Call to Order and Roll Call
Thesecond meeting of the Interim Joint Committee on Health and Welfare was held on Wednesday, July 20, 2016, at 10:00 a.m., in Room 129 of the Capitol Annex. Representative Tom Burch, Co-Chair, called the meeting to order at 10:10 a.m., and the secretary called the roll.
Members:Representative Tom Burch, Co-Chair; Senators Danny Carroll, Julian M. Carroll, David P. Givens, Denise Harper Angel, Jimmy Higdon, Alice Forgy Kerr, and Reginald Thomas; Representatives George Brown Jr., Reginald Meeks, Darryl T. Owens, Ruth Ann Palumbo, David Watkins, Russell Webber, and Addia Wuchner.
Guest Legislator: Representative Will Coursey.
Guests: Tim Feeley, Deputy Secretary, Cabinet for Health and Family Services; Bernard Decker, Executive Director, Office of Administrative & Technology Services, Cabinet for Health and Family Services; Kristi Putnam, Executive Advisor, Department for Community Based Services, Cabinet for Health and Family Services; Stephen Miller, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services; Adam Meier, Deputy Chief of Staff for Policy, Office of the Governor; Susan Zepeda, Ph.D., President/CEO; Gabriela Alcalde, DrPH, M.P.H., B.A., Vice President of Policy and Program, Foundation for a Healthy Kentucky; Emily Parento, JD, LLM, Associate Professor of Law and Gordon D. Schaber Health Law Scholar, University of the Pacific, McGeorge School of Law; Paula Schenk, Kentucky Board of Nursing; and Sarah S. Nicholson, Kentucky Hospital Association.
Update on the Implementation of Benefind
Tim Feeley, Deputy Secretary, Cabinet for Health and Family Services, stated that the cabinet worked diligently to make sure no one lost benefits resulting from problems with the roll-out of Benefind. Deloitte will continue to help the cabinet until the system is working properly.
Bernard Decker, Executive Director, Office of Administrative & Technology Services, Cabinet for Health and Family Services, stated that as an extension of the health benefit exchange (HBE), the prior administration requested and received approval from the Centers for Medicare and Medicaid Services (CMS) to build a modern information technology (IT) system to integrate benefits eligibility functions across all state-administered health and human services programs. Currently, Benefind provides a single system for economic stability programs such as Supplemental Nutritional Assistance Program (SNAP), Kentucky Transitional Assistance Program (KTAP), Medicaid and waiver services. It enables residents to enter, view, and manage applications throughout the process in a one-stop shop of information that satisfies multiple programs in a much more efficient manner. Benefind has enabled the Commonwealth to bring systems into compliance with federal regulations. Benefind was the first integrated system built fully on Microsoft that incorporates all benefits programs including kynect. The first and second proposed release December release dates for Benefind were postponed. Although the cabinet had concerns, but Benefind was rolled out on February 29, 2016 (directed by the federal government). A Rapid Response Team (RRT) was established to help address erroneous notifications sent to recipients stating benefits had been terminated. RRT responded to cases that required immediate action. On May 31, 2016, 100 percent notifications review was complete. Interactive Voice Response (IVR) improvements were made to the phone systems that decreased wait times by providing a specific queue for citizens seeking benefits status or reporting changes. As of December 2015, $70 million of federal match funds had been spent on the five Benefind release phases. The cabinet and Deloitte continue to review policies associated with notifications in order to eliminate confusion.
By the time the scope and magnitude of systematic issues were fully identified, the contingency plan to reverse back to the Kentucky Automated Management Eligibility System (KAMES) was not feasible to implement. However, Benefind provides the ability for workers to do a system override for emergency cases. The CMS and the Food & Nutrition Services (FNS) policies contradicted each other in the integrated system, and did not properly allow utilization of kynectors. The cabinet requested and received approval from FNS for kynectors affiliated with non-profits to assist with SNAP applications.
Proficiency thresholds and timeframes will be established and verified prior to any future system roll-outs. Future pilot programs will incorporate all special populations and geographic areas. Clear communication between vendor and the cabinet was lacking. The 2013 DCBS workforce study recommended a statewide structure that proved inadequate to operate the Benefind system and maintain local community involvement. An Operation Field to Frankfort (O.F.F.) team has successfully processed more than 50,000 cases and been instrumental in identifying system issues experienced during the Benefind roll-out process. A kynect case is faster than DCBS social service cases. DCBS has been working with community partners to address citizens’ concerns while implementing changes to the organization processes in order to better serve the citizens.
The cabinet, in conjunction with Deloitte, will establish permanent RRTs and O.F.F. teams, examine DCBS workforce and structure to improve organizational workflow, confirm operation of system, conduct consistent reviews of system operations, verify architectural framework software is stable, and continue planning and prioritization to confirm future releases incorporate all predefined contractual agreements and identified system improvements.
In response to questions by Senator Danny Carroll, Director Decker stated that Deloitte is fixing technical problems free of charge.
In response to questions by Representative Owens, Kristi Putnam, Executive Advisor, Department for Community-Based Services, Cabinet for Health and Family Services, stated that post-Benefind, there has been a decline in enrollment in all programs. Director Decker stated that the six-month face-to-face meeting with SNAP recipients was moved to every twelve months. A FS2 document was sent to SNAP recipients every six months and completed paperwork would then be returned to the cabinet. In October 2016, recipients would come back for a face-to-face meeting. A recipient would have to notify the cabinet within ten days after an address change.
In response to questions by Senator Givens, Director Decker stated that 30 to 40 individuals have been working on Benefind complications since March 20, 2016 to ensure there are no complications in other areas. Deputy Secretary Feeley stated that individuals in every affected area, DMS, DCBS, IT, are on the O.F.F. team working to fix problems. Workers want to help people in local communities in order to serve them better. Senator Givens told cabinet representatives to continue to solve the problems internally.
In response to questions by Senator Higdon, Ms. Putnam stated that the cabinet is looking at how to leverage the current system and the ability to work with local communities, especially when dealing with SNAP, KTAP, and other programs.
In response to questions by Representative Wuchner, Ms. Putnam stated that available services for refugees as well as Kentucky citizens come through Benefind which adds an extra load to the system.
Senator Julian Carroll stated that because lower educational levels of some of the recipients causes them to be overwhelmed and confused when they receive correspondence from the cabinet, the information needs to be more understandable.
In response to questions by Senator Danny Carroll, Director Decker stated that harder case scenarios should have been tested before the Benefind roll-out. The prior administration did not advertise Benefind, no one had ever heard about it before its roll-out. The current administration has acted as fast as possible to correct problems. Senator Carroll stated that Benefind will be an awesome system once the kinds are worked out.
In response to questions by Representative Watkins, Director Decker stated that Oregon and Georgia have similar programs to Benefind. Nothing has changed with kynect.
In response to questions by Representative Brown, Director Decker stated the cabinet was told by previous administration that Benefind was ready to be rolled-out.
Representative Wuchner stated that she had never heard about Benefind before January 2016, but that this was always a part of the cabinet’s plan.
In response to questions by Representative Burch, Ms. Putnam stated that applicants had been made aware of the opportunity to appeal benefit denials. Director Decker stated that there was a mismatch in information between systems that caused the 50,000 individuals to receive cancellation of services notifications. A Benefind pilot test was ran in ten counties.
Senator Higdon stated that on February 5, 2015, he received information from the previous administration about a new web-based eligibility system that would provide DCBS the opportunity to increase efficiencies while promoting better integration with other services both within the and outside of the cabinet. The major project would affect staff from IT, DCBS, DMS, and several other ancillary agencies impacted by the change. It stated the cabinet until December 31, 2015 to implement the system to receive a 90 percent federal, 10 percent state match.
A motion to approve the June 15, 2016 minutes was made by Senator Kerr, seconded by Representative Brown, and approved by voice vote.
Consideration of Referred Administrative Regulations
The following administrative regulations were referred for consideration: 201 KAR 9:016 – establishes the requirements governing the use of amphetamine and amphetamine-like anorectic controlled substances; 201 KAR 9:025 – establishes application procedures and limitations for licensure to an applicant in extraordinary circumstances under KRS 311.571(10) by the Kentucky Board of Medical Licensure; 201 KAR 9:081 – establishes the procedures to be followed in handling formal and informal disciplinary proceedings before the Kentucky Board of Medical Licensure, to conduct the proceedings with due regard for the rights and privileges of all affected parties; 201 KAR 9:240 – establishes the procedure to be followed in handling emergency proceedings before the Kentucky Board of Medical Licensure; 201 KAR 13:040 – prescribes the forms, required examinations, experience, renewal requirements, and provisions for inactive status required for licensees by the Kentucky Board of Ophthalmic Dispensers; 201 KAR 13:050 – establishes the requirements for an apprentice ophthalmic dispenser; and 201 KAR 20:520 – establishes the requirements governing the use of telehealth services, preventing fee-splitting through the use of telehealth services, and utilizing telehealth in the provision of nursing services and in the provision of continuing education. A motion to accept the referred administrative regulations was made by Senator Givens, seconded by Senator Kerr, and accepted by voice vote.
Presentation on Section 1115 Waiver Application Proposal - Kentucky Helping to Engage and Achieve Long Term Health (HEALTH)
Stephen Miller, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, stated that from January 1, 2017 to January 1, 2021, Kentucky will have to pay approximately $1.2 billion for the Medicaid expansion. The unsustainable growth in the cost of the Medicaid expansion threatens the traditional Medicaid program and coverage for the aged, blind, disabled, pregnant women, and children. The current Medicaid managed care population accounts for approximately 70 percent of total Medicaid spending, approximately $7 billion. Kentucky HEALTH would preserve all mental health and substance use disorder (SUD) benefits. Individuals who seek SUD treatment may be eligible to earn My Rewards Account contributions. In July 2015, the Centers for Medicare and Medicaid Services (CMS) outline a new Section 1115 waiver that would allow states to obtain a waiver of the Institutions for Mental Disease (IMD) exclusion and require states to develop a comprehensive program to reform SUD delivery and services. Kentucky would develop a SUD pilot program in 10 to 20 select high-risk counties based on a recent CDC HIV/hepatitis C outbreak study; the existing Sharping Our Appalachian Region (SOAR) initiative, and public input. The waiver would allow Medicaid to reimburse for short-term residential stays in an IMD and explore best-practice strategies. Kentucky HEALTH will utilize existing resources to support efforts to improve chronic disease prevention and management and encourage managed care participation in the national Diabetes Prevention Program (DPP).
The cabinet renegotiated a six-month contract with the Medicaid Managed Care Organizations (MCOs) through the end of 2016 that could potentially result in a four percent reduction in costs or a $280 million savings in state and federal dollars. While MCOs should be allowed to have profits, those profits should not be excessive. The new contracts will improve patient experience, population health goals, and lower costs. The contract would require MCOs to develop provider bonus programs that correlate to improving health outcomes and align with member My Rewards Account incentives.
Kentucky HEALTH is expected to save taxpayers a total of $2.23 billion dollars over the five-year waiver period. Medicaid expansion costs would be higher without Kentucky HEALTH.
Adam Meier, Deputy Chief of Staff for Policy, Office of the Governor, stated that nearly one-third of Kentucky’s population is currently enrolled in Medicaid. Kentucky ranks the third highest nationwide for the number of drug related fatalities with more than 1,200 drug overdoses per year. Fifty-four of the 220 counties identified by the Centers for Disease Control and Prevention (CDC) at risk for an HIV or hepatitis C outbreak resulting from intravenous drug use are located in Kentucky. The goals of Kentucky Helping to Engage and Achieve Long Term Health (HEALTH) are: 1) improve participants’ health and help them be responsible for their health; 2) encourage individuals to become active participants and consumers of healthcare who a prepared to use commercial health insurance; 3) empower people to seek employment and transition to commercial health insurance coverage; 4) implement delivery system reforms to improve quality and outcomes; and ensure fiscal sustainability. Kentucky HEALTH policies target able-bodied adults. The state will develop a process to identify “medically frail” adults to be covered by Kentucky HEALTH. Individuals with SSI or SSDI determination will automatically be deemed medically frail. Benefits will not change for children, non-expansion populations, or the medically frail.
Two options for Kentucky HEALTH coverage are the employer premium assistance program and consumer driven health plan. Premiums are more predictable and may cost less than standard co-payments. The costs range from $1 per month for less than 25 percent of the federal poverty level (FPL) up to $15 per month for up to 138 percent of the FPL. After two years of Kentucky HEALTH coverage, cost sharing will increase for individuals above 100 percent of the federal poverty level to $22.50 and $37.50 after five years to prepare and encourage recipients to transition to private market coverage. Individuals who are eligible for Kentucky HEALTH enroll in their employer’s health plan in lieu of the standard consumer health plan option. The employee’s premium is deducted through payroll and reimbursed by the state minus the required member premium contribution. There is a wrap around for cost sharing and benefits covered by Kentucky HEALTH, but not covered by the employer. Members receiving premium assistance will receive a My Rewards Account to earn incentive dollars. The states contributes $1,000 per year for the consumer driven health plan option. The account covers the deductible, excluding preventive services. After the deductible is met, the health plan pays all claims in full. Fifty percent of unused deductible account balance transferred at the end of the year. The My Rewards Account pays for vision, dental, over the counter medications, and gym membership reimbursement. Former members may apply to receive the unused portion of the account, up to $500, after leaving Medicaid for 18 months.
Members who chose not to make a premium payment within 60 days of the due date will be subject to a six-month non-payment penalty. Individuals may re-enroll earlier than six months by paying two months of missed premiums and one month’s premium to restart up to five percent of income and by completing a health or financial literacy course. Individuals with income below 100 percent FPL who do not make the first payment will receive benefits 60 days after application approval. Re-enrollment paperwork must be returned within a specific time period or wait six months for the next open enrollment period to re-enroll in coverage. Early re-enrollment is available for completion of a health or financial literacy course. A beneficiary must maintain plan choice for entire 12-month benefit period with a few exceptions. Data indicates that community engagement improves health and employability and decreases poverty. Children, pregnant women, individuals determined medically frail, and individuals who are the primary caregiver of a dependent are exempt from the community engagement and employment initiative. Twelve months of eligibility require 20 hours per week of community engagement or employment initiative.
The state will provide full premium assistance, so the out-of-pocket cost to participants is the same as Kentucky HEALTH monthly premiums. Premiums are more affordable and easier to budget than paying for an expensive copayment during a medical emergency. Current vision and dental coverage will be maintained for children, adults eligible for Medicaid prior to expansion, and medically frail. Expansion group may choose to use the My Rewards Account to gain access to vision, dental coverage, or other enhancements such as over-the-counter drugs or gym membership. The waiver was posted for public comment on June 22, 2016 and will be submitted to CMS by August 1, 2016. Most Kentucky HEALTH policies have been approved in other states except the community engagement and employment initiative, open enrollment period, and increasing premiums for individuals above 100 percent FPL. More information can be found at the agency’s website, http://chfs.ky.gov/kentuckyhealth.
In response to questions by Representative Owens, Commissioner Miller stated that premiums would be paid by both the husband and the wife who earn 138 percent below FPL. The cabinet wants to improve health outcomes and the savings will follow under Kentucky HEALTH. He does not know of any study on uncompensated care costs to hospitals. The cabinet is trying to keep the Medicaid expansion.
In response to questions by Senator Danny Carroll, Commissioner Miller stated that the MCOs have to spend 90 cents of each dollar on medical expenses to curtail excessive profits. Employers would be required to pay the additional costs of medical plans for employees not reimbursed by the cabinet.
In response to questions by Senator Thomas, Mr. Meier stated that anyone covered under traditional Medicaid will keep vision and dental coverage. The My Rewards Account would allow someone covered under the Medicaid expansion to earn coverage of dental and visions services. If someone misses a premium payment, coverage would revert back to the fee-for-service reimbursement rates. The purpose of a premium is to make it easier for cost sharing. Implementing the 90 percent federal, 10 percent state match will not change under Kentucky HEALTH but will only help engage people in their health decisions.
Representative Palumbo asked that a copy of the map that lists the 54 counties at risk for an HIV or hepatitis C outbreak resulting from intravenous drug use be sent to the committee members.
Legislative Hearing on Executive Order 2016-496 relating to the Establishment and Operation of the Kentucky Office of Health Benefit and Information Exchange
In response to a question by Representative Watkins, Adam Meier, Deputy Chief of Staff for Policy, Office of the Governor, said that the executive order would not dismantle kynect. A motion to accept Executive Order 2016-496 was made by Senator Kerr, seconded by Senator Givens, and accepted by a 13 yes votes, 1 no vote, and 0 pass votes roll call requested by Representative Burch.
Discussion on Section 1115 Waiver Application Proposal - Kentucky Helping to Engage and Achieve Long Term Health (HEALTH)
Susan Zepeda, Ph.D., President/CEO, Foundation for a Healthy Kentucky, and Gabriela Alcalde, DrPH, M.P.H., B.A., Vice President of Policy and Program, Foundation for a Healthy Kentucky stated that Kentucky has one of the highest poverty rates in the nation as well as some of the most challenging health status statistics in the United States. Since Kentucky expanded Medicaid, nearly half a million Kentuckians have gained coverage through Medicaid. Concerns over the financial sustainability of Medicaid has led to the current administration to consider alternatives for providing access to health care services to low-income Kentuckians. The criteria that CMS will apply in evaluating whether Medicaid program objectives are met by the Section 1115 waiver proposal are: 1) increase and strengthen overall coverage of low-income individuals in the state; 2) increase access to, stabilize, and strengthen providers and provider networks available to serve Medicaid and low-income populations in the state; 3) improve health outcomes for Medicaid and other low-income populations in the state; or 4) increase the efficiency and quality of care for Medicaid and other low-income populations through initiatives to transform service delivery networks. Concerns for access barriers are loss of oral health, hearing, vision; no retroactive eligibility; premiums at all income levels; monetary and lockout penalties; mandatory work/volunteer; loss of non-emergency medical transport; reduced smoking cessation options; and emergency room use penalties. Kentucky needs a strong, sustainable, and fact-based proposal that addresses the needs, challenges, and opportunities of Kentuckians to improve the health and economic well-being of the state. In tailoring a Medicaid waiver program to the challenges and strengths of Kentucky, it is important to start with a clear and shared awareness of who the Kentuckians are that would be served more efficiently and effectively through the waiver. It costs Kentucky less in the long-run for all Kentuckians to be healthy and to have timely access to needed preventive and therapeutic care than to delay or otherwise forego care. The state’s commitment to all persons should be to first do no harm and treat all Kentuckians with respect, dignity, and compassion.
Emily Parento, JD, LLM, Associate Professor of Law and Gordon D. Schaber Health Law Scholar, University of the Pacific, McGeorge School of Law, stated that all states were given the choice to have the Medicaid expansion. The purpose of Section 1115 waivers is to expand eligibility to individuals who are not otherwise Medicaid or CHIP eligible, provide services not typically covered by Medicaid, or use innovative service delivery systems that improve care, increase efficiency, and reduce costs. Arizona and Ohio are also seeking Section 1115 waivers. Ben Wakana, federal Health and Human Services’ (HHS) press secretary, stated that Kentucky’s Medicaid expansion has led to one of the biggest reductions of uninsured people in America, and any changes to the program should maintain or build on the historic improvements Kentucky has seen in access to coverage, access to care and financial security. States must demonstrate how existing research supports the hypothesis that its proposals will maintain, at reduced overall cost, existing levels of access/quality, or improve access/quality/cost sustainability of the Medicaid program already in place in the state. The HHS has never approved a work requirement as a condition of eligibility for the Medicaid program. Kentucky HEALTH proposes that most adults be required to complete between 5 to 20 hours per week of work activities as a condition of eligibility for the program. The HHS has never approved program elements that impose either a time limit or a penalty for continued eligibility for the Medicaid program. Kentucky HEALTH seeks to impose increasing premiums for individuals with income greater than 100 percent FPL, beginning with a beneficiary’s third year of enrollment, which would exceed the premiums that beneficiaries at this income level would face in the marketplace. No state has obtained approval to charge premiums over two percent of an individual’s income.
Data from the 2016 State Health Reform Assistance Network regarding Medicaid expansion in Arkansas, California, Colorado, Kentucky, Michigan, New Mexico, Oregon, Maryland, Pennsylvania, Washington, West Virginia, and the District of Columbia confirm that states continue to realize savings and revenue gains as a result of expanding Medicaid. The means of achieving improved efficiency have generally been through implementation of initiatives to transform service delivery networks. Projected cost savings from Kentucky HEALTH in the adult expansion population derive exclusively from reduced enrollment with a higher per person cost.
There being no further business, the meeting was adjourned at 1:20 p.m.