Call to Order and Roll Call
The 6th meeting of the Task Force on Medicaid Cost Containment was held on Tuesday, September 21, 2010, at 10:00 AM, in Room 131 of the Capitol Annex. Representative Jimmie Lee, 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 Tom Buford, Julie Denton, Denise Harper Angel, Bob Leeper, and David L. Williams; Representatives Tom Burch, Rick Rand, and David Watkins.
Guests: Dustin Pugel for the Kentucky Council on Developmental Disabilities; Eric T. Clark and Wayne Johnson for the Kentucky Association of Health Care Facilities; Toni Miles for the University of Louisville; Charles George for the Kentucky Chamber of Commerce; Ellen Kershaw and Brandi Bullock for the Alzheimer’s Association; Patty Dempsey for Arc of Kentucky; Sheila Schuster for the Kentucky Mental Health Coalition; Jan Gould for the Kentucky Retail Federation; and Sarah Nicholson for the Kentucky Hospital Association.
LRC Staff: Miriam Fordham, Pam Thomas, Mike Clark, DeeAnn Mansfield, Lashae Kittinger, and Cindy Smith.
Approval of Minutes
The minutes of the September 7, 2010 meeting were approved without objection.
Discussion of Long-Term Care
Lisa Alecxih, Vice President, Center on Long Term Care, The Lewin Group discussed considerations for long-term care services and supports. Long term services and supports are needed when one’s ability to care for themselves has been reduced by a chronic illness, disability, or frailty. The need for long term services and supports (LTSS) greatly increases with age. The total national LTSS expenditures for 2008 were $243.4 billion. The majority of seniors with disabilities are supported by unpaid care in the community. In Kentucky, the cost for long term care services varies. Assisted living services cost approximately $2,557 per month, while nursing facility care costs approximately $5,779 per month. Medicaid covers limited LTSS benefits, and eligibility criteria among LTSS users makes Medicaid the payer of last resort. Long term care insurance, which emerged during the 1980s, plays a limited role. Only 10 percent of individuals over age 65 own long term care insurance policies, and those policies offer limited benefit payouts. In the last decade, Medicaid LTSS spending grew more quickly than total health spending. However, Medicaid LTSS spending grew at a slower rate than total Medicaid spending. There has been a significant decline in the use of nursing homes for the oldest groups of individuals due to the use of alternative residential settings.
Financing strategies for long term services and supports in successful states include: use of global budgeting; expansion of home and community-based alternative; capitated managed long term care; long term care insurance partnership program; targeted state funds; and nursing home bed buy backs. There are also some other things that successful states do differently. These include: articulating a government-wide vision; plans are made according to that vision; planning in accordance with that vision; executing the plan; monitoring the execution of the plan with data; and regularly reassessing the vision.
In response to a question by Senator Denton, Ms. Alecxih said that the adult day costs are for the base rate of the program and they do not include the costs for therapy.
In response to a question by Senator Denton, Ms. Alecxih said that Oregon does have Certificate of Need, but their occupancy rate is only about 85 percent.
In response to a question by Senator Denton, Ms. Alecxih said that Oregon began global budgeting in the early 1980s.
In response to a question by Senator Harper Angel, Ms. Alecxih said that rebalancing was done by global budgeting in Washington and Oregon, but they received no increased FMAP.
In response to a question by Representative Lee, Ms. Alecxih said that Texas had been most aggressive with their Money Follows the Person program.
In response to a question by Senator Harper Angel, Ms. Alecxih said that Kentucky may qualify for the five percent enhanced FMAP payment offered to states under the health care reform law to increase the proportion of long term care services provided in the community depending on whether the federal regulations figure the proportion by population or if categories of populations are combined.
In response to a question by Senator Stine, Ms. Alecxih said that “successful” meant that spending has been controlled; a large portion of Medicaid spending is in home and community based services; and the Medicaid nursing facility census has been reduced over a period of time.
In response to a question by Senator Buford, Ms. Alecxih said that some things that Kentucky can do differently with long term care are: global budgeting; having a no wrong door type of system; looking into having better resource centers; and considering options to get a higher FMAP.
Discussion of Fiscal Issues
Dave Adkisson, President and Chief Executive Officer, and Bryan Sunderland, Vice President, Public Affairs, Kentucky Chamber of Commerce, discussed fiscal issues relating to Medicaid. Mr. Adkisson reported that about 800,000 Kentuckians receive Medicaid benefits. Medicaid contributes over $5 billion per year to the health care economy. Medicaid spending is putting stress on other important parts of Kentucky’s budget, mainly education. Findings have shown that better education leads to better health, which in turn leads to lower health care costs. Action is needed now because the expansion of Medicaid due to the new health care reform law will increase Medicaid recipients by 300,000. Some solutions include: expanding Medicaid managed care; incorporating wellness activities; and improving Medicaid program administration.
In response to a question by Representative Rand, Mr. Adkisson said he had not done any research in what the cost would be if Kentucky expanded managed care.
In response to a question by Representative Burch, Mr. Adkisson said that to improve the administration of the Medicaid program, error rate improvement should be studied, child support orders should be used to mandate insurance coverage; co-pays should be considered; and generic drug use should be increased.
In response to a question by Representative Lee, Mr. Adkisson said times are difficult because businesses that are laying off employees are struggling. The jobs picture needs to pick up. He is not sure how businesses can help because they are having a difficult time just trying to keep their doors open.
In response to a question by Senator Buford, Mr. Sunderland said that the fine for businesses not providing insurance by 2014 will be $2,000 per employee.
Discussion of Do Not Substitute Requirements
Eric Friedlander, Deputy Secretary, Cabinet for Health and Family Services, was present to provide clarification on the Cabinet’s response to questions from the Task Force members regarding Do Not Substitute requirements for prescription drugs in the Medicaid program.
In response to a question by Senator Stine, Deputy Secretary Friedlander said that he thought the “purchaser” was Medicaid, but it may be the person for whom the prescription was written. Upon further clarification by Cabinet officials, “purchaser” was defined as the person for whom the prescription was written.
In response to a question by Representative Lee, Mr. Friedlander said that if the purchaser does not want the generic, the name brand drug could be purchased, but Medicaid would not cover the cost and the purchaser would have to pay for the drug.
Jan Gould of the Kentucky Retail Federation provided further clarification on the Do Not Substitute requirements. He clarified that a patient can request a name brand drug in place of the generic that is offered, but that Medicaid does not have to cover the cost of the name brand drug.
Representative Watkins agreed with Mr. Gould and noted that procedure is what happens in his medical practice.
In response to a question by Senator Harper Angel, Deputy Secretary Friedlander said that he will check to be sure that the letter of intent for the funding for the Aging and Disabilities Resource Center (ADRC) has occurred.
In response to a question by Senator Stine, Deputy Secretary Friedlander said the Cabinet is currently working on determining cost cutting measures for the Medicaid program, and they look forward to presenting those ideas to the committee at a future meeting.
Representative Lee announced that at the November 16, 2010 meeting, the Task Force on Medicaid Cost Containment will hold a public forum to allow citizens to speak about their ideas on Medicaid cost cutting measures.
The meeting was adjourned at 12:15 p.m.