; Betsy Nowland-Curry and Ann Ferrell, Kentucky Commission on Women, Frankfort; Keith Sanders and Lory Hager, Hope Foundation; Carol Strange, Department for Mental Health/Mental Retardation Services, Cabinet for Health Services; Tony Sholar, Kentucky Chamber of Commerce, Frankfort; Scott Wegenast, Catholic Conference, Frankfort; Sheila Schuster, Kentucky Mental Health Coalition, Louisville; Barbara Wright, Division of Child Support, Cabinet for Families and Children; Judy Levey, Homeless and Housing Coalition of Kentucky; Anne Joseph, Kentucky Task Force on Hunger; Bobby Marshall, UTU, Louisville; Prentice Harvey, Norton Healthcare, Inc., Frankfort; Steve Shannon, Kentucky Association of Retired Persons; Sean M. Cutter, MML&K, Frankfort; Sarah S. Nicholson, Kentucky Hospital Association, Louisville; Randy Blevins and Karen Jones, Kentucky Agency for Substance Abuse Policy, Frankfort; Ann Gordon, Cabinet for Health Services; Don Fornwalt, Council for Retarded Citizens; Donna Brown, Brandenburg; Jan Gould, Kentucky Retail Federation, Frankfort; and Lewis Wilkerson, D&R Pharmacare, Lexington.
LRC Staff: Robert Jenkins, CSA; Barbara Baker, Eric Clark, DeeAnn Mansfield, Murray Wood; Gina Rigsby and Cindy Smith.
A motion to adopt a resolution in honor of J. Murray Blue was made by Senator Herron, seconded by Representative Burch and approved by voice vote.
The first item on the agenda was a briefing on the Governor’s Office of Child Abuse and Domestic Violence Services by Carol Jordan, Executive Director. Ms. Jordan said that on August 24, 2001, Governor Patton issued an executive order on workplace policy on domestic violence and sexual assault for the executive branch. Approximately 30 percent of women who die in the workplace lose their lives because of homicide. The national annual cost of sexual assault is $127 billion due to medical expenditures and lost productivity. Twenty-six percent of women who have been stalked lose time from work because of their victimization. The Domestic Violence and Sexual Assault in the Public Workplace Policy has three key components: 1) Zero tolerance for domestic violence and sexual assault; 2) Creating safety for victims of domestic violence and sexual assault; and 3) Safe and productive workplaces for all employees.
Ms. Jordan said that the purpose of the Statewide Victim Advocate Communication Network (V-NET) is to link victim advocates in Rape Crisis Centers, Spouse Abuse Centers, Children’s Advocacy Centers, prosecutors’ offices, and other locations to state agencies and each other. Kentucky is the only state to have this type of computer system for victim advocates. V-NET eases communication between victim advocates and gives access to information.
Ms. Jordan said that Project Passport is a program to establish an eight-state strategy for implementing the Full Faith and Credit Clause of the U.S. Constitution to allow for enforcement of domestic violence protective orders from other states. The goal of Project Passport is to create a regional model of enforcement of domestic violence protective orders across state borders through the development and adoption of a recognizable protective order form which will be used throughout the region and ultimately expanded nationwide.
Ms. Jordan said that the Sexual Assault Nurse Examiner Program was created in 1996. A hospital emergency rooms is not the best place for a victim of sexual assault to get a forensic rape exam, and sometimes a physician is not the best person to perform the exam because he or she is not specially trained in this area. There are 83 nurses across the state that have specialized training to perform the forensic rape exam. An advisory committee for the program was created in 1996 and attached to the Board of Nursing to oversee the certification. There are now Sexual Assault Response Teams (SART) throughout the state. The foundation of the program is the rape crisis centers. The program serves approximately 8,000 victims a year.
Ms. Jordan said the Governor’s Council on Domestic Violence and Sexual Assault was created in 2000. One recommendation from the Governor’s Council on Domestic Violence and Governor’s Task Force that looked at adult rape cases was to create a statutory entity that could oversee, in a multidisciplinary way, the areas of both domestic violence and sexual assault. Thirty-three Local Domestic Violence Coordinating Councils were created to figure out the best administration of justice for domestic violence cases in the community. House Bill 427, enacted during the 2000 Regular Session, created Domestic Fatality Review Teams. At the state level, a model policy or protocol is being created for Domestic Fatality Review Teams when conducting reviews whenever there is a death related to domestic violence. There are only two Domestic Fatality Review Teams in Kentucky.
Ms. Jordan said that in 1996, legislation was enacted for an offender certification program in the area of forensic mental health that provides certification for mental health professionals who perform court-ordered domestic violence offender treatment. There are 90 mental health professionals throughout Kentucky who are certified to treat domestic violence offenders.
Ms. Jordan said that one of the things her office works on is public awareness of child maltreatment, domestic violence, and sexual assault. The month of September is Sexual Assault Awareness Month.
Representative Nunn asked why the executive order only included the executive branch and commented that the legislative and judicial branches need to be included in this policy. Ms. Jordan said all employees deserve this kind of protection and all it would take would be interest from the legislative and judicial branches. Representative Nunn said the Health and Welfare Committee could take the initiative to show interest and move forward on such a policy.
Representative Burch asked if there reciprocal agreements with other states to enforce domestic orders. Ms. Jordan said with the passage of the 1994 Violence Against Women Act, all states are supposed to enforce orders from other states. The problem has been not having a recognizable form that would be used by all states that would make it easier to enforce the domestic violence orders. Representative Burch asked how to make this enforcement occur. Ms. Jordan said law enforcement does the enforcement in response to a court’s order. The challenge has been to get the courts, Governor’s representatives, domestic coalition representatives, Administrative Office of the Courts’ representatives, and law enforcement together to enforce domestic violence orders from other states. Ms. Jordan said one problem of enforcement of domestic violence orders in other states is how clear the domestic violence order is and how well trained a law enforcement officer is in enforcement of these orders. Ms. Jordan said out-of-state victims that come to Kentucky are better off than Kentucky victims who go to another state because Kentucky has focused on this issue since 1994.
Senator Denton asked why the Jefferson County Police Department did not submit a grant request to the federal government to renew the grant for the Domestic Violence Unit. Ms. Jordan said that part of the problem is that Kentucky will have less Violence Against Women Act (VAWA) funds in the coming year to support this program. The formulary for the VAWA funds, based on population, has been cut.
Senator Stine asked if there is adequate training for guardians ad litem in understanding the pathology associated with relationships that have been shattered by domestic violence. Ms. Jordan said anybody can benefit from additional training but guardians ad litem had not been targeted. Senator Stine said because of the intricate role that guardians ad litem play in custody determinations, they need to have an insight into how the victim may or may not behave.
The next order of business was an update on the KIDS NOW Initiative given by Dr. Kim Townley, Executive Director, Governor’s Office of Early Childhood Development. Dr. Townley said that the Folic Acid Campaign has helped approximately 40,000 receive folic acid that helps prevent spina bifida. As of June 30, 2001, $276,770 was spent on this campaign, and $1,522,400 is projected for 2002.
The Substance Abuse Treatment Program for Pregnant and Post-partum Women assists Medicaid-eligible women with current or prior substance abuse problems to bear healthy babies and to remain free of substance abuse behaviors in the future. Contracts are in place with thirteen Mental Health/Mental Retardation Boards, and Dr. Townley’s office is working on the contract for the fourteenth MH/MR Board. As of June 30, 2001, no funds were spent on this campaign, but $1,000,000 is projected for 2002.
The Universal Newborn Hearing Screening Initiative assists hospitals to screen all newborns prior to hospital discharge. Approximately 24,000 infants have been tested. As of June 30, 2001, $1,010,683 was spent on this initiative, and $605,300 is projected for 2002. The Immunization Program for Underinsured Children Initiative has helped immunize 10,000 children. As of June 30, 2001, $1,999,335 was spent on this initiative, and $2,000,000 is projected for 2002.
The Voluntary Home Visiting Program provides voluntary home visitation for first time parents who are at-risk. There are 3,800 families in the program. The HANDS Program is in 52 counties and will be expanded to 102 counties in 2002. As of June 30, 2001, $1,797,046 was spent on this initiative, and $9,522,300 is projected for 2002.
The Quality Rating System for Childcare: STARS for KIDS NOW program will raise the level of quality in childcare by offering a system of incentives and rewards based on identified characteristics associated with positive outcomes for children and families and by offering technical assistance to achieve quality indicators. This system has been piloted in 17 counties, and there are 77 STAR-rated programs as of July. As of June 30, 2001, no funds have been spent on this initiative, but $6,082,800 is projected for 2002.
The Scholarship Fund for Childcare Providers administered through the Kentucky Higher Education Assistance Authority is available to anyone who works in childcare at least 20 hours per week and to trainers also seeking a specialty trainer’s credential. There are 25 public institutions and five private institutions that have scholars in this program which was started in January. As of June 30, 2001, $155,943 was spent on this initiative, and $1,259,500 is projected for 2002.
The Increased Licensing Personnel Initiative will bring expertise to upgrade childcare quality by having smaller caseloads consisting only of childcare facilities. There is one licensing surveyor for 50 centers. All funds for this initiative will be federal money.
The Healthy Start in Childcare Initiative will provide personnel to train and educate childcare providers and parents in health, safety, nutrition, and the benefits of early intervention. As of June 30, 2001, $1,115,614 was spent on this initiative, and $2,100,000 is projected for 2002.
The Community Early Childhood Council Funding Initiative will form community councils to improve the quality and availability of childcare in low resource/high need areas. As of June 30, 2001 $138,141 was spent on this initiative and $2,559,300 is projected for 2002.
The Early Childhood Development Authority will coordinate the development of the initiative’s programs. As of June 30, 2001, $75,422 was spent on this initiative, and $188,400 is projected for 2002.
The Business Council will involve the corporate community and local governments in supporting issues of importance to working families in Kentucky. As of June 30, 2001, no funds have been spent on this initiative, and $50,000 is projected for 2002.
The Professional Development Council will work with existing entities to create a seamless system of education and training for early childhood providers, beginning with an entry level credential and proceeding through a Master’s degree. As of June 30, 2001, $69,604 was spent on this initiative, and $110,000 is projected for 2002.
The Evaluation of Initiative continues to ensure effective use of funds in achieving targeted outcomes across settings statewide. As of June 30, 2001, $116,968 was spent on this initiative, and $250,000 is projected for 2002.
The Child Safety in Childcare Initiative allows the Cabinet for Families and Children, through the Office of Inspector General, to assess penalties on facilities when an inspector finds a situation that poses an immediate threat to the health, safety, or welfare of children. In addition to a hearing, an informal dispute resolution process is established prior to an action that could result in the closure of a childcare facility.
Senator Roeding asked for the budgeted and spending amounts for the initiatives in 2001. Dr. Townley said that 25 percent of Kentucky’s Phase I Tobacco Settlement dollars will fund the early childhood initiatives, which over the two-year biennium is approximately $56 million, and $7,381,000 was spent in 2001. Governor Patton has recommended that $10.1 million of the carry-over funds would be used to balance the 2002 budget. Senator Roeding asked if Kentucky would receive another $56 million in 2002. Dr. Townley said $56 million was over the biennium. There will be approximately $38 million to be spent on the initiatives in 2002. Approximately $30,400,000 of the $38 million will be spent in 2002.
Representative Burch said the Early Childhood Initiative is a 30-year commitment to the children of Kentucky, and funds should not be diverted to other programs. Sound programs have been developed with available funds. Programs need to be implemented slowly in order to become effective.
In response to a question by Representative Reinhardt, Dr. Steve Davis, Director, Division of Adult and Child Health, Department for Public Health, Cabinet for Health Services, said that part of the series of vaccinations over the past eight years given to children covers meningitis.
Senator Mongiardo said that prevention is easier to obtain and cheaper than cure. The Governor’s Early Childhood Initiative is a great step toward prevention. Research shows that a child’s general character is set by eight years of age. He asked if there was an early childhood initiative to plan the education component of early childhood development where children can be educated on prevention. Dr. Townley said the STARS Program is a quality rating system for parents that rates early childhood programs and deals with the education of the teacher in the early childhood classroom. If the teacher has the training to know how to provide developmentally appropriate education to a young child, a child can start learning as young as six weeks. Senator Mongiardo asked if the curricula for this training has been reviewed or if it is left to individual centers. Dr. Townley said individual centers choose their own curriculum that matches the center’s philosophy and that best matches the families they serve. Senator Mongiardo asked if “no smoking” or “no littering” programs should be incorporated into the curriculum. Dr. Townley said exposing children to a variety of curricula, foods, early literacy skills, and early math activities helps develop a child’s whole development and prepares them for the next step in their development.
Senator Borders asked if the amount of funds needed in future bienniums for the early childhood initiative will level off. Dr. Townley said that when the early childhood initiative is fully operating in 2003, it will take the entire $56 million over the biennium on an on-going basis. If any of the programs are expanded, additional funds would be needed. Senator Borders asked where Kentucky ranks on vaccinating children. Dr. Townley said Kentucky ranks third in the nation. Senator Borders asked if Kentucky is in a position to respond effectively to an outbreak of smallpox more so than other states. Dr. Davis said that our nation has been free of smallpox since the early 1980s and the production of the vaccine has since ceased. The CDC and Russia are the only know places to have a supply of the smallpox virus and there is not enough smallpox vaccine available.
Representative Heleringer said that the Government Contract Review Committee reviews all state contracts that the Executive Branch executes monthly. His concern was the $4.2 million cut from the Department for Mental Health/Mental Retardation Services budget to help cover the budget shortfall. Representative Heleringer said the resolution he was offering, if adopted by the committee, would urge the Governor to examine the issue of personal service contracts and to look at curtailing the spending on non-essential contracts such as outside consultants, lawyers, and other individuals, and instead take some of this money that is saved and apply it back first to the $4.2 million cuts for the Department for Mental Health/Mental Retardation Services budget and then to other cuts made throughout state government because of the budget shortfall. A study was done by the LRC staff economists on the entire contract mechanism and reported that the Executive Branch has doubled in eight years the amount of money spent on personal service contracts. Last year they spent $350 million on personal service contracts. If Memorandums of Agreement and price contracts are included, the total approaches $1 billion. The amount of contracts for September was $37 million. Contracts need to be reviewed and every dollar reprioritized to meet the needs of the citizens of Kentucky. A motion to adopt the resolution was made by Representative Heleringer and seconded by Senator Roeding.
Senator Miller said that he was offended that the Governor would be accused of making unnecessary and non-essential expenditures. He said that the legislature should work with the present administration in addressing the problems rather than working against them.
Representative Burch said that the $4.2 million was unspent money and would be applied to the Medicaid budget deficit, which would help everyone. He said that the Department for Mental Health/Mental Retardation Services is trying to get good services but has not been able to do so because the services are hard to get. He thought the resolution should come from the committee that deals with this issue rather than the Health and Welfare Committee, and it would be inappropriate to vote on the resolution.
Representative Nunn said this resolution is a statement about priorities of the Commonwealth and not an attack on the administration. Money will continue to be expended even though there is a budget shortfall and the General Assembly did not appropriate the funds. He questioned whether priorities will be to fund services for people who truly need them or to provide funds for non-essential contracts.
Representative Heleringer said that the resolution does not criticize the Governor, but when there is a shortfall, he has to make the final decision. Mental health/mental retardation are not partisan issues in the General Assembly. Kentucky has a serious shortfall and it is the right of the General Assembly to question, criticize, and make suggestions to the executive branch about different ways of handling it. The resolution only asks the Governor to look at the contracts to decide what is frivolous, unnecessary and non-essential, and if he finds problems, to do whatever is necessary to correct them because the Government Contract Review Committee cannot legally do anything to correct the problems. Because of the cuts in the Department for Mental Health/Mental Retardation Services budget, 2,018 individuals will receive fewer or no services. Representative Heleringer said that our citizens must come first. A motion was made for a roll call vote by Representative Heleringer, seconded by Senator Roeding, and approved by voice vote.
Senator Roeding said that the legislative body passed a balanced budget, but because of the shortfalls, we no longer have a balanced budget. The resolution merely asks the Governor to look at other ways to make cuts in the budget, and contract review is one way of doing it.
Senator Mongiardo asked what would happen if the state reneges on a contract that has already been signed. Representative Heleringer said that the contracts that the Government Contract Review Committee looks at are for prospective contracts. There are some that are designated as an emergency and need immediate consideration even though the contract has already been executed.
After a roll call vote of 15 yes votes, 5 no votes, and 0 pass votes, the resolution was adopted.
The next item on the agenda was a presentation on assessing the effects of alternative welfare reform policies on low-income families by Charles Michalopoulos and Ann Rosewater, Manpower Demonstration Research Corporation. Dr. Michalopoulos said that in 1996, the federal government passed major welfare reform legislation that is about to be reauthorized in 2002. Kentucky has responded by changing the welfare policy. One important way many states have changed policies is to introduce a different kind of employment services initiative that is designed to help people find jobs. The focus has been to make it mandatory for individuals to look for a job. If they do not comply with the requirements, they would be sanctioned by losing part or all of their welfare benefits. Kentucky has allowed some individuals to receive up to 24 months of postsecondary training or education while still being in compliance. Another major policy implemented in almost all states is earning supplements or financial work incentives. The third major policy is time limits. Many states, Kentucky included, have implemented a 60-month time limit. No state has hit the five-year time limit yet, but Kentucky will reach the limit in October, 2001. Diversion studies are an attempt to keep people coming onto the welfare roll by giving money for car repairs. Teen pregnancy and marriage are issues that also need to be addressed.
The six main points of research by the Manpower Demonstration Research Corporation are: 1) many welfare-to-work programs increase earnings; 2) only policies that supplement earnings help children; 3) no evidence of benefit or harm because of time limits; 4) voluntary education is more effective than if required; 5) challenge of retention and advancement; and 6) challenge of identifying and reducing barriers to work.
An evaluation technique called Random Assignment has been used on programs that have been researched over the past ten to fifteen years. One group of individuals was placed in a program group subject to new welfare policy and another group was placed in a control group subject to old welfare policy. The individuals in the program group earned an average of $600 more per year than the control group. Programs that used a mix of mandatory job retention and education were the most successful. Programs that tailor activities to what individuals need are going to be more successful. Mandatory employment services have few effects on school achievement. A number of states implemented programs that allowed people to keep more of their welfare benefits after they were employed.
Kentucky’s programs are focused on employment, allow postsecondary education, and challenge dropouts to further their education. MDRC recommends that individuals know what incentives are available. One option is to offer incentives for a longer period of time, although this could be expensive. The challenges are working with the working poor and identifying and working with the hard-to-employ individuals. Building supports for the working poor is important in the context of a time-limited welfare system and trying to reduce welfare dependency because it will help to keep people from returning to the welfare rolls. A substantial safety net already exists because people are eligible for food stamps, earned income tax credit, KCHIP, and child care subsidies. The problem with many of the supports is that many people who leave welfare do not receive them. The challenge is to have an agency accountable to make sure individuals know about available programs.
Two ways to keep individuals from receiving welfare is to help keep them at work and get better jobs. Financial incentives and earning supplements increase income and benefit children and encourage individuals to stay at work or find new jobs when they lose a job. Once individuals have been employed, they understand what skills are needed in the workplace and are more receptive to education. Community colleges should be linked with employers to help educate individuals with the skills needed for a specific job. Senator Roeding said that there needs to be focus on vocational schools as well as colleges.
Senator Mongiardo said that in eastern Kentucky, welfare reform is taking people who can work and pushing them into jobs, if they are available. He asked if there were studies that looked at the migratory patterns of individuals on welfare having to leave areas, such as eastern Kentucky, to find jobs and what kind of burden this places on the family. Secretary Miller said relocation assistance was provided through the original welfare reform plan, but it has been unsuccessful. Very few people took advantage of the program and if they did, they did not stay away from eastern Kentucky very long. Some of the greatest success in Kentucky with welfare reform has been in eastern Kentucky because innovative and creative ways have been found to put people to work. Senator Mongiardo said that one hurdle to bringing jobs to eastern Kentucky is the lack of transportation.
Representative Burch asked if there is a fallback plan if there is a recession. Dr. Michalopoulos said that the studies indicate recession does not have an affect on programs. Secretary Miller said as times get harder, the money has to be used in ways that are most likely to get good outcomes for families and children.
Representative Crall asked if the studies show that voluntary programs produce better results. Dr. Michalopoulos said when you require people to go into education, a lot will drop out and fail and such an arrangement would not be successful for these individuals. A program that requires education for everyone will have a mix of success for few and failure for many. Ms. Rosewater said that for some people, going to work is an incentive to recognize and have greater motivation to voluntarily participate in education. Representative Crall said that sometimes the results of studies can be contraindicating.
The item on the agenda was a presentation on the status of women’s health by Gwen Mayes, Executive Director, Office of Women’s Physical and Mental Health. Dr. Mayes said that the Office of Women’s Physical Health was created by House Bill 864 enacted during the 1998 General Assembly. Following are the legislative directives: 1) repository for data and information affecting women’s health and mental health; 2) analyze and communicate trends in women’s health issue and mental health; 3) recommend data elements affecting women’s health and mental health that should be collected, analyzed and reported; 4) cooperate with the Cabinet for Health Services in receiving and disseminating through the internet relevant aggregate data affecting women; and 5) administer a Women’s Health Resource Center to focus on targeted preventive and comprehensive health education. In House Bill 124 passed by the 2000 General Assembly, the legislative amendments to the Office of Women’s Physical Health include: being attached to the Office of the Secretary in the Cabinet for Health Services and adding “Mental Health” to the name.
Six main goals were established: 1) administrative/operational; 2) Women’s Health Resource Center; 3) improve gender specific date; 4) Women’s Health Data Report; 5) health education; and 6) communications. Women: 1) spend more money for health care than men and more often influence spending decisions; 2) utilize the health care system more often than men; 3) suffer from certain diseases more than men; and 4) respond differently to medical treatment and exhibit different psychological and mental symptoms of the same disease as men. Women suffer from autoimmune diseases, osteoporosis, depression, osteoarthritis, and migraine headaches more than men. Kentucky women’s health ranks 47th in the nation, according to “Making the Grade on Women’s Health: A National State-by-State Report Card” as of August, 2000.
The Women’s Health Data Report will be completed in fall 2001 and distributed in January, 2002. The report will cover aging, breast/cervical cancers, chronic conditions, mental health, and rural health. As of 1999, the leading causes of death for Kentucky females are chronic lower respiratory disease, diabetes mellitus, heart disease, malignant neoplasms, and cerebrovascular diseases. The report will also include information on the increase of folic acid use, osteoporosis awareness, calcium supplements, decrease in teen birth rate, decrease in teen pregnancy rate, drop in reported incidence of gonorrhea, and more overall health awareness. The lifestyles choices that play a role in the health status of women are smoking, exercising, and diet. The health consequences are increased weight, increased in obesity and diabetes, and increased high cholesterol and hypertension.
The Women’s Health Resource Center will provide information on prevention and wellness and comprehensive health data. This information can be accessed on their website.
Representative Heleringer asked what could be done to raise awareness and help women alter lifestyles. Dr. Mayes said that policy and funding decisions by the legislature will be made that will impact women.
The next item on the agenda was a presentation on the Kentucky Physician’s Care Program by William McElwain, M.D. Dr. McElwain said anyone can call 800-633-8100, which is answered by staff at the Cabinet for Health Services. If it is determined that someone is eligible for free care by being below the federal poverty level, they are referred to the local Department for Community Based Services (DCBS) office for an application. The application process is done through DCBS to make sure the applicant is not eligible for other available services. If someone is eligible for the KPC program, they call the “800” number again to receive the name and phone number of a physician closest to them who has agreed to see them for at least one visit without charge. There are 3,000 physicians statewide who participate in the KPC program. If there is a charge after the first visit, the patient and physician negotiate the fee. All 127 acute care hospitals, 525 pharmacies, and seven pharmaceutical companies participate in the KPC program. Approximately 300 referrals are made per month, and approximately 65 percent of patients who see a physician the first time without charge are incorporated into the practice and are continued to be seen, without charge, by this physician.
Senator Mongiardo said the KPC program is not publicized well enough, and asked what could be done to improve access. Dr. McElwain said they have tried to make the information available to people who need services while still maintaining paying patients. Senator Mongiardo said that eastern Kentucky has SKYCAP, a federally-funded pilot project that takes people who qualify and finds participating physicians and incorporates them into case management. People who do not have insurance have a tendency to wait to seek services, which costs more in the long run.
The next item on the agenda was a presentation on the Pharmacy Cost Study Methodology Report by Kathy Kustra, Governor’s Medicaid Steering Committee and Marcia Morgan, Secretary, Cabinet for Health Services. Secretary Morgan said that the statute calls for the cabinet to do a dispensing fee study and acquisition fee study and submit it to the Legislative Research Commission and the Governor by December 1 each year. In August, the cabinet distributed surveys to all pharmacies. In addition, the cabinet circulated the methodology to each member of the committee because the statute calls for the committee to review and have the ability to ask questions about the methodology. The area with the most disagreement about how the cabinet had interpreted the statute was over the common meaning of “average.” The methodology will be a calculation of average dispensing cost for pharmacies dispensing intravenous prescriptions and for retail pharmacies. The total number of prescriptions dispensed will be taken into the total dispensing cost to arrive at an average. The cabinet will look at the calculation of the average dispensing cost for retail pharmacies, assume legislative intent, and the average dispensing cost would be arrived by taking the total dispensing cost weighted by Medicaid volume and divide it by the total number of prescriptions dispensed.
Senator Denton said she understood the difference in the 2000 and 2001 reports would be that instead of doing the survey of both the long-term care intravenous pharmacies and retail provider together and then dividing this by the number of prescriptions, the cabinet would survey only the retail provider. Secretary Morgan said this was correct. Secretary Morgan answered Senator Denton by saying no study is being done on the long-term care pharmacies. Senator Denton said the cabinet cut the dispensing fee for long-term care pharmacies and asked if unit dosing reimbursement had been restored. Secretary Morgan said this was correct. Ms. Kustra said long-term care also had a $1 incremental payment that was eliminated for reasons of safety. All long-term care reimbursements, dispensing fees, and reimbursement for unit dosing are presently frozen. Secretary Morgan said that because the cabinet is looking at all aspects of the Medicaid operation, acquisition costs could be considered as well.
Senator Roeding said the report says that “average is the raw or unweighted mean; however, the average can be weighted by the number of Medicaid prescriptions to produce a weighted mean.” Secretary Morgan said that taking out the intravenous, the cabinet is going with the simple average for retail pharmacies. Senator Roeding said the expertise of all General Assembly members should be used wherever possible. Ms. Kustra said the federal government required states to move away from cost basis. The Medicaid Steering Committee is looking at other states’ determination of dispensing fees.
Ralph Bouvette, Executive Director, American Pharmacy Services Corporation, said that from their perspective, the study for 2001 does not differ materially from the 2000 study. Two areas of concern are the selection of the pharmacy population and the allocation of expenses. Kentucky law says that for every hour a pharmacy is open, regardless of the number of prescriptions filled, there must be a registered pharmacist in the pharmacy to operate the establishment. If you have any affiliation with the owner of the building, the cost of rent cannot be deducted. Questions were raised about the pro-rata allocation of fixed and variable expenses. Advertising or bad debt expenses cannot be deducted, but both these deductions are allowed by the Internal Revenue Service.
Representative Burch asked how many retail pharmacies were in Kentucky. Mr. Gould said approximately 1,000. Representative Burch asked how many were “mom and pop” pharmacies. Mr. Bouvette said approximately 380. Representative Burch asked if any just sell drugs. Mr. Bouvette said approximately 200. Representative Burch said small pharmacies need to be protected. Representative Burch asked what the pharmacies are willing to do to make medications affordable for everyone. Mr. Gould said approximately 88 percent of the cost of prescriptions paid at a pharmacy is the industry’s cost of the drug. They pharmacists will help with the 12 percent they have control over.
Senator Buford said Kentucky has a shortage of approximately 400 pharmacists. Because some pharmacies stay open 24 hours, there is a problem with having a pharmacist on the premises at all times. New rules and regulations are driving pharmacists out of the state.
Senator Denton said that there need to be open dialogues between the General Assembly, Cabinet for Health Services, and pharmacists to find a better instrument to measure the cost of dispensing drugs.
Senator Roeding said that almost all providers have done a great job helping with Medicaid. The pharmaceutical companies bring $80 million back to Kentucky through rebates.
Senator Mongiardo asked where the average wholesale price comes from. Mr. Gould said manufacturers establish average wholesale prices on products. Senator Mongiardo asked if a price is established by the manufacturer for what the pharmacist will buy or sell a product. Mr. Gould said it is supposed to be an average of the cost. Senator Mongiardo said the wholesale price is what a retailer pays, and the pharmacist sells it at a retail price. Senator Mongiardo said there is an acquisition cost to the pharmacist that is less than average wholesale price. A prescription is sold to Medicaid for average wholesale price minus 10 percent. Senator Mongiardo asked what most-favored nation provision meant. Mr. Gould said most-favored nation provision typically would mean that it would be at the lowest price that anyone else could buy a drug. Senator Mongiardo asked if there were a provision that Medicaid is supposed to buy drugs from the pharmacists at the lowest price pharmacists sell it for. Mr. Gould said there is a provision in the administrative regulation that sets the price at the lower of the usual and customary price for the stated Medicaid formulary which is AWP less 10 percent plus the dispensing fee, or the federal upper limit.
Senator Mongiardo said there are companies buying drugs from pharmacists cheaper than Medicaid. Mr. Gould said this is a dangerous comparison to make because Medicaid is not a private insurer. Medicaid has a provision that requires the pharmacist to be responsible for coordination of benefits to determine if a Medicaid recipient has other insurance that should pay for the drug. Private insurance plans do not have this provision. In some instances Medicaid can charge back drugs where a private insurer cannot. Senator Mongiardo asked if there is more workload burden on the pharmacist with Medicaid than with private insurers. Mr. Gould said patients under Medicaid tend to be sicker and take more medications so the potential for drug interactions is much greater, which requires more time from the pharmacists. Senator Mongiardo asked if the Medicaid dispensing fee covered the contractual obligations of the pharmacists. Mr. Gould said the Medicaid dispensing fee is to reflect the cost of dispensing that medication to Medicaid patients. Mr. Gould said the dispensing fee is designed to cover costs with no allowance of return on investment. Senator Mongiardo said that an issue that needs to be addressed is why pharmacists do not want to work in Kentucky.
Senator Mongiardo said that the person who pays the most for prescriptions is the cash-paying patient who does not have the ability to pay and asked what should be done about this problem. Mr. Gould said the issue of differential pricing is very complicated. Senator Mongiardo said that as we tighten up in private insurance and Medicaid, there is going to be more cost shifting to those least able to avoid this because that is the only place pharmacists or entities will be able to go to get extra funding to keep the system running. Mr. Gould said this was true not only of pharmacists and pharmacies but is true of any provider.
Senator Mongiardo asked if the rebate program is a good deal for the state. Mr. Gould said it depends on what Kentucky wants to accomplish by it. Rebates are fine if the goal is to deliver to the patient a particular drug for which a rebate is available; however, if there are other alternatives available at a lower cost that will do the same thing, then you should not have to choose the rebate. Senator Mongiardo said because the way the system is set up, when Kentucky gets an $80 million rebate, we cannot put this money back into the system and get federal matching funds, so it is not as good as having $80 million from the general budget where you can get matching federal funds. If Kentucky had a prebate of $80 million and could match this with federal funds, it would take care of Medicaid’s problem in 2002. Ms. Kustra said when looking at major cost drivers for the pharmacy line, it is not the pharmacists.
A motion to approve administrative regulations 202 KAR 7:580 & E, 921 KAR 1:380, 921 KAR 2:006, 922 KAR 1:400, 922 KAR 2:160, AND 922 KAR 2:180 was made by Senator Roeding, seconded by Representative Crall, and approved by voice vote.
There being no further business, a motion to adjourn at 5:17 p.m. was made by Senator Roeding, seconded by Representative Crall, and approved by voice vote.