Call to Order and Roll Call
The 5th meeting of the Task Force on Medicaid Cost Containment was held on Tuesday, September 7, 2010, at 10:00 AM, 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, Bob Leeper, and David L. Williams; Representatives Tom Burch, Rick Rand, and David Watkins.
Guests: Eric Clark for the Kentucky Association of Health Care Facilities; Jeff Presser for Dean Dorton Ford; Ellen Kershaw for the Alzheimer’s Association of Kentucky; Jodi Mitchell for Kentucky Voices for Health; Jan Gould for the Kentucky Retail Federation; and Jim Kimbrough for AARP.
LRC Staff: Miriam Fordham, Pam Thomas, Mike Clark, DeeAnn Mansfield, Frank Willey, Lashae Kittinger, and Cindy Smith.
Approval of Minutes
There was a motion by Representative Lee to amend the minutes from the last meeting. After that amendment, there was a motion by Representative Lee, seconded by Senator Harper Angel, to approve the minutes as amended.
Discussion of Current State Medicaid Cost Containment Statutory and Regulatory Framework
Pam Thomas, Committee Staff Administrator, Legislative Research Commission, provided an overview of the existing statutory and regulatory framework for achieving cost containment or expenditure reduction in the Medicaid program. She identified various provisions of the Kentucky Revised Statutes (KRS) requiring or authorizing actions intended to contain costs in the Medicaid program.
In response to a question by Representative Burch, Ms. Thomas said that she is not the correct person to offer her opinion on what needs to be changed in the Medicaid program to make it function properly. She noted that there are many people who will testify before the committee who are more qualified to answer those types of questions. Senator Stine noted that at a future meeting the members would hear testimony about the Program Review report mentioned in Ms. Thomas’ overview which may be helpful in answering those questions.
Discussion of Prescription Benefit Management
Brenda Motheral, MBA, Ph.D., Associate Professor, College of Pharmacy, University of Kentucky, discussed prescription benefit management. She reported that Kentucky leads the nation in prescription drug use overall, which is driven by many factors, including the lack of efficiencies in the system, obesity rates, and diabetes rates. She discussed the evolution of what is happening with prescription drugs and said there is a shift to a more consumer-oriented market. Important factors to consider include: establishing a transparent contract with the vendor; ensuring that programs on paper are actually in place; and providing evidence to show that the program is saving money. Dr. Motheral discussed the drivers of prescription drug trends, which include price, utilization and mix.
Dr. Motheral discussed relationships between legislation requiring patient consent for generic substitution and generic fill rates. Her research shows that there is a projected savings of $100 million dollars if states with patient consent policies would remove the need for patient consent for generic substitution.
In summary, Dr. Motheral said that the waste in prescription drug spending is significant across the United States and in Kentucky. The pharmacy benefit is very complex, making transparency, evidence, and timeliness critical. Payers can lower costs without compromising quality. Cost management challenges will be even greater in the future given specialty pipeline and other trends.
In response to a question by President Williams, Dr. Motheral said that research shows that attitudes have changed about the use of generic drugs. Many individuals think that generic drugs are as advantageous as name brand drugs.
In response to questions by President Williams, Dr. Motheral said that pharmacies typically do not waive co-pays. She defined the Therapeutic Interchange Program as a program that allows for drugs passed to be auto substituted through the state program.
In response to a question by Senator Stine, Dr. Motheral said the national generic fill rate is between 80 percent and 85 percent, and Kentucky’s should be similar.
In response to a question by Representative Lee, Dr. Motheral said her comparisons are not necessarily based on facts researched in Kentucky Medicaid, but common tactics reflect what Kentucky is doing and what is common in the marketplace. Dr. Motheral said she researched what is publicly available to get her findings.
In response to a question by Senator Stine, Dr. Motheral said there are many areas where compliance is a problem. Her findings show short-term, hard dollar savings that are cost effective.
In response to a question by President Williams, Dr. Motheral said that health educators have a lot of programs that can get long-term clinical benefits.
In response to a question by President Williams, Dr. Motheral said that including some diagnoses in her findings would have been more complex. She wanted to identify areas with compliance that led to short-term savings. President Williams pointed out that cost savings is not only short-term, but also medium and long-term.
In response to a question by President Williams, Dr. Motheral said that in Kentucky, there are specific drugs where the state addresses off-label use. There must be a specific diagnosis before the prescription will be paid for.
In response to a question by President Williams, Dr. Motheral said she did not have the figures with her for the exact amount spent on off-label drugs in Kentucky, but she could get that information to the committee.
In response to a question by Senator Stine, Dr. Motheral said the $1 billion savings in costs management was figured by taking the total use per capita, where the fill rate is, where it could be, and the difference in cost between the brand name and generic drug.
In response to a question by Representative Lee, Dr. Motheral said that every employer will cover some off label drug use, and some are not worth addressing through prior authorization. Off label drug use moves so quickly that it is hard for employees to catch up.
Representative Lee requested that by the next meeting the Cabinet provides a dollar number and the number of prescriptions changed by purchasers to a name brand.
Representative Lee made a recommendation that immediately in the 2011 Session there is legislation relating to the Medicaid program that a generic prescription cannot be changed to a name brand when the generic equivalent would work.
Discussion of Managed Care
Shannon R. Turner, JD, Executive Vice President, University Health Care, Inc., and Larry N. Cook, MD, Chief Executive Officer and Chairman of the Board for University Health Care, Inc./Executive Vice President for Health Affairs, University of Louisville presented an overview of Medicaid managed care. Dr. Cook noted that the Passport health plan has been ranked in the Top 25 Medicaid health plans in America by US News and World Report for the past five years. Passport serves not only Medicaid recipients, but also Medicare recipients with their Passport Advantage HMO plan. Passport is a provider sponsored HMO with over 165,000 members in 16 counties and an extensive provider network. Passport Health Plan operates under an 1115 waiver from the federal government that must be renewed every three years and must remain budget neutral. Passport offers an array of services and is committed to covering Kentucky’s children. Dr. Cook reported that the number of children with Passport has increased, and EPSDT rates continue to remain among the highest.
Regarding the plan’s efficiency, Dr. Cook reported that Passport Health Plan provider payments have consistently equaled or exceeded those of Kentucky’s Medicaid. Ninety-three cents out of every dollar goes to providers. In addition, Passport stands proud of its primary care physician pay for performance model. Over the years Passport has established many programs to help enrollees, including: a childhood obesity program; a cultural and linguistic services program; an asthma program; a research and development program; and a smoking cessation program.
Next, Shannon Turner discussed efforts to combat waste, fraud and abuse. Passport is committed to eliminating member and provider fraud in the payment system. The company’s total recovery efforts yielded $19,852,690 from 2005 through 2010. It is enhancing its efforts to mirror the best practices of Kentucky Medicaid and the Office of Inspector General.
Ms. Turner also discussed pharmacy innovations and trend management. She reported that Passport has a generic utilization rate of nearly 80 percent. Members receive the care they need and providers make the right choices for care based on data driven, evidence based clinical information. Pharmacists are engaged though the use of eHealth solutions. Passport also established CHOICES, a pharmacy medical utilization review program. With this program, prescribers are presented with combined pharmacy and medical services data to be utilized by individual prescribers for comparative purposes.
Lastly, Denise Keyhoe of Perform Rx and Dee Dee Davis, Vice-President, Health Plan Operation, Passport were present to discuss the provider and member portal, Passport’s latest innovation. This on-line member portal offers the ability to be proactive. It offers an overview of the individual’s care in-depth, with a look into the member’s profile, showing details about the client including: lab claims, medical claims, diagnosis, and prescribed medications.
In response to a question by President Williams, Ms. Davis said providers are indirectly incentivized for not duplicating medical tests that have already been done. The portal identifies individuals over-utilizing and duplicating tests.
In response to a question by President Williams, Shannon Turner said that managed care could provide value in all areas of Kentucky. Having a primary care medical home model is the most valuable asset.
In response to a question by President Williams, Dr. Cook said that it has not been problematic in the Passport region to have most physician practices purchased by hospitals. Ms. Turner said that would not impede the rest of Kentucky either.
In response to a question by President Williams, Shannon Turner said there is a willingness of pharmacies and physicians to participate in managed care.
In response to a question by President Williams, Dr. Cook said there is no good data to say if the Passport model would work in the rest of Kentucky. Shannon Turner said the models in the rest of the state were different than the Passport model. Now that times have changed, there may be a more receptive nature to managed care models across the state.
In response to a question by Representative Watkins, Dr. Cook said Passport does not provide recipients or providers with computers, but the portal is available on-line for those with internet access.
Next, Pamela Perry of Amerigroup Community Care spoke briefly about its managed care organization. Amerigroup is a Medicaid managed care organization that operates in 11 states. Expansion of Medicaid in Kentucky would make the most sense for cost containment in the state. The expansion would provide a medical home for all Medicaid recipients. The Kentucky Medicaid budget is growing at an unacceptable rate, and the Medicaid population is expanding rapidly. Kentucky should use a Request for Proposal (RFP) to find the best deal on a managed care company to take over the rest of Kentucky. After the process is started, cost savings would be seen in about one year.
In response to a question by Representative Lee, Ms. Perry said the all contracts should be risk-based from the beginning.
In response to a question by Representative Lee, Ms. Perry said that Amerigroup currently has contracts that include long-term care and mental illness.
President Williams noted that Commissioner Johnson of the Cabinet for Health and Family Services was present at the meeting and asked for the progress the Cabinet had made on recommendations for cost savings in Medicaid. Commissioner Johnson said the Cabinet will be having a meeting about cost efficiencies soon and she will get those recommendations to the committee as soon as possible. President Williams said if the committee does not soon get recommendations regarding cost savings from the Cabinet, the Legislative Research Commission will direct them to provide the recommendations.
In response to a question by Representative Lee, Commissioner Johnson said she would provide the committee with the pay difference between generic and name brand drugs.
In response to a question by Senator Stine, Commissioner Johnson said the Medicaid population generic utilization rate outside of Passport is 74 percent.
The meeting was adjourned at 12:42 p.m.