Interim Joint Committee on Health and Welfare


Minutes of the<MeetNo1> 5th Meeting

of the 2011 Interim


<MeetMDY1> November 16, 2011


Call to Order and Roll Call

The<MeetNo2> fifth meeting of the Interim Joint Committee on Health and Welfare was held on<Day> Wednesday,<MeetMDY2> November 16, 2011, at<MeetTime> 1:00 p.m., in<Room> Room 129 of the Capitol Annex. Representative Tom Burch, Co-Chair, called the meeting to order at 1:05 p.m., and the secretary called the roll.


Present were:


Members:<Members> Senator Julie Denton, Co-Chair; Representative Tom Burch, Co-Chair; Senators Joe Bowen, Tom Buford, David Givens, Denise Harper Angel, Alice Forgy Kerr, Dennis Parrett, Joey Pendleton, and Jack Westwood; Representatives Julie Raque Adams, Kelly Flood, Jim Glenn, Brent Housman, Tim Moore, Ruth Ann Palumbo, Susan Westrom, and Addia Wuchner.


Guests: Cindy Heine, Associate Executive Director, Prichard Committee for Academic Excellence; Dr. Ruth Ann Shepherd, Division Director. Division of Maternal and Child Health, Department for Public Health, Cabinet for Health and Family Services; Ralph Bouvette, Ph.D., J.D., Executive Vice President, American Pharmacy Services Corporation;         Jonathan Van Lahr, Pharmacist, Brandenburg Pharmacy; Michael A. Minor, State President, and Mike Ridenour, Senior Director of External Affairs, WellCare of Kentucky; Bill Strein, Medco Health Solutions; Barb Witte, CEO, and Jim Giardina, Vice President of Clinical Services, CoventryCares of Kentucky; Dr. Whitney Jones, President, Colon Cancer Prevention Project; George E. Foster; Joseph Eiler; Chandra Venettozzi, Office of Health Policy, Cabinet for Health and Family Services; Michele Blevins and David T. Meredith, Division for Behavioral Health, Department for Behavioral Health, Developmental and Intellectual Disabilities, Cabinet for Health and Family Services; Karen Thomas Lentz; Jan Gould, Kentucky Retail Federation; and Anne Joseph, CKKF/KTFH.


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



A motion to approve the minutes of the October 19, 2011 meeting was made by Representative Buford, seconded by Representative Burch, and approved by voice vote.


Colon Cancer Prevention Project

            Representative Jim Glenn stated that he and Representative DeWeese have requested legislation that would fund colon cancer screenings for uninsured individuals between the ages of 50 through 64 years. The legislation requests $3 million in FY 2012 and $5 million in FY 2013.


            George Foster, colon cancer patient from Owensboro, stated that in 2009 he was diagnosed with colon cancer. He has had a prior colonoscopy ten years ago as recommended by his doctor. There is not enough information available to people about colon cancer screening, the symptoms of the disease, and what will happen if someone has colon cancer. His insurance company has spent over $1 million in healthcare costs since his diagnosis.


Dr. Whitney Jones, Clinical Professor at the University of Louisville, and President, Colon Cancer Prevention Project, stated that colon cancer is the number one cause of cancer deaths in non-smokers in the United States and Kentucky. Each year 150,000 Americans are diagnosed with colon cancer and of that amount 50,000 Americans will die from the disease. Approximately 2,700 Kentuckians will be diagnosed with colon cancer in 2011 and 800 will die from the disease. Louisville is the fourth worst largest metropolitan city for colon cancer nationally. Colon cancer deaths are 90 percent preventable with appropriate screening and removal of polyps. In 2001, Kentucky was the worst state with colon cancer, but is currently twenty-third in the nation. Kentucky has gone as far as it can without further funding. House Bill 415 passed in the 2008 Regular Session relating to the colon cancer screening program, but the program still remains unfunded. By funding the program, local health departments can provide education, prevention, and early detection of colon. The funding will provide thousands of screenings for uninsured Kentuckians. While the Affordable Care Act will address health insurance issues for some individuals in Kentucky, it will not solve the problem for the uninsured. The colon cancer screening program has a budget in place, has a program manual, and it needs now is funding.


In response to questions by Representative Flood, Dr. Jones stated that there will be a blended program where some people will receive testing for blood in the stool, others colonoscopy. People who are high risk need to be screened by a colonoscopy. Family history is the single most important determination of someone who is at high risk of developing colon cancer. Approximately 80 percent of Kentuckians are average risk. In 2008 and 2010, the National Behavior Risk Factor Survey listed the preparation for a colonoscopy as the fourth highest reason for someone not getting a colonoscopy.


In response to comments by Senator Buford, Dr. Jones stated that there is no more cost effective preventative measure than colon cancer screening in public health.


Consideration of Referred Administrative Regulations

            201 KAR 22:020 – establishes the criteria for eligibility, methods, and procedures of qualifying for a credential to practice physical therapy in Kentucky; 201 KAR 29:050 – delineates the requirements for continuing education and prescribes methods and standards for the accreditation of continuing education courses of the Kentucky Board of Respiratory Care; 900 KAR 6:030 – adjusts the expenditure minimums for capital expenditures and major medical equipment in the Certificate of Need (CON) program; 900 KAR 6:080 – establishes the guidelines for alleviating an emergency circumstance for the orderly administration of the CON program; 902 KAR 100:019 – provides standards for the protection of the user and general public against radiation exposure and establishes standards for protection against ionizing radiation resulting from activities conducted by persons issued licenses or registrations by the cabinet;             902 KAR 100:022 – establishes procedures, criteria, terms, and conditions upon which the cabinet issues licenses for the land disposal of radioactive wastes received from other persons; 902 KAR 100:040 – establishes general provisions for the issuance of radioactive material licenses to possess, use, or transfer radioactive material within Kentucky; 902 KAR 100:042 – establishes requirements for decommissioning and financial assurance of radioactive material licensees; 902 KAR 100:100 – provides radiation safety requirements for industrial radiographic operations and shall apply to licensees or registrants who use sources of radiation for industrial radiography; 921 KAR 2:050 – establishes the time and manner of payments for the Kentucky Transitional Assistance Program (K-TAP) and the Kentucky Works Program (KWP) in conformity with the Social Security Act 42 U.S.C. 601-619, and federal regulations; and        922 KAR 1:490 – establishes the procedure by which the cabinet shall conduct background checks for caretaker relatives, kinship caregivers, or applicants seeking to provide foster or adoptive services. In response to a question by Senator Givens, Jim Graves, Protection and Advocacy, stated that 922 KAR 1:490 establishes the procedure that the cabinet will use to conduct background checks for caretaker relatives, kinship caregivers, or applicants seeking to provide foster or adoptive services. The administrative regulations were amended to require an address check of the Sex Offender Registry. A motion to accept the administrative regulations was made by Senator Buford, seconded by Representative Burch, and accepted by voice vote.


Legislative Hearing on the FFY 2012-13 Unified Mental Health and Substance Abuse Prevention and Treatment Block Grant

A motion to accept the block grant was made by Senator Buford, seconded by Representative Flood, and accepted by voice vote.


Subcommittee Reports

Representative Burch, Co-Chair of the Families and Children Subcommittee, reported that the subcommittee met and heard presentations on the First Steps Program from Dr. Ruth Ann Shepherd and Paula Goff, Cabinet for Health and Family Services. The program is a statewide early intervention system that provides services to children from birth to age three who have developmental disabilities and their families that serves over 14,000 individuals annually.


The subcommittee received a second presentation on Family Assistance Programs facilitated by the Cabinet for Health and Family Services. Dr. Shepherd reported on the Special Supplemental Nutrition Program for Women, Infants, and Children that serve 136,000 Kentuckians monthly. Jason Dunn, Cabinet for Health and Family Services, continued the assistance programs presentation and discussed the cabinet facilitated programs of Temporary Assistance to Needy Families, K-TAP, Supplemental Nutrition Assistance Program, K-CHIP, Child Care Assistance Program, and the Low Income Home Energy Assistance Program (LIHEAP). The eligibility requirements and accessibility for all programs were detailed.


The final presentation was from the Kentucky Department of Education (KDE) and three Kentucky Schools regarding the status of physical activity in schools. Jamie Sparks with the department reported on the Coordinated School Health Project programs. The subcommittee learned that these are organized sets of programs, policies, and activities that individual schools may voluntarily choose to implement. KDE has received funding for the development and implementation of these programs from the Centers for Disease Control and the Robert Wood Johnson Foundation Obesity Prevention Project. Tates Creek Middle School in Fayette County, Shannon Johnson Elementary School in Madison County, and Campbell Ridge Elementary School in Campbell County testified on the specific physical education activities they have implemented in their schools and the successes they have experienced.


Senator Denton, Co-Chair of the Health Issues and Aging Subcommittee, reported that the subcommittee met and heard a presentation by Mary Crowley-Schmidt, Jan Day, Molly Dobson, and Polly Troxell on home and community based services for the elderly and disabled. Kentucky, like the rest of the United States, is facing an increasing number of seniors. Over 419,000 older adults, grandparents, and persons with disabilities received services including meals, transportation, and in-home care in fiscal year 2010-2011. Total spending, including federal, state, and local funds, was about $61.3 million, at an average cost of about $135 per person. The number of individuals on the wait list for meals, transportation, and in-home care has steadily increased. The services provide an economic impact to the local communities and help maintain the health and safety of older adults and the disabled by reducing costs associated with providing additional care for falls, poor health, and malnutrition. The Personal Care Attendant Program (PCAP), one of the first of its kind to be established in the United States, continues to provide valuable services to individuals with disabilities and also faces a decrease in funding.


Susan Campbell Turner, Commissioner Hall, and Natalie Kelly, Cabinet for Health and Family Services, testified about providers’ procedural concerns with the IMPACT Plus program. The program provides services to children with severe emotional disabilities who need intensive services to stay in their home. Ms. Turner highlighted issues related to due process in the termination of providers.          


Amy Head, Commissioner Neville Wise, and Karen Martin testified about the Acquired Brain Injury Medicaid waiver program. Ms. Head reported on the problems she has encountered in trying to get services for her brain injured husband. The committee also heard testimony from Mary Hass about the Money Follows the Person program. Ms. Hass highlighted problems encountered by individuals in trying to transition from nursing homes to community based services.


Independent Pharmacies Under Medicaid Managed Care

Jonathan Van Lahr, Pharmacist, Brandenburg Pharmacy, Ralph Bouvette, Ph.D., J.D., Executive Vice President, American Pharmacy Services Corporation, and Sam Willet, Duncan Prescription Center, Mayfield, stated that independent pharmacists are not just business owners, but are involved community leaders. There are 550 independent pharmacies in Kentucky. The provision of pharmacy services has changed dramatically over the years because health care and health insurance has changed so much. Instead of health insurers managing a person’s pharmacy needs, most have turned these responsibilities over to pharmacy benefit managers (PBMs). The large out-of-state corporations are focused on cutting costs and creating profits for their shareholders by cutting pharmacy reimbursement so dramatically that it has created a crisis for independent pharmacies in all communities and the well-being of patients. The PBM controls when it will reimburse the pharmacists for an increased price of medication. Insurance companies, managed care companies, and PBMs continue to see record profits while insurance premiums continue to increase and reimbursement to pharmacies continue to be cut to devastating lows. The PBMs are reducing the reimbursement for drugs, and often times the reimbursement is less than the cost of the drugs.


Pharmacists often lose money because they pay more for some drugs on the maximum allowable cost (MAC) list than they are reimbursed. The MACs are set by the PBMs and are confidential. The current Medicaid fee-for-service program allows pharmacists to look at the MAC list and make a determination whether they want to participate or not. The MAC list is updated monthly. The MAC pricing can be adjusted by a PBM without any notice making it difficult for pharmacies to know the pricing, sometimes until a claim is being adjudicated. While a pharmacist can appeal the price, the PBM makes the final decision. Under the contract, a pharmacist cannot refuse to fill a prescription for someone who is in the plan. While doctors are given incentives to send prescriptions electronically, the pharmacy has to pay an additional fee to receive the electronic prescription and another fee for refills. Kentucky Spirit offered pharmacists a Kentucky-specific contract that each pharmacy could accept or reject. Catalyst the PMB for WellCare, and Medco the PBM for CoventryCares, took an existing contract with the pharmacy purchasing groups and rolled the Kentucky Medicaid members into it and pharmacists were not given the option to accept or reject the terms of the contract. Even when pharmacists are willing to accept the same payment terms as a PBM-owned mail order and specialty drug pharmacies, unreasonable requirements are placed them.


One example is having a toll free number and a registered nurse on call 24 hours per day, seven days a week. The PBMs, including those being used by Medicaid, require members to use their specialty drug pharmacies for many drugs that the independent pharmacy has always provided. The independent pharmacy is allowed to fill a prescription initially, but not to refill the same prescription. When a community pharmacy closes, people lose their jobs, local governments lose taxes, and the communities lose access to high quality and personal health care. Sometimes an independent pharmacy is the only pharmacy for 30 to 50 miles. Pharmacy audits are conducted to find fraud, waste, and abuse. A pharmacy audit can take between 12 to 15 hours and takes away from pharmacists being able to help customers. Recommendations are to get the focus back on fraud, waste, and abuse, not require more stringent recordkeeping than what is required by law, and prohibit recoupment of a claim for a covered individual.


            Tom Kaye, Pharmacy Director, Amy Williams, Vice President, Marketing Development, and Marty White, Vice President, External Relations, Kentucky Spirit Health Plan, stated that Kentucky Spirit was implemented on November 1, 2011. US Scripts, owned by Centene, is the PBM for the MCO. Kentucky Spirit is a Kentucky-based company and a subsidiary of Centene, a St. Louis-based company. Contracts have been tailored specifically to Kentucky. Kentucky Spirit has negotiated contracts with approximately 1,000 pharmacies in 1,200 locations statewide. The MAC schedule was shared with the associations in September to get feedback from associations. Kentucky Spirit has contracts with independent organizations as well as large national organizations and have tailored the contracts so neither has an advantage nor a disadvantage as far as reimbursement levels are concerned. Because of the any willing provider law, any pharmacy will be offered a contract. Kentucky Spirit is an integrated healthcare delivery system that includes the medical and pharmacy components.


            Barb Witt, CEO, and Jim Giardina, Vice President of Clinical Services, CoventryCares of Kentucky, stated that because a large percentage of healthcare dollars is spent on pharmacy, there have to be changes in order to achieve savings. Pharmacy audits and MAC pricing reimbursement have been around before Medicaid managed care. Since implementation on November 1, 2011, 175,000 prescriptions have been filled totaling $7.5 million. CoventryCares has not initiated any mail order policies. There is not a four-prescription limit per member per month as there was in the fee-for-service plan. There is a proposal to increase dispensing fees. Another part of the proposal is a pay for performance program that will engage the College of Pharmacy to better educate the pharmacists to make sure everyone has the same level of education. This would help patients who do not take medications regularly or patients who should be on specific medications but are not filling the prescriptions.


            Michael A. Minor, State President, and Mike Ridenour, Senior Director of External Affairs, WellCare of Kentucky, stated that the company is looking at ways to improve healthcare delivery, quality, and access of care to the most vulnerable citizens of Kentucky as efficiently as possible. WellCare is committed to maintaining a disciplined approach to assure a competitive cost structure which is critically important in light of challenging fiscal conditions every state is facing. Since implementation on November 1, 2011, 68,500 pharmacy claims have been processed, 20,000 calls have been fielded from members and providers assisting in the transition, member identification cards and welcome kits have been mailed to approximately 116,000 members, over 75,000 health risk assessment calls have been initiated, and hospital and physician reimbursements four times per week and pharmacy reimbursements weekly have been processed.


Several member forums have been scheduled statewide to get direct feedback from Medicaid recipients. The company coordinates and integrates medical, behavioral, and pharmacy services for eligible Medicaid recipients. The focus is on improving healthcare outcomes and care coordination while promoting wellness and healthier lifestyles to lower the overall cost of healthcare. A mail order pharmacy has not been implemented nor was the four prescription limit per member per month. Pharmacists can administer and be reimbursed for flu vaccines not previously covered services under the Medicaid fee-for-service benefits. Of the 1,115 contracted pharmacies, there is one pharmacy located within 15 miles for most members. Catalyst, PBM for WellCare, has committed to address all Kentucky MAC appeals daily and to adjudicating drug pricing for pharmacy providers in real time. Once the appeals are reviewed and prices are adjusted in real time, the price adjustments will be retroactive back to November 1, 2011. Pharmacies have to provide drug invoices to make retroactive adjustments. WellCare wants to have many qualified in-network pharmacists who will be available to plan members.


In response to a question by Representative Wuchner, Mr. Willett stated that under Medicare Part D, the dispensing fee is $6.50. Mr. Van Lahr stated that the fees for private insurance are similar to the MCO fees which are about 85 percent less than the previous fee-for-service reimbursement.


In response to questions by Senator Bowen, Mr. Van Lahr stated that whether the medication is dispensed by an independent pharmacy or a chain, the state spends the  same amount of money on purchasing a drug.


In response to a question by Senator Givens, Mr. Van Lahr stated that the pharmacies were not involved in the initial negotiations of the cabinet’s request for proposals (RFP). After the contract had been signed by the pharmacists, the cabinet’s response was that you signed it, deal with it. Mr. Bouvette stated that the Kentucky Pharmacists Association had discussion with the Governor’s staff and cabinet Medicaid staff, but there was a breech left at the end of the discussions. Mr. Minor stated that as data is collected, the MCO and providers will be able to see if the outcomes were accomplished.


In response to a question by Representative Adams, Mr. Minor stated that all required reports, including financial reports, will be filed with the Department of Insurance by the MCOs.


In response to a question by Representative Moore, Mr. Van Lahr stated that the pharmacy contract is with the PBM not the managed care organization.


Representative Stacy stated that big pharmacies, hospitals, and doctors get the prices they want and do not have to come to Frankfort to discuss any problems. Independent pharmacists were not allowed to see the contract before being required to sign it. The contracts with the PBMs will put small pharmacies out of business because they cannot afford to stay open.


In response to a question by Senator Denton, Bill Strein, Vice President, Retail Network Management, Medco Health Solutions, stated that he is not aware of the policy that a pharmacist is required to have a toll free number or RN available to dispense specialty drugs. Mr. Giardina stated that specialty drugs are covered under the pharmacy and medical benefits depending on who is administering the medication. Self-administered drugs are covered under the pharmacy benefit and provider administered drugs would typically be under the medical benefit. CoventryCares does have a requirement that specialty pharmacies meet certain criteria. Mr. Kaye stated that any retail pharmacy has the ability to dispense any specialty drug with a national drug code (NDC) number, for initial and refill prescriptions. Susan Burgess, Legal Counsel at Catalyst, stated that she is not aware of any specific requirements for retail pharmacies to dispense specialty drugs. Mr. Gaye stated that there are different criteria for Medicare Part B.


In response to a request by Senator Denton, Mr. Strein, Medco Health Solutions, Mr. Wolfe, Catalyst, and Mr. Gaye agreed to be contact persons to answer questions from the pharmacists.


In response to a question by Representative Burch, Mr. Gaye stated that Kentucky Spirit had provider representatives who solicited participation and worked with the Kentucky Pharmacists Association to reach out to the pharmacists. Mr. Wolfe stated that generally the pharmacists belong to a pharmacy services administration organization (PSAO) that allows them to contract with entities on their behalf.


In response to a question by Representative Stacy, Mr. Wolfe stated that Catalyst contracts with a PSAO who can legally sign on behalf of a group of pharmacists. Ms. Burgess stated that Catalyst worked with the PSAOs about the reimbursement rate for independent pharmacies. Catalyst also sent a letter to the independent pharmacies not included in a PSAO asking them to participate. Mr. Van Lahr stated that US Scripts was the only PBM that has a Kentucky Medicaid specific contract with pharmacists. Medco and Catalyst rolled the pharmacists into existing contracts that may not be a Kentucky Medicaid specific contract and has been in place for years. Mr. Wolfe stated that the Catalyst pharmacy contract to participate in WellCare is a national contract specific only to Medicaid. The reimbursement rates, including the MAC rate, are the same in any state that WellCare does business. Mr. Gaye stated that US Scripts worked directly with pharmacies as well as the Kentucky Pharmacists Association.


In response to a question by Representative Housman, Mr. Gaye stated that pharmacists are being exposed to the evolution of the market. Mr. Wolfe stated that independent pharmacists are incredibly important in trying to get healthcare costs under control. Mr. Strein stated that the over the past four years, the marketplace has been commoditized. Payors need to recognize the value of the clinical services that can be delivered through a pharmacy network.



There being no further business, the committee adjourned at 3:50 p.m.