Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, July 11, 2014, at 10:00 AM, in Room 129 of the Capitol Annex. Representative Dennis Keene, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator John Schickel, Co-Chair; Representative Dennis Keene, Co-Chair; Senators Tom Buford, Julie Denton, Jimmy Higdon, Morgan McGarvey, R.J. Palmer II, Dan "Malano" Seum, and Damon Thayer; Representatives Julie Raque Adams, Tom Burch, Denver Butler, Larry Clark, Jeffery Donohue, Dennis Horlander, Joni L. Jenkins, Adam Koenig, Reginald Meeks, Charles Miller, Brad Montell, David Osborne, Darryl T. Owens, Ruth Ann Palumbo, Sal Santoro, Arnold Simpson, and Diane St. Onge.
Guests: Allen Brenzel, M. D., Medical Director, Department of Behavioral Health and Developmental and Intellectual Disability, Department for Health and Family Services, Mike Townsend, President, Kentucky Association of Addiction Professionals, Pat McKiernan, Kentucky Department of Veteran Affairs, Veronica Cecil, Chief of Staff, Department of Medicaid Services; Sonja Minch, Administrator, Francis Simpson Chairman, Kentucky Board of Barbering; Arch Gleason, President/CEO, Mary Harville, General Counsel, and Howard Kline, Chief Financial Officer, Kentucky Lottery Corporation.
LRC Staff: Tom Hewlett, Bryce Amburgey, Jasmine Williams, Michel Sanderson, and Susan Cunningham.
Approval of minutes
A motion to approve the minutes from the June 13, 2014 meeting was made by Representative Miller and seconded by Senator Palmer. The motion carried by voice vote.
Licensure of Clinical Alcohol and Drug Counselors
Representative Joni Jenkins introduced a group of mental health professionals to speak in favor of a bill to add licensure to the existing certification of clinical alcohol and drug counselors.
Pat McKiernan, Kentucky Department of Veterans Affairs, said the Licensed Clinical Alcohol and Drug Counselor bill is intended to encourage another tier of practice within the state of Kentucky. There are approximately 800 certified alcohol and drug counselors in the state, but there are an estimated 280,000 individuals needing drug and alcohol treatment. By adding this level of licensure and increasing the competency level of the profession, more people would be encouraged to treat the disease.
Alan Brenzel, M.D., Medical Director of the Department of Behavioral Health and Developmental and Intellectual Disabilities, and Veronica Cecil, Chief of Staff with the Department of Medicaid Services, said substance abuse is a growing epidemic that affects all aspect of state government from law enforcement to judiciary and education. It hinders economic development and impacts families and children. A common reason children come into state custody is the result of the dysfunction related to substance abuse disorders. Overdose deaths are increasing from heroin. The cabinet believes this issue has become urgent.
In January, Medicaid added a substance abuse benefit to the state plan. To obtain a provider number, independent licensure is required. Therefore, it is necessary to create a category called Licensed Clinical Alcohol and Drug Counselors (LCADCs) that allows professionals to practice independently in order to gain Medicaid provider status, and thus provide a qualified workforce to provide treatment to adults, children, and families. The Mental Health and Substance Parity Act requires that private insurers cover substance abuse treatment. The bill would create a board that will oversee the work of counselors and protect the public from someone who is not practicing in the scope of practice for the profession. Veronica Cecil, as Director for Program Integrity that oversees provider licensing, said that adding licensed Alcohol and Drug Counselor providers will benefit the Medicaid members as well as the state.
In response to a question from Senator Schickel, Dr. Brenzel said the changes would allow the licensed professionals to become credentialed and gain independent Medicaid provider status. Overall health costs are related to untreated substance abuse. Identifying and treating substance abuse early controls health care costs and prevents more expensive medical costs later. Ms. Cecil said that Certified Clinical Alcohol and Drug Counselors may provide services to Medicaid members in a Community Mental Health Center setting, but they are limited to that setting. However, if they gain independent provider status they may provide treatment outside the clinic.
In response to a question from Representative Montell, Dr. Brenzel said that all states, under the Mental Health and Substance Abuse Parity Act, are required to provide coverage for substance abuse treatment. Based on a January estimate of the number of active abusers, only a small number are seeking treatment, which makes it difficult to develop an estimate of demographics and total cost. An actuarial analysis is part of the negotiation with Managed Care Organizations. Ms. Cecil said that other states have been providing this coverage for quite some time. Representative Jenkins said the treatment is already being provided; however, with passage of this legislation there will be more qualified practitioners to provide the service.
In response to a question from Senator Buford, Representative Jenkins said the language regarding license fees is consistent with other licensing boards and the notwithstanding language allowing fees to be swept is built into the budget document.
Representative Burch said that these services are needed to serve people who have addictions. The cost of an alcoholic cannot be measured. The federal government is fully funding Medicaid for the next two years and funding it at an enhanced level for years after that.
Changes to Kentucky Board of Barbering policies and procedures
Sonja Minch, Administrator for the Kentucky Board of Barbering, said the board had explored the possibility of not accepting checks for renewal fees due to cost and delays in issuing licenses while waiting for checks to clear. However, boards are required by statute to accept payment for license renewal in the form of a check, so the board has decided not to prohibit checks. The board is exploring the possibility of online renewal. With the changing demographics, many new licensees do not use personal checks, so a number of options are being considered.
In response to a question from Senator Schickel, Ms. Minch said the number of barbers in Kentucky is not declining, but the demographic is changing. There are 5,000 licensed barbers. Some are independent contractors, and some are shop owners. All licenses are renewed annually in June. The change from the apprentice to probationary period has led to some difficulty because it takes away oversight of new barbers.
In response to a question from Representative Miller, Ms. Minch said barbers and cosmetologists are trained differently. The law requiring a wall of separation is in the cosmetology statutes; however, as a barber, she would not be interested in combining a shop with hairdressers.
Francis Simpson, Board Chairman for the Kentucky Board of Barbering, said he has five barbers and eight hairdressers working in the same building, divided by a wall. Barbers are trained differently, and the apprentice program is useful in training new barbers.
Representative Clark suggested that the board consider changing the license renewal program to a staggered system to avoid the burden of all licenses renewing on July 1.
Keno and future plans for Kentucky Lottery Corporation
Howard Kline, Chief Financial Officer, said the Kentucky Lottery Corporation (KLC) saw record sales in 2014 totaling $857.7 million, a 1.3 percent increase over 2013. There was a two percent increase in the 2014 transfer to the General Fund. In 2015, sales are projected at $935 billion with a net income of $247 million and $238 million projected to be transferred to the General Fund. Sales of scratch-off ticket in 2014 were $1.8 million less than in 2013. Also, a lack of major, sustained Powerball jackpots had a negative effect on that game’s sales. However, Mega Millions sales made up some of the shortfall with sales of $12.7 million over the previous year.
Keno began play in November of 2013 with 394 retailers: 194 Keno-only retailers, and 200 traditional retailers. Sales for 2013 were $29.5 million, $1.5 million more than projected. Currently there are 510 Keno retailers, 269 Keno-only retailers and 241 traditional lottery retailers. A $24 million increase is expected in 2015.
Arch Gleason, President and CEO of KLC, said the decline in scratch-off ticket sales is troubling because that has been the dominant product since the inception of the lottery, with 60 percent of sales in the form of the scratch-off ticket. Keno has had some impact on scratch-off sales, but it is not anticipated for the long term. Sales of Keno are typically in social settings, and KLC will continue to grow this market.
In October, KLC is scheduled to launch a third, nationally based lottery game. This will be a draw game, sold through a terminal on a weekly basis, based on the game of Monopoly. Lotteries from across the country participate in the weekly drawing. The initial jackpot will be $15 million. It is anticipated that it will take approximately 12 weeks for a winner. Kentucky will win a share based on sales.
KLC is the sole funding source for the Kentucky Education Excellence Scholarship (KEES), the need-based College Access Program (CAP), and Kentucky Tuition Grant (KTG) programs. These proceeds have been distributed to 569,542 Kentucky college students to help defray college expenses.
In response to a question from Senator Thayer, Mr. Gleason said KLC has had discussions regarding equine lottery and offering that product in recent years. It is the opinion of KLC that it would require a law change. There is a question about whether KLC could legally split funds with the racing enterprises. Additionally, it is felt that this particular game will not have the benefits that the designer believes it will have. It is not in the current plans of KLC to offer that product. Mary Harville, General Counsel for KLC, said that 100 percent of Keno revenue goes to scholarships, the same way as all lottery revenue is handled. In the equine lottery game, the race tracks would receive part of the proceeds even though the lottery would be the seller of the tickets.
Ms. Harville said that, in January 2014, KLC began to focus on iLottery, the sale of lottery products over the internet. A team from the lottery traveled to three other state whose lotteries that are selling products over the internet. These states included Minnesota, Michigan and Georgia. KLC officials observed their systems and vendors. There was an option in the contract with KLC’s current vendor to institute Internet based sales. However, because the contract was aging, it was felt a Request for Proposal (RFP) was necessary. The specifications should be finalized and the RFP sent out this summer. It is anticipated that a contract could be finalized by the end of the year. Sales should begin in about one year.
The iLottery system will be able to determine if the player is in Kentucky and is 18 years of age, which will be verified with each wager. There will be the ability to set limits on amount and time spent wagering. Games offered initially would consist of the multi-state draw games, Powerball, Mega Millions, and the Monopoly game. In approximately three months, KLC will add other draw games and later implement an electronic version of scratch-off games.
In response to a question from Representative St. Onge, Mr. Gleason said KLC has gathered information from lotteries around the world. Illinois has set a global dollar limit on the amount wagered at $200 per player per cycle. There is also a self exclusion program so that a player who does have a problem could elect to self-exclude. Banking will be established for players and cash will have to be in their account for them to play. In Georgia, a player can apply for a card through the lottery, which is linked to a bank account that the player must fund. KLC may also offer a prepaid card with a set amount already on the card. Ms. Harville added that KLC is not aware of any law that prohibits them from deciding the manner in which the product should be responsibly sold.
In response to a question from Senator Higdon, Mr. Gleason said that maintaining business with retailers is important to the lottery. The percentage of iLottery sales at this time is less than one percent and should not have a significant impact on retail sales.
In response to a question from Representative Osborne, Ms. Harville said KLC ensures they are in compliance with federal law. In 2011, the Department of Justice was clear that lotteries can engage in this type of internet wagering if it is within each state’s borders, is not sports wagering, and is consistent with the laws of the state.
Representative Osborne said that he would like to have Equine Lottery come before the committee to get a better understanding of how the game works.
Senator Schickel said the next meeting of the committee will not be on the regular meeting date. The meeting will be Tuesday, August 12, at 1:30 PM at Eagle Distributors. Lunch will be served at 12:30 PM. More information will be sent in the mail.
There being no further business to come before the committee the meeting was adjourned at 11:13 AM.