Call to Order and Roll Call
The 1st meeting of the Task Force on Medicaid Cost Containment was held on Monday, July 19, 2010, at<MeetTime> 1:00 PM, in Room 131 of the Capitol Annex. Senator Katie Kratz Stine, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Katie Kratz Stine, Co-Chair; Representative Jimmie Lee, Co-Chair; Senators Julie Denton, Denise Harper Angel, and David L. Williams; Representatives Tom Burch, Rick Rand, Greg Stumbo, and David Watkins.
Guests: Don Putnam for PROOF; Dave Croft for Bristol-Myers Squibb; Marty White and Bill Doll for the Kentucky Medical Association; Sheila Schuster for the Advocacy Action Network; and Anne Joseph for Covering Kentucky Kids & Families.
LRC Staff: Mike Clark, Miriam Fordham, Lashae Kittinger, DeeAnn Mansfield, Cindy Murray, Cindy Smith, Pam Thomas, and Frank Willey.
An Overview of Medicaid
Mike Clark, Ph.D, Chief Economist, Legislative Research Commission, presented a general overview of Medicaid. Medicaid is a means-tested entitlement program authorized by Congress in 1965 as part of the Social Security Act. Medicaid provides three broad types of health coverage: health insurance, supplemental coverage, and long-term coverage. Individuals must meet certain requirements to be eligible for Medicaid including categorical, income, resource and citizenship requirements. Medicaid eligibility is limited to individuals who fall into six broad population groups. Statistics were given regarding income limits for pregnant women and children to be covered by Medicaid. Pregnant women are covered up to 185 percent of the federal poverty guidelines. Children are covered under Medicaid or KCHIP and can be covered up to 200 percent of the federal poverty guidelines depending upon for which program they qualify. U.S. citizens must meet categorical and financial requirements. Illegal immigrants cannot qualify for basic Medicaid benefits, but they can qualify for Medicaid for emergency medical care if they meet financial requirements. States are required to redetermine eligibility at least once every 12 months.
Mandatory eligibility groups and optional eligibility groups were discussed. There are mandatory and optional services that are covered by Medicaid and examples were given of each group of services. Kentucky’s Medicaid program pays co-payments and deductibles for qualified Medicare beneficiaries who receive certain services. Waivers allow states certain exceptions to the service requirements. There are a number of current Kentucky waiver programs. Currently, there are over 40,000 providers of Medicaid services in Kentucky. Charts were shown that reflect how Kentucky Medicaid eligibles have increased more steadily over the years as compared with the number of eligibles if the growth equaled the state population growth. The growth in the KCHIP population and the number of children enrolled in Medicaid are a driving growth in the increase of Medicaid eligibles. Kentucky Medicaid funding sources include federal matching funds, provider tax revenues, and general fund appropriations. The Federal Medical Assistance Percentage (FMAP) is the percentage of Medicaid costs paid by the federal government. The FMAP is based on each state’s per capita income relative to the national per capita income. States with lower per capita income received a higher FMAP. Kentucky provider taxes were also discussed and figures were shown relative to rates for current Kentucky provider taxes for different providers. Tax rates vary depending on the category of provider. Major legislative changes from 1996 to 2009 regarding provider taxes were shown, as well as the share of total Kentucky provider taxes by services. A chart on Kentucky’s Medicaid general fund expenditures which showed that the dollar amounts of expenditures grew steadily over time, from 7.8 percent in 1992 compared to 11.5 percent in 2009 was discussed.
In response to a question by Senator Stine, Dr. Clark responded that, as to Kentucky Medicaid expenditures per capita, the number might have increased because people are coming in for different periods of time and depending on when the snapshot of Medicaid eligibles is taken, different counts may be seen. Dr. Clark said he does not have the Kentucky Medicaid expenditures per capita, but there are about 4 million individuals in Kentucky. Using that number will not provide the same type of comparison because it would be taking health care expenditures for just the Medicaid population and dividing it by the full population of this state.
In response to a question by Representative Lee, Dr. Clark said if one takes the same population figure and did not make any changes to that population and did not make any changes to the services that were being covered, and just looked at the Medicaid program that existed in 1992 and did not make changes to it subsequently, then that population probably still would have grown relative to the total general fund. The reason for that is, even if the population did not grow any more than the rest of the state, there have been increases in utilization and in the cost of health care.
Representative Lee said that information should be provided to the committee in further meetings that looks at the difference between the waivers that were in place in 1992 and the waivers that are currently in place and the impact that has had on the state’s budget.
In response to questions by Senator Denton, Dr. Fordham said that federal rules govern that resources are not considered in Medicaid eligibility determination for pregnant women and the CHIP program, as well as the legal residents prior to 1996.
In response to a question by Senator Denton, Dr. Fordham said that she was not sure of how often Kentucky is re-determining eligibility, or if the federal government has a certain way it requires states to do that, but that is something that the Cabinet could address in its presentation at a future meeting.
In response to a question by Senator Denton, Dr. Clark said a person can be eligible while pregnant but not be eligible after delivery because, after 60 days, the person would fall under different eligibility guidelines. It would depend on what those guidelines were for that particular category population.
In response to a response to a question by Senator Denton, Dr. Fordham said that almost all other states provide emergency and non-emergency medical transportation
In response to a question by Senator Denton, Dr. Clark said data has been requested from the Cabinet on what the per member per month rate is, and it is working on that information. Cindy Murray said that it is $3 per individual, per member per month, which is just the provider fee, for managing care. The providers would still receive fees for other services that they provide. When the global costs are received from the Cabinet, they will be reported to the Committee.
In response to a question by Representative Rand, Dr. Clark responded that determination of FMAP is primarily a formula based on per capita income to get the FMAP rate. With the enhanced match, there were some adjustments based on level of employment, so areas with high unemployment received some additional consideration there.
In response to a question by Representative Rand, Dr. Clark said that Kentucky has to provide services for pregnant women up to 133 percent of the federal poverty level. The information is being worked on to prepare an analysis that would show the range of flexibility that can be chosen from in determining eligibility levels.
In response to a question from Representative Rand, Dr. Clark said that it is not that guidelines on welfare reform have been relaxed, but changes in the scope of Medicaid, specifically expansion of the KCHIP program have contributed to the growth of certain eligibility categories. In the late 1990's, the federal government provided some additional incentive to extend coverage to children at higher income levels than what had been done in the past, so that's contributed to a portion of it. The idea was the limits under welfare reform constrained the total population but there was another effort to allow excess for children basically.
In response to a question by Representative Burch, Dr. Clark responded that there is a difference in how KenPac and Passport are reimbursed. With Passport there basically is a contractual fee. KenPac is more of a fee-for-service program, but there is a primary care component. With KenPac, there can have a primary care health care provider and the provider will receive $3 per Medicaid enrollee.
In response to a question from Representative Burch, Dr. Clark responded that there have been some studies that compare what Medicaid pays versus what the private sector pays. That information will be given to the committee at a later date.
In response to a question by Representative Watkins, Dr. Clark said that Medicaid has provided some information relative to a breakdown on where the Medicaid dollar flows. That information will be given at a future meeting, and the Department for Medicaid Services will be discussing that as well.
In response to a question from Senator Harper Angel, Dr. Clark said that the legislative changes that affected the provider tax was just for Passport, and the dip in 2009 provider tax returns was primarily from the removal of that tax.
In response to a question from Representative Stumbo, Dr. Clark said that his understanding is that the provision of prescription drugs is an optional service, and, therefore, the state has a range of options. Kentucky could not provide some of these services or reduce services, but Kentucky would not be eligible for the match if the state chose to do that. There would be consequences of doing this though. Individuals not getting access to pharmaceuticals may show up in some other category, which would raise costs in that category. Dr. Fordham added that even though there is some latitude as to being an optional service, there is a baseline that the states have to cover.
In response to a question by Representative Rand, Dr. Clark said that Kentucky still must provide the mandatory services and offer it to the mandatory groups. That would not affect the FMAP for those components of Medicaid.
In response to a question by Speaker Stumbo, Dr. Clark said he could work with the Cabinet on getting information regarding if Kentucky is going to offer optional services and if Kentucky adheres to the baseline that the federal government requires, what the difference is in what is offered and paid for now as opposed to what the minimums are.
Representative Burch added that when the Cabinet appears, it should be asked about the guidelines on all the optional programs; the percentage that Kentucky is above the minimum on those particular programs; the amount of the minimums and maximums; the amount of deductibles; and which benefits are provided above the minimums.
The meeting was adjourned at 2:25 p.m.