Interim Joint Committee on Health and Welfare


Minutes of the<MeetNo1> 2nd Meeting

of the 2004 Interim


<MeetMDY1> July 8, 2004


The<MeetNo2> 2nd meeting of the Interim Joint Committee on Health and Welfare was held on<Day> Thursday,<MeetMDY2> July 8, 2004, at<MeetTime> 1:00 PM, in<Room> Room 129 of the Capitol Annex. Representative Tom Burch, Co-Chair, called the meeting to order 1:13 PM, and the secretary called the roll.


Present were:


Members:<Members> Senator Julie Denton, Co-Chair; Representative Tom Burch, Co-Chair; Senators Charlie Borders, Tom Buford,  Richard Roeding, Ernesto Scorsone, Katie Stine, Damon Thayer, Elizabeth Tori, and Johnny Ray Turner; Representatives Robert Damron, Bob DeWeese, Mike Harmon, Jimmy Higdon, Mary Lou Marzian, Stephen Nunn, Ruth Ann Palumbo, Jon David Reinhardt, Ancel Smith, Kathy Stein, and Susan Westrom.


Guests:  Kim Townley, Ph.D., Division of Early Childhood Development, Department of Education; James W. Holsinger, M.D., Secretary, Cabinet for Health and Family Services; Matt Bassett, Chief of Staff, and Kevin Payton, Legislative Liaison, Cabinet for Health and Family Services; Mark Birdwhistell, Undersecretary for Health, Cabinet for Health and Family Services; Gene Foster, Ed.D., Undersecretary for Children and Family Services, Cabinet for Health and Family Services; Duane L. Kilty, Jr., Ph.D., Undersecretary for Administrative and Fiscal Affairs, Cabinet for Health and Family Services; Mike Robinson, Commissioner, Department for Community Based Services, Cabinet for Health and Family Services; Karen Hinkle, Executive Director, Kentucky Home Health Association, Louisville; Susan Flynn, Clinical Manager, VNA Home Care, Louisville; Guy Hardin, Take Back Kentucky; Mike Porter, Kentucky Dental Association; Douglas Kennedy, UNISYS, Vera Frazier, interested citizen; Ashley Abshire, American Health Management; Jan Gould, Kentucky Retail Federation; Walter Gose, Aventis; Jenny Mitchell, Office of Inspector General, Cabinet for Health and Family Services; Brenda Jones and Tom Young, Office of the Ombudsman, Cabinet for Health and Family Services; Bill Doll, John Cooper, and Marty White, Kentucky Medical Association; Jim Carreer, Cabinet for Health and Family Services; Stacy Woodrum, Hospice Association; John Brazel, Kentucky Pharmacists Association; Sarah S. Nicholson, Kentucky Hospital Association; Prentice Harvey, Norton Healthcare; and Sheila Schuster, Kentucky  Mental Health Association.


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


A motion to adopt the minutes of the June 16, 2004 meeting was made by Representative Harmon, seconded by Representative Nunn, and approved by voice vote.


The next order of business was an update on the Early Childhood Development Initiative from the 2000 Regular Session by Kim Townley, Ph.D., Division of Early Childhood Development, Department of Education.  Dr. Townley said that in order to reach the goal that all young children in Kentucky be healthy and safe, possess the foundation that will enable school and personal success, and live in strong families that are supported and strengthened within their communities, 25 percent of Kentucky's Phase I Tobacco Settlement dollars must continue to fund the early childhood initiative, KIDS NOW.  She said that there is a collaboration with the Tobacco Prevention and Cessation Program to use the Healthy Babies television advertisements from January through June of 2004.


Dr. Townley said the goal of the Oral Health Education and Prevention Program is to prevent early childhood cavities (ECC) through targeted early screening, oral health education of caregivers, application of a fluoride varnish to primary baby teeth if necessary, and proper referral to a dentist if appropriate for care.  In 2004, training was provided at 16 sites to approximately 700 health department nurses and other providers, approximately 12,000 pre-packaged fluoride varnish kits were provided to local health departments, and a database was developed for monthly tracking and reporting applications of fluoride varnish.  She said that the Early Childhood Mental Health Program's goal is to provide mental health consultation for early childhood programs, assessment, and therapeutic services for young children and their families as appropriate.  In 2004, approximately 1,586 children and families have received services, eight regional trainings have been presented to specialists and other mental health professionals, and early childhood mental health specialists have contacted most of the child care centers and other early childhood programs.


Dr. Townley stated that STARS for KIDS NOW is a voluntary quality rating system to raise the level of quality in early care and education child care 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.  Children cared for in high quality settings perform significantly better in math, language, and social skills at school entrance than did their peers in programs of poor quality, according to studies published.  She said that in 2004, approximately 485 Quality Incentive Awards have been disbursed at a cost of $368,900, and approximately 302 Achievement Awards have been disbursed at a cost of $112,000.


Dr. Townley said that the 2002-2003 evaluation of the KIDS NOW initiative demonstrates the rapid implementation of components throughout the state.  The University of Kentucky and the University of Louisville collaborated to evaluate programs using an integration of data from surveys, face-to-face interviews, and classroom observations that indicated five key findings:  1) center-based child care programs in Kentucky are improving in quality but improvement is still needed; 2) knowledge and participation in the KIDS NOW initiative are related to overall center quality; 3) enhanced efforts to promote the KIDS NOW initiative have increased familiarity to it; 4) leadership impacts participation in and perceived benefits of the initiative; and 5) urban and rural differences exist in the way child care providers participate in and perceive the benefits of the components of the KIDS NOW initiative.  The evaluation team recommends to continue efforts to increase the numbers of licensing professionals to ensure a 1:50 ratio, to continue support centers' participation in the early care and education components of the KIDS NOW initiative, to ensure targeted training and technical assistance to programs serving high numbers of children on subsidy and infant and toddler programs serving children with disabilities, and provide training on working effectively with families faced by poverty, discrimination, and other stressors.


Representative Stein asked about the number of dentists who accept Medicaid and/or K-CHIP.  Dr. Townley replied she would have to defer to the Cabinet for Health and Family Services for that information.  Representative Stein asked if there are enough dental providers, and Dr. Townley said there are not enough dentist statewide who will accept Medicaid patients.


Representative Burch stated that, when children begin kindergarten, the benefits of the early childhood initiative will be seen.  The programs are focused on the child and the family.  He said that during the 2000 Regular Session, every legislator in both chambers voted for House Bill 706, the early childhood initiative legislation, and funded $56 million for the initiatives.


Senator Roeding asked if it was necessary for the application of a fluoride varnish if there is already a sufficient amount of fluoride in drinking water.  Dr. Townley stated that although there is fluoride in drinking water, the additional fluoride varnish is necessary to protect children's teeth every six months.  Senator Roeding said that every child needs the fluoride varnish, not just Medicaid recipients, and Dr. Townley agreed.  Senator Roeding stated that child care providers need help as well as the children. Representative Stein stated that it is already general practice for children to receive an application of a fluoride varnish.


Dr. Townley said that, in President Bush's "No Child Left Behind" program, there is a section called "Good Start, Grow Smart" that addresses early childhood education.  The program requires states to develop early childhood standards for three and four year olds in the areas of literacy and math.  Kentucky has developed the early childhood standards from birth to five years of age across physical, social, emotional, motor, and cognitive development areas. She said the follow-up piece is an assessment guide on how to measure whether children are progressing.  This guide will be available on the internet in August.


The next order of business was an update on Medicaid modernization by Mark Birdwhistell, Undersecretary for Health, Russ Fendley, Commissioner, Department for Medicaid Services, and Dr. Duane L. Kilty, Jr., Undersecretary for Administrative and Fiscal Affairs, all from the Cabinet for Health and Family Services.  Undersecretary Birdwhistell stated that the goal of the Department for Medicaid Services is to implement innovative practices that have proven successful in other states and the commercial sector.  He said that there are three components to modernize the Medicaid program:  1) benefit management; 2) care management; and 3) improvements in technology.  The current pharmacy claims payment system is inefficient, and there continues to be a problem between pharmacy switch vendors and the MMIS.  Pharmacists continually must resubmit claims, data is not analyzed for drug interactions, and drug abuse patterns or high utilizers of services are not identified or managed.  The prior authorization process is cumbersome and time-consuming for providers.  Undersecretary Birdwhistell stated the solution is to hire a Pharmacy Benefit Manager.  On April 5, 2004, 907 KAR 1:019 was filed that would allow the Pharmacy and Therapeutics Committee to increase the number of drug classes from 12 to 53 and enhance the ability to negotiate supplemental rebates.


Undersecretary Birdwhistell stated that the department contracts with National Health Services to provide Peer Review (PRO) services for prior authorization, pre-admission screening, concurrent review of admitted patients, and utilization review.  The 2003 data shows that there were approximately 29,000 cases with yearly costs exceeding $25,000, and the department lacked dedicated care management personnel to manage outliers.  He said that the department is actively recruiting two Medicaid directors and a pharmacy director.  A comprehensive medical management Request for Proposal (RFP) will be issued to procure an improved PRO, and the medical management vendor would utilize local health departments when appropriate.


Undersecretary Kilty stated that the Kentucky Health Card pilot program, to begin in Clay and Fayette Counties, would replace the monthly Medicaid eligibility paper card with a permanent plastic health plan card.  Eligibility and claims status information would be accessible real-time via the web consistent with commercial health insurance.  The MMIS through Unisys manages and processes recipient claims and houses provider data.  The current database prohibits the ability to quickly and easily extract and analyze data for decision support.  An RFP will be issued in July 2004 for a new MMIS system to utilize advanced technology.  Representative Burch asked if the card could be used by more than one person without detection, and Undersecretary Kilty said nothing is fool proof but the information is based on a person's social security number.


Undersecretary Kilty stated that KAMES is an aging mainframe system that calculates Medicaid eligibility and passes data to MMIS.  KAMES also supports TANF, food stamps, and state supplementation.  KAMES has poor data quality and confusing user interface.  The department plans to redevelop the KAMES system over the next five years.


Senator Denton asked if Kentucky would get a larger supplemental rebate with a pharmacy benefits manager (PBM), and Undersecretary Birdwhistell stated it would not diminish rebates.  Senator Denton asked about prior authorization.  Commissioner Fendley stated the prior authorization process is an antiquated system and the PBM would find the best way to handle the process.  Senator Denton asked what would be different by hiring two medical directors and a pharmacy director, and whether the higher salaries could be justified.  Undersecretary Birdwhistell stated that the two medical directors would communicate with physicians to find a solution to medical disputes.  The medical directors would also serve as a supervisor for the nurse case managers.  Commissioner Fendley said that quality is the primary need and recipients would receive better care.


Representative Damron asked if any Kentucky firms had submitted bids.  Commissioner Fendley said that one local company expressed interest in one component.  Representative Damron asked if any consideration had been given to using the expertise of the University of Kentucky and the University of Louisville when looking for medical directors and a pharmacy director instead of hiring outside of Kentucky.  Undersecretary Birdwhistell stated that the department was looking for individuals with the expertise and experience of providing the care and medical management with Medicaid who could make an immediate difference.  There have been conversations with the University of Kentucky College of Pharmacy.  Representative Damron said that the University of Kentucky has one of the top pharmacy schools nationwide.  Undersecretary Birdwhistell said that the University of Kentucky has developed a good software tool that the department is reviewing.  Representative Damron said that the University of Louisville is exceptional in many areas dealing with the Medicaid population, and he wanted to keep the money in Kentucky.


Senator Scorsone asked about the $300 million deficit in Medicaid.  Undersecretary Birdwhistell stated that there had been no reduction in services or fee schedule.  Undersecretary Kilty said that fiscal year 2005 had been balanced but there would be a shortage of approximately $335 million in fiscal year 2006.  Undersecretary Birdwhistell said the fiscal year planning for all budgets would start in January 2005.


Senator Roeding asked for a list of the 53 categories of drug classes.  Undersecretary Birdwhistell said he would provide the list.  Senator Roeding said that the department should be careful about prior authorization.


Representative Marzian asked about the monthly savings by using permanent plastic eligibility cards instead of paper cards.  Undersecretary Kilty said there would be a $1 million to $2 million savings.  Representative Marzian asked how the cabinet would be able to keep up-to-date information on recipients and asked how often the information is updated.  Undersecretary Kilty said information would be updated monthly, but the department would be able to keep the information current because it is a web-based verification.  Representative Marzian asked about the average number of prescriptions per Medicaid recipient.  Undersecretary Birdwhistell said each recipient averages 23 prescriptions per year compared to the national average of 11.  She asked about dispensing fees.  Undersecretary Birdwhistell said insurance companies' dispensing fees are $1.25 to $1.50 compared to Medicaid's rate of $4.51.  He said that he would provide a map that shows each state's dispensing fee.  Representative Marzian asked about mail order maintenance medications.  Undersecretary Birdwhistell said the proposal is on the table, but the PBM and PBA would need to be in place first.


The next order of business was testimony on home health care services, given by Karen Hinkle, Executive Director of the Kentucky Home Health Association, and Susan Flynn, Clinical Manager of the VNA Home Care in Louisville.  Ms. Hinkle stated that Kentucky's efforts to implement a disease management program should include the current home health care provider network as key players to ensure an integrated approach to care delivery and expected patient outcomes.  Otherwise, it will become an add-on cost that may contradict current care practices.  Home health can support and reinforce behaviors only if they know what methods are being used and what the desired behaviors are.


Ms. Hinkle said the Kentucky Home Health Association supports consumer-directed care initiatives within Medicaid and other programs providing long-term care services to Kentucky's frail elderly and persons with disabilities.  She said that home services are critical to ensuring some individuals are able to remain at home and encompasses an array of important services for the frail and disabled such as changing bed linens, laundry, cleaning the bathroom and kitchen areas, grocery shopping and meal preparation, and light housekeeping.  Due to some difficulties in the First Steps Program, some home health providers have stopped providing services.  Reductions in First Steps to stay within budget may be false savings.  If adequate care is to be provided, there will be services needed under EPSDT and traditional services.  She said that some families have questioned why a therapist is unable to be a case manager, saving the cost of a Primary Service coordinator and using the money for services.


Ms. Flynn said that home health agencies have to be in compliance with Medicaid and Medicare regulations.  There needs to be a continuity of care and quality of service delivery.


The next order of business was testimony on Executive Order 2004-444 relating to the reorganization of the Cabinet for Health Services and the Cabinet for Families and Children given by James W. Holsinger, M.D., Secretary, Cabinet for Health and Family Services, and Duane L. Kilty, Jr., Undersecretary for Administrative and Fiscal Affairs, Cabinet for Health and Family Services.  Secretary Holsinger said the cabinet was able to maintain the number of non-merit positions.  The final executive order reorganizing the Cabinet for Health and Family Services will become effective July 16, 2004.


Senator Roeding made a motion to approve Executive Order 2004-444 but Senator Denton stated there was not a quorum present.


Representative Stein asked about the Office of Inspector General and its two divisions.  Secretary Holsinger said that the area of fraud, waste and abuse is based on practitioners fraudulently bill and collect funds and recipients that use fraudulent methods to become eligible to receive payments or services from the cabinet.  Representative Stein asked if other cabinets would have a similar division for fraud, waste and abuse.  Secretary Holsinger said that he was not familiar with other cabinets' reorganization plans.  Representative Stein said that she was concerned that the Division of Child Abuse and Domestic Violence Services is being removed from the Governor's office.  Secretary Holsinger assured Representative Stein that the cabinet would enhance the office.


Representative Marzian asked where the Division of Child Support had been reassigned.  Undersecretary Kilty said the Department for Community Based Services.  She asked if there would only be one ombudsman for the entire cabinet.  Dr. Holsinger said the goal is to have a single, instead of multiple, tracking system.  Representative Marzian asked where the Division of Licensing and Regulation had been reassigned.  Dr. Holsinger stated that it was now located within the Office of Inspector General.


Representative Damron asked about the status of the funding for the long-term care ombudsman in every ADD.  Dr. Holsinger stated that he did not expect any change in the level of funding or number of positions from the past year.  Representative Damron asked if the cabinet received federal funding for the Office of Ombudsman and Dr. Holsinger said it is predominantly federally funded.  Representative Damron asked if the cabinet felt the new structure would provide adequate advocates for seniors and individuals in long-term care.  Dr. Holsinger said the cabinet would still provide strong support to individuals in long-term care facilities.  Representative Damron asked about the difference of structure of the Office of Aging Services and the Division of Aging Services.  Dr. Holsinger stated that it would allow the cabinet to manage programs better by having division directors report to the Undersecretary who in turn would report directly to the Secretary.  Representative Damron asked if there would be a change in the funding level for the Division of Aging Services, and Dr. Holsinger said no.


The next order of business was an overview of the 2005 Social Services Block Grant, given by Gene H. Foster, Ed.D., Undersecretary for Children and Family Services, Cabinet for Health and Family Services, and Mike Robinson, Commissioner of the Department for Community Based Services.  Dr. Foster said that the federal revenue source allotted to Kentucky is based upon the state's population.  The funds will be used to support the direct services provided by cabinet staff and contracted services needed to meet social service requirements.  Both the amount of funding and program priorities for fiscal year 2005 will essentially remain the same as in fiscal year 2004.  Approximately $15 million will go toward the cost of staff needed to prevent, investigate, and remedy abuse, neglect, and exploitation of children and vulnerable adults.  The remainder is allotted to providing juvenile services, including residential services through a contract with the Department of Juvenile Justice.  The emphasis on funding services designed around prevention, investigation, and protection is consistent with the cabinet's priority to improve the way it assesses and intervenes in child, adult, and elder abuse cases.  He said that the priorities for allocation of Social Services Block Grant funds would remain much the same as in the recent past, but the way the cabinet will deliver services will become more data-driven and outcome-oriented.


Senator Denton announced that the Committee would meet August 24, 2004 in Louisville.


There being no further business, a motion to adjourn at 3:05 p.m. was made, seconded, and approved by voice vote.