Medicaid Managed Care Oversight Advisory Committee


Minutes of the<MeetNo1> 13th Meeting

of the 2001 Interim


<MeetMDY1> July 27, 2001


The<MeetNo2> 13th meeting of the Medicaid Managed Care Oversight Advisory Committee was held on<Day> Friday,<MeetMDY2> July 27, 2001, at<MeetTime> 12:00 PM, at the Hazard Appalachian Regional Medical Center Auditorium in Hazard, Kentucky<Room>. Senator Daniel Mongiardo, Co-Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Daniel Mongiardo, Co-Chair; Representative Paul Bather, Co-Chair; Senators Julie Denton (in Frankfort), Vernie McGaha (in Frankfort), Dan Seum, and Johnny Turner; Representatives James Bruce, Jack Coleman, Stephen Nunn, and Dottie Sims (in Frankfort).


Guests:  Michael Stanley, University of Kentucky; Belinda Gross, RN, Hazard/Perry County Community Ministries; Sherry Baker, RN, Hazard Appalachian Regional Hospital; Mary Minerus, Hazard Clinic; Chris McCowan, Purdue Pharmacy; Norm Parker, Novartis Pharmacy; Syamala Reddy, MD; W. Scott Black, MD, Kentucky Medical Association; Annie Williams, Hazard Clinic; Rebecca Fletcher, Hazard Clinic; Karen Boyd, Roche Pharmaceuticals; Greg Brown, Lederle Pharmaceuticals; Peggy Caudill, SKYCAP; Bob Harris, Data Futures; Jane Bruce, citizen; Dianna McClure, citizen; Susan Walls, Kentucky River Area Development District; Stacie Abner, Kentucky River Area Development District; Marie Alagia Cull, Cull, Haydon, & Vance; Terry Smith, CHA Health; Phil Peters, American Association of Retired Persons; Brandon D. Smith, State Representative; Eva Curry, Appalachian Research and Defense Fund of Kentucky, Inc. Legal Services; Peggy Roll, Kentucky River Area Development District; Ida Elkins, Dr. Auya’s Office; Vivian Caudill, Hazard Appalachian Regional Hospital; Les Rogers, Appalachian Regional Hospital Home Services; Lowell Jett, CHI; Anthony Warlock, MCHC; Leslie Shockey-Caudill; Don Dunn, Appalachian Regional Hospital; Scott Miller, TAP; Barry Martin, Mountain Comprehensive Health Corporation; Treva Haley, Appalachian Regional Hospital; Charles Hensley, Hazard Appalachian Regional Hospital; Sean Cutter, McBrayer, McGinnis, Leslie & Kirkland, Lyle Snider, University Center for Rural Health; Russell Barker, Harlan Appalachian Regional hospital; James Wetmore, CHS, Office of Inspector General, Audits; Marty White, Kentucky Medical Association; Mark Birdwhistell, CHA Health; Melodie Shrader, Kentucky Association of Health Plans; Arlene Jones, Kentucky River Area Development District; Pat Caskey; Janet Murray, ARDF, Lara Lesle, Astra Zeneca; Eleschia Jent, Hazard Appalachian Regional Hospital; Phyllis Smith, DVR; Robert Stockton, Appalachian Regional Hospital Hazard; Jane Bowen, KRCC; Ruth Woolum, HPCCM; Loyd Kepferle, University of Kentucky; Gerry Roll, Harlan/Perry County Community Ministries; John Burkhart, Data Futures; Elmer Whitley, University of Kentucky; Karen Main, University of Kentucky; Annie Fox, Harlan County Health Care; Tammie Roberts, Horizon Adult Health Care; Melinda Burchett, American Health Management; Robin Martin, American Health Management; Melissa Cochran, SKYCAP; Dennis Chaney, Morgan County Appalachian Regional Hospital; Carrie Lipfud, Surgical & Family Dentistry; Dan Fitzpatrick, Appalachian Regional Hospital, William Miller, Appalachian Regional Hospital; H. Fred Howard, Dentist; Barbara Thomas, American Health Management; Peggy Smith, OLBH; Bill Doll, Kentucky Medical Association; Jan Gould, Kentucky Retail Federation; Peter Hasselbacker, University of Louisville, Marybeth Crouch, Doral Dental; Prentice Harvey, Norton Health Care; Frances McGraw, Medicaid Services; Helane Miler, Abbott Laboratory; Karen Thomas Lentz, Johnson & Johnson; Darlene Harris, Kentucky Medical Services Foundation; Joe Harrison, Kentucky Medical Services Foundation; Marcia Atwell, Kentucky Medical Services Foundation; Greg Pope, Kentucky Medical Services Foundation; Gwen Colliver, Kentucky Medical Services Foundation; Angie King, Kentucky Medical Services Foundation; Becky Percx, Kentucky Clinic Administration; Natalie Elliott, Kentucky Clinic Administration; Kevin Caudill, Kentucky Medical Services Foundation; Terry DelBosco, Kentucky Medical Services Foundation; Lydia Withrow, Ky Telecare; Gail Shearer, EMRMC; Margaret Love, University of Kentucky Family Practice; Emery Wilson; Tony Goetz; Mike Jackson; Chris Wilson; Bobby Rogers, Rich Seckel, Craig Clough; Libby Carter, Department for Medicaid-KenPac; Jay Narola, Psychiatric Center; Phil Powell, Pfizer, Nancy Lane, Appalachian Regional Hospital; Anne Joseph, Kentucky Task Force on Hunger, Dr. Michael Rie, University of Kentucky Medical Center; and Dr. Yalamanchi.  


LRC Staff:  Barbara Baker, Robert Jenkins, Eric Clark, and Cindy Smith.


The minutes of the June 29, 2001 meeting were approved without objection.


The first item on the agenda was an overview of the Southeast Kentucky Community Access Program (SKYCAP), experiences with their case management program and management information system for tracking clients, by Gerry Roll, Executive Director, Hazard/Perry County Community Ministries, Ann Fox, Executive Director, Harlan Countians for Health Community, Fran Feltner, RN, Director of SKYCAP, and Karen Main, Deputy Director, UK Center for Rural Health and Principal Investigator for SKYCAP.  Ms. Roll said SKYCAP is a community accessed program and is a short-termed federally funded initiative.  The University of Kentucky acts as the facilitator between Harlan and Perry counties.  The goal of SKYCAP was to get the community on board by involving all the partners.  Ms. Fox said there are two components to the program: (1) a comprehensive MIS system; and (2) the case management component.  They are trying to use lay health providers, which they call family health navigators.  She explained that there is a national trend toward the use of lay healthcare workers, because there is an increase in accountability, and it is more cost effective.  The referral system is a comprehensive system, with 4,000 folks currently in the system; 286 are in case management with priorities given to ambulatory diseases.  SKYCAP refers individuals who are uninsured or underinsured to physicians who will provide free care.  They also assist patients in accessing the free prescription drug program provided by drug manufacturers.  When using case management, the emergency room visits, the utilization of primary care providers, and the need for medication has decreased.  Next, Fran Feltner discussed the Management Information System. This system permits the navigators to view patients’ medical records in order to track emergency room and doctor visits. They not only look at the health care they are receiving, they look at what type of homes they live in, what kind of water they have, if they have air conditioning, etc.


Ms. Fox said SKYCAP is a federally funded infrastructure program, and does not have continuing ongoing funding.  This model is one that is very user friendly and applicable to the whole community.  It may be something that the state would like to look at as a model for the Medicaid program.  One-third of the population in Harlan County (10,000) are Medicaid eligible, and almost one-third (9,000) of the population in Perry County are Medicaid eligible.


Representative Burch asked how many doctors are in the system.  Ms. Roll said about 60 right now.  Representative Burch asked if that takes care of the 1900 patients.  Ms. Roll said right now that is their our referral network.


Representative Coleman asked how many patient there are now.  Ms. Roll said there are close to 4,000 in the system now.  Representative Coleman asked if they were uninsured.  Ms. Roll said they are uninsured or underinsured, meaning they could have just Medicare and their monthly prescriptions run more than their income.  Representative Coleman said, assuming that we are talking about 27,000 people in Perry County and 9,000 are Medicaid recipients, about 30,000 in Harlan and 10,000, are Medicaid recipients, so we are looking at 57,000 total population in the two counties, 19,000 are Medicaid eligible, so the difference is 36,000.  He asked how many people they are coming on line with, if they think that is a low number, and how many people would be insured.  Ms. Roll said there are 5,200 under or uninsured clients in Harlan, and there is 5,000 in Hazard, Perry County.


Representative Coleman asked if they call KASPER or ask for a KASPER report if they suspect that a patient is doctor shopping.  Ms. Feltner said that has not come up yet.  Representative Coleman said maybe that would give them a better feel for that person outside the system.  Ms. Feltner said they try to educate them to the point where they pick one provider.  As a follow-up, they make two phone calls a month and two home visits.  Sometimes it is more than that, according to the severity of the client.


Representative Nunn asked if the profile pages are uniform for every person that is enrolled.  Ms. Roll said yes.  Representative Nunn asked if the health navigator is part of the program or if it encompasses other programs such as Kentucky Homeplace.  Ms. Fox said that the navigators are part of SKYCAP.


Representative Nunn asked where they are getting the referrals.  Ms. Roll said from hospitals, health departments, schools, social services department and homeless shelters.


Representative Nunn asked how Kentucky Homeplace fits into what they are doing.  Ms. Fox said they actually refer to Kentucky Homeplace and Kentucky Homeplace refers to SKYCAP.  We do more of the management care system and they refer to us for these specific diseases, but we do confer back and forth to each other.


Karen Main said Homeplace is more of an in and out program.  Homeplace teaches people regarding a specific problem such as how to access transportation to get to the doctor or how to fill out the forms for free drugs.  Homeplace also has the same management information system as SKYCAP.


Representative Nunn asked about their federal grant, and where are you all headed.  Ms. Roll said that this program was initially presented in the Clinton administration as a program that would go for about five years to help communities built an infrastructure.  For some reason that has not been done.  At the end of the first year, the federal government said it is no longer available.  SKYCAP was one of the original 23 nationally funded sites.  She stated that SKYCAP is the only one of the 23 nationally funded sites that actually did what they said they were going to do.  SKYCAP is going to receive a reduced amount of funding to continue for the next year.  She explained that this leaves very little time to figure out how to best use what has been learned and built in this state to do a better job of managing, not just our Medicaid recipients, but indigent people as well.  It may be an opportunity for us to combine resources and look at Harlan and Perry counties as a demonstration project to see if Medicaid could be managed across Kentucky in this way.


Senator Mongiardo asked about the flow of the federal dollars and what is paid for in the system.  Ms. Feltner said it was to build the  MIS system and to pay for the navigators.  Ms. Roll said there are some costs to maintaining the server and the site, but the hardware, software, and all development costs came out of the grant money.

Representative Nunn asked about the number of navigators.  Ms. Fox said there are currently five in Harlan and four in Perry County.


Representative Nunn asked if they could share their budget with the members for informational purposes.  Ms. Roll said the cost of having a navigator is from $25,000 to $30,000 versus the cost of a registered nurse or case manager probably in the $60,000 range.


Representative Bather asked about the capacity of their information system.  Bob Harris, CEO of Data Futures said the capacity of the server was bought with growth in mind.  The capacity of the server will handle all of the projected folks who may be in the two county area, so the physical capacity of the server is not an issue.  Since the initial installation, enhancements have been added to the system that will allow upgrades.  The capacity is there, but there is the issue of staffing considerations.  As more people are serviced, there is a need for more case workers.


Representative Bather asked what kind of geographic area could they manage if they had the money.  Ms. Roll said their original thought was that they could encompass that whole Southeastern Kentucky region.  The entire Region 8 Medicaid service area was hopeful.


Representative Bather asked what it would cost to service Region 8.  Ms. Roll said they already said that FHN cost in the $25,000 range, and they have nine.  To try to serve just the Medicaid population in Perry and Harlan Counties, they would probably need six.


Representative Bather asked for a proposal from the group, and they said they could get that together for him.


Representative Coleman asked about the amount of their grant.  Ms. Fox reported that the initial grant was almost one million dollars.  Out of that there was an indirect cost of 24 percent to the University of Kentucky which came off the top.  The actual subcontract out to the community partners are $280,000 in each county.  The field staff cost community ministries about $275,000 to $300,000 a year.  That keeps those four navigators out there and also helps with the free clinic sites.


Representative Bruce said that he is interested in saving the state money, and asked if they  have an idea of what was saved the last year they were in operation.  Ms. Feltner said not as of yet.  As cases start to close, they can give a report on how much was saved.


Representative Bruce asked if many of their patients are Medicaid recipients.  Ms. Roll said that none of their patients are Medicaid patients.  All of their patients are uninsured.


Representative Burch asked how they protect the confidentiality of the people.  Ms. Roll said there is a signed consent form, and they go through all the confidentiality steps that you would in a regular medical record.  There are only specific people that have security rights into the system.


Representative Burch asked what they do about oral health.  Ms. Roll said they have signed on some dentists in this program to do free care for indigent people.  In the next year, they plan on addressing the oral care of these clients.


Representative Burch asked if the health department helps in regard to oral health in any way.  Ms. Roll said they are one of the partners, but at this point none of them have dental clinics.  There are TANF funds available to help folks for the one time events like that, many people just do not know how to access those resources.

Senator Mongiardo asked how they get free medications for patients.  Ms. Feltner said each pharmaceutical company requires different things.  Ms. Fox said it is about educating them on how to access the resources that are available.  They have also utilized Kentucky Physician Care to fill the pharmaceutical needs of clients for one year as long as they are being seen by that doctor, which is also a tremendous amount of savings in terms of prescription drugs.


Representative Coleman asked if they work with Hospice for the patients who are terminally ill.  Ms. Roll said that Hospice is a partner.


Next on the agenda was a progress report from the Governor's Executive Steering Committee on Medicaid.  This steering committee has been meeting with provider groups regarding ways to change the Medicaid program.  This information was presented by Ann Marks, Deputy Secretary for the Cabinet for Health Services. During the past eight months she has also served as the Interim Director of the KENPAC Division of the Department for Medicaid Services.


Ms. Marks said KENPAC is a primary care case management model.  Kentucky historically had a very well-respected model known as KENPAC.  After no success in doing the regional models outside of the Passport region, known as Region 3, Kentucky obtained permission to continue with the primary care case management model.  This model involves establishing a physician primary care provider, which may be referred to as a gatekeeper model for the Medicaid recipients.  The KENPAC Department has been reorganizing to be able to respond as a true managed care entity statewide.  It is that effort that they have met with many provider groups to have question and answer sessions about how to approach and get input about what would incentivize them to not only serve this population, but be partners in achieving benchmarks in approving quality care.  She stated that they have been looking at the staffing that is required to operate the Medical Managed Care Division known as KENPAC. They have moved forward with placing registered nurse consultants into communities outside of Frankfort.  One of the requirements in employment of these individuals is that they actually are residents of the communities, and have practiced in the communities.  They are seeking nurses with Medicaid experience if they were available.  These nurses are not case managers. It is their first step into the community of engaging a relationship between the KENPAC Program and the primary care case managers.  To date they have been well received in the communities, not only by the physicians, the nurse practitioners and the local health departments, but by the recipients as well. 


The KENPAC program has a toll free line that has actually touched over 40,000 recipients of the 69,000 to help them into the KENPAC program, start the educational processes, explain the importance of having a medical home and then actually help with the selection of a primary care physician in cases where the recipient does not have one.  The nurse consultants are being used to help stabilize this population so that they can achieve a successful match for the rest of the 25,000 that they need to touch.  The Department is looking at the reorganization of the KENPAC plan.  The same management staff that oversees the Passport Health Plan will be working with the KENPAC plan so that managed care can be approached by linking the data and the benchmarks statewide.  She stated that they are creating a division of managed care. They hear that if KENPAC is going to be successful, there must be a very active role with the recipient education, there must be timely and clear decisions made regarding benefits or any exception processes.  They have asked to increase incentives for prevention.  If healthcare costs are going to be controlled, the focus needs to be on the preventive side.  They have been asked, and are considering, how to have better access to medical specialty advisors especially in relation to the diseases that we will need to manage from a primary care standpoint.


Representative Coleman asked about the responsibilities of UNISYS.  Ann Marks said UNISYS is doing an excellent job from a Medicaid Management Information System standpoint.  UNISYS is the claims payment entity, and it is through the claims payment that data is extracted.  It has to go to another level to take the data that is very timely into provider type report.  It is actually taking the data that UNISYS collects and puts it into user friendly reports that mean something to a provider on a local level.  That is not part of the UNISYS contract.


Representative Coleman asked if the Cabinet is moving in a direction to work with KASPER.  Ms. Marks said they are.  Representative Coleman asked where they are on that.  Ms. Marks said the Cabinet works closely with trying to do the profiles of users that surface from high utilization from Medicaid.  From a KENPAC prospective, the Cabinet can start to profile both, for not only narcotic drugs, but for any type of medication or any type of service even if it is just emergency room visits.  They need to start tracking overutilization and underutilization as well.  A good managed care entity will help establish some parameters and study those.  They are making a very big effort in the KENPAC division to look at individual recipient areas where there is a  high user population.


Senator Mongiardo asked what data is received from UNISYS.  Ms. Marks said they get volumes of reports from paid claims.  You can get reports on any type of diagnosis for which claims are paid.  She said they are getting tons of data primarily related to paid claims data.  They are also getting pharmacy data in very real time because they have point of service pharmacy.  Information is available as soon as the pharmacist fills the prescription for a Medicaid recipient.


Representative Bather said he and Senator Mongiardo have asked for baseline data, not necessarily the reports, but the baseline data from the claims report.  He said they really need the UNISYS output, then staff can begin to analyze the information.  He said he is getting frustrated because there were commitments made to get data to the member four or five months ago, and to date not one page has been seen.  Ms. Marks said she will take those comments back to her office and see where they stand in putting together the data request.  She said they have furnished some data to the Medicaid Managed Steering Committee, and she believes in some of the presentations they have overviewed some aggregate data.


Representative Bather clarified the request.  He said the members have been provided a report that says x number of dollars are being spent.  The Committee is looking for the output that you have so that LRC staff can begin to get a real understanding of the numbers. There have been some questions over the past year about whether the numbers have changed, and if budget estimates have changed.  We do not want to hire more consultants, and do not need to manipulate the data.  He asked when the data would be received.  Ms. Marks asked Ellen Hesson, Interim Commissioner of the Department for Medicaid Services to respond.  Ms. Hesson said all the data that has been requested will be to the members in the next two weeks.


Representative Bruce suggested that the committee work with the Cabinet staff to come up with something in January or February that would help solve the problems that we have in Medicaid, because it will take a joint effort to solve the problem.


Senator Mongiardo said that SKYCAP is using lay people at probably half the cost, and asked if there is a reason the Cabinet is using RN nurse consultants and are not even doing case management, but just coordination of care.  Ms. Marks said the nurse consultants are actually serving as managers for Medicaid for a large population on a regional level.  They are actually in those communities to solve very serious challenges between providers and large population groups.  Occasionally they could become involved in a case management case but this is not representative of a case management model they are describing, so it is really not the same thing that Skycap does.


Senator Mongiardo asked how their RN education benefits them in coordination of care versus where Skycap is using non RN's at a lesser cost.  Ms. Marks said to do their job would require a very thorough knowledge of all health care systems and the health care business processes, as well of what it takes to actually operate the health care systems in those communities.


Senator Mongiardo asked how many times in your memory has someone higher up in Medicaid traveled to Eastern Kentucky to address a group of providers other than this trip today.  Ms. Marks said she knows of no instance where the Cabinet has been invited to testify that they have not attended.  She said she has made three visits to Eastern Kentucky during the past four months as Deputy Secretary.  Most recently she was in Somerset with the Rural Health Care Association.  She has also addressed other meetings with the local health departments and other organizations, and she stated that Secretary Morgan and Kathy Kustra have been in Eastern Kentucky, Western Kentucky and all over.


Senator Mongiardo said there has been improvement.  He said several months ago several physicians from Eastern Kentucky came to Frankfort to meet with the former Cabinet Secretary.  They asked the former Cabinet Secretary about how Oxycontin affects or impacts Medicaid.  The answer was very startling.  He said it is not a Medicaid issue.  Anyone in Eastern Kentucky knows that it is a major Medicaid issue.  Medicaid pays for the emergency room visit, pays for any x-rays, CAT scans, all the doctor's visits.  It really outlined the problem in the Medicaid system that there is top down management of Medicaid, but there is no feedback loop.  That loop has to be developed.  Senator Mongiardo said one of the major reasons he wanted to bring the meeting to Hazard is because the providers need to be heard.  He continue by saying that because if you don't listen to the providers and find the problem at the source, there is no way to fix the problem in Frankfort.  He suggested developing a feedback system.


Next on the agenda was a presentation from Mark Birdwhistle, CEO of CHA Health regarding the private insurance market, approaches to provide quality, cost effective care.  Mr. Birdwhistle said that private insurers are very much dependent on technology, both for internal management of their plans as well as for external communications.  From an external standpoint, they give feedback to the providers by providing report cards to physicians that show them how they are doing on pharmacy prescriptions and how they are doing on ordering of high cost technologies.  He said from an internal standpoint, there is a need to have information to forecast cost trends.  He said that is one of the areas where there needs to be some improvement.  He said that an organization must have accurate eligibility information, which is the life blood of any managed care organization.  He said that he did not think he could present a better case for technology than what was heard from the SKYCAP presentation.  What they are doing is how you manage the care, and it is true care management. Technology is piece number one.  Piece number two is medical professionals.  He said there have to be medical directors and pharmacists.  He has two full-time medical directors just to manage a commercial plan in Central and Eastern Kentucky.  They  look at the report cards and advise on policy procedures.  CHA and the other health plans in the state have found success in disease management for asthma and cancer.  He stated that clinicians need to be looking at regional demographic factors and making determinations of what kinds of disease management programs are needed in certain locations.  He said one thing that is not real popular with providers are prior authorizations for high cost technologies.  Those things are bothersome to the providers, but they are cost effective.  Prior authorizations need to be in place and continuously reviewed.  If it is not having any effect, get rid of it and try to go after something else.  That further reinforces your demand for data  His third item was flexibility and network management.  He said it is very difficult at the state level to have flexibility in contracting with providers.  From a managed care perspective, it is important to be able to negotiate favorable rates, discounts, and service standards.  Cost based reimbursement is non existent in commercial markets.


Mr. Birdwhistle also discussed pharmacy management. He said from the administrative side, there needs to be pharmacy benefits management.  From the clinical side, there needs to be a clinical pharmacist sitting down with a physician or a PA, and showing them their utilization and their costs.  He said although these approaches may seem very simple, there is a lot of hard work involved and it is continuously changing.


Representative Bather asked Mr. Birdwhistle about his thoughts that some states are trying to pull the three markets, the uninsured, publicly insured, and privately insured, together.  Mr. Birdwhistle said there are definitely lessons that can be learned from looking at things from all three perspectives and finding out the best and incorporating them together.


Senator Mongiardo asked if CHA would consider opening the formulary to have all drugs available.  Mr. Birdwhistle said CHA's formulary is fairly open.  He said if you have a medical need that can be met no other way, you can actually get to the drugs, but they would not have an open formulary to everyone for everything.


Senator Mongiardo asked if co-pays work for CHA, and if he believes having been in Medicaid and now in the private insurance industry, if a one, two, three dollar co-pay would be something that should be looked at in Medicaid.  Mr. Birdwhistle said yes, but he was not an advocate of co-pays previously.  He reported that when he took over CHA, they did not have a three tier co-pay with variable co-pays.  They have implemented co-pays and he has seen the difference that these make.  Senator Mongiardo asked if it does work.  Mr. Birdwhistle said it does work, and it is a tool that is effective.


Senator Mongiardo asked what kind of rebates CHA gets compared to Medicaid rebates.  Mr. Birdwhistle said it is between four and six percent. The Medicaid rebate is considerably higher than that.


Senator Mongiardo asked if the four to six percent is from average manufacturer's cost or from average wholesale costs.  Mr. Birdwhistle said theirs is from average wholesale.  He thinks Medicaid’s cost is from average manufacturers, but they may not be comparing the same things.


Next on the agenda was testimony from East Kentucky Physician's Provider Advisory Group.  This is a group of physicians throughout Eastern Kentucky who have been meeting over the past several weeks to discuss Medicaid issues.  It is a group of specialists and primary care providers from all regions of Eastern Kentucky.


Dr. Syamala Reddy said the group would like to share their problems, concerns, and some of their thoughts on how Medicaid problems can be worked out together.  He said he has been in practice for over 21 years and has 29 or 30 Medicaid patients.  One thing that strikes him very hard is the cost of the pharmacy.  They are caught in the battle between providing quality care without all the tools that are needed for Kentuckians.  He said the role of the primary care physician is still very poorly defined in the Medicaid system.  A big item missing in the system is the informational system.  Emergency room usage is very poorly defined and poorly guarded.  The role of the primary care clinic and how effective they are is still not understood.  Transportation and how the system provides expense for transportation is a concern.  Another concern is health education.  He said all these cost saving measures can be effective only if we have a very close relationship between the primary care physicians and the other providers.  The model system should be like something like the health system.  The primary care physician is the one that is intimately involved in the day-to-day health care needs of an individual.  The effectiveness of the system depends upon how closely the primary care physician, the specialists, and all the other health care workers can work together. The primary care physician's role as a gatekeeper should be the one that controls and delegates the care in all aspects of patient care except the dental, OB/GYN, and pediatrics.  An incentive for providing all the skeletal work and the informational systems and delegating those responsibilities and incentives for the primary care physicians for doing their jobs needs to be established.  In their view the informational system should contain all the health related matters and the primary care physician should be the custodian.  He described a model system as being on where the physician would maintain the medical information and each recipient would carry a card that contains their names, their identification number, and essential medical information.  This information should be accessible to the health care providers that are working within the system.  Currently there is no incentive for doing the job right.  In their view the information system would be very effective and it certainly could improve the quality of health care in a timely manner and result in cost savings in the long run.  Currently there are several primary care clinics.  He said he does not have in-depth experience or knowledge about the primary care clinics, but there is a wide variation in the infrastructure for the primary care clinic.  The costs start as low as $16.80 for a patient visit in a rural area and go as high as $273.30 in big cities such as Lexington and Louisville.  He suggested a Medicaid board consisting of primary care physicians and equal number of specialists, other providers, hospitals and also beneficiaries.  This board should work as a liaison between the providers, recipients, and the state legislature.   With this kind of information system, there should be periodic updates of all the performances of all the providers to see how the job has been done.


Next, Dr. Mitch Wicker, general internist, said he has been asked to do is speak specifically about ER utilization and overutilization.  According to the Medicaid Department, the Medicaid program spent between $230 and $274 million dollars on all physician non-emergency room fees last year.  The total spent on emergency room physician fees in the past year was $90 million dollars.  In his office or any other physician's office, the visit is a mid-level visit.  Visits are divided into five levels and the highest that Medicaid pays the office is $27.  The average amount paid to the hospital, not including the emergency room physician fee, was about $225 per visit for facility fees and services.  In the United States, outpatient ambulatory medical care at doctor's offices is the predominant method of furnishing health care.  According to the CDC National Ambulatory Medical Care Survey, only about 47 percent of emergency room visits were classified as either urgent or emergency.  What this means on a practical standpoint is that 53 percent of the total spent by Medicaid on emergency room physician charges alone wasn't necessary and would total almost $48 million dollars in physician charges.  This does not include the charges that go to the hospital.  He proposed provider and recipient education on a method to reduce or control inappropriate use.  He proposed outreach efforts to get the recipient into the primary care provider’s office to introduce the patient to the doctors, and to let them feel comfortable with the doctors would encourage them to visit the doctors instead of going to the emergency room.  A good idea would be to have an authentication 800 number such as 1-800 Call a Doc, Call A Nurse, Call A Insurance Company.  This would not be designed to forbid an individual from going to an emergency room; instead it would provide an authentication that the individual had contacted his or her designated provider or the 1-800 Call A Doc and received an agreement that his or her complaints or symptoms required an ER visit or that a viable alternative was suggested.  There are going to be times when people are truly too sick to call a 1-800 number and ask if it is okay. This is not meant to be punitive, this is meant to be educational.  Some other incentives would be to pay a little bit more to the providers to extend office hours.  Right now there is an $18 differential to go to the emergency room as opposed to your physician.  He also suggested incentive for preventative services.  He said his office utilizes mid level providers, nurse practitioners and physician assistants.  He stated that he also has done what Dr. Reddy suggested Medicaid do, which is invest in an information system that allows them to monitor care through automated and semi-automated reminders to patients and the staff for regarding preventive and ongoing care.  They have semi-computerized medical notes that allow providers in each facility to access records so if somebody from Hazard happens to go to a Jackson provider, they have immediate access to the notes and any emergency room visit profile. They also offer in office lab, and mammograms, so they can do these when the patient comes in.  They have a nurse coordinator who provides information to the patient and providers.  This helps to keep them in communication with their patients without actually having to spend a lot of time doing it.  This system is designed to increase the information, get the patient in, and avoid emergency room visits.


Representative Coleman asked if 53 percent of all Medicaid visits are inappropriate.  Dr. Wicker said 47 percent were classified by the CDC survey as being truly emergent, it does not mean the need for care was inappropriate, but it was an emergent or urgent.


Representative Bather asked what Dr. Wicker’s thoughts were about developing a system that is integrated with providers and the people who pay, whether it is government or private insurance companies, to begin to work toward solving the problem together.   Dr. Wicker said that there are so many different information systems.  Medicaid is sadly deficient in their information system and they acknowledge it.  There has to be a way to share information through a common mediator.


Senator Mongiardo asked if a physician would be available to talk on the 800 line.  Dr. Wicker said the physician would have that option.  The doctor could be asked if they can be called after hours.  Technology now exists for calls to roll over to an answering service when the doctor is out of the office.  There are many options.  Because physicians are so different, there needs to be a menu to choose from to fit each physician.


Senator Mongiardo asked if the center could possibly be at a local hospital where the doctors work.  Dr. Wicker said it could be in a trailer up a hollow somewhere, just as long as it exists.  Senator Mongiardo asked who would coordinate it.  Dr. Wicker said the local medical societies or groups of physicians.


Next, Dr. J. D. Miller, general internist from Harlan County, spoke about controlling pharmaceutical costs and improving communications.  He said pharmaceutical costs are rising at a rate faster than any other aspect of health care today.  The costs of many drugs have skyrocketed in the U.S. while the same drugs cost much less in neighboring countries.  Runaway pharmaceutical costs are the single biggest factor in Kentucky Medicaid's budget crisis.  Other states are contracting with pharmacy benefits managers to deal with pharmaceutical costs.  He thinks there is a need for a meaningful drug formulary.  A meaningful drug formulary will require legislative action to remove the existing requirement that all new drugs be included in the formulary.  Pharmacy costs could make up a major portion of next year's projected Medicaid budget deficit.


Next, Dr. Miller discussed improving communication.  Improved communication can help control costs by sharing information between physicians as well as between other providers and by the state providing timely feedback regarding physician practices.  Sharing information will decrease the need for duplicate testing and referrals.  It will also decrease prescribing of duplicate drugs as well as conflicting drugs.  Sharing information will aid in physician awareness of patient use of narcotics.  Providing timely feedback regarding physician practices will improve physician awareness of their practice and provide an opportunity for modifying these.  However, this feedback must be up to date and must be relevant to the practices the state plans to monitor.  He suggested that the Department for Medicaid Services provide monthly reports to physicians on the parameters that the state will be monitoring.  He and the other doctors are also endorsing the idea of an information system that can be accessed by physicians and other providers as a means of sharing information, and they are also suggesting that the state give strong consideration to providing incentives for moving toward electronic medical records as a means of more completely sharing information.


Representative Coleman asked if Dr. Miller currently uses the KASPER system.  Dr. Miller said that he does.  Representative Coleman asked if he uses the reports, and if they are good.  Dr. Miller said it was very effective for a while.  It has gotten so far behind now in terms of getting timely information back that it is less effective; but it is still helpful enough that  he uses it.  Representative Coleman asked how far behind the information is.  Dr. Miller responded that the information is four to five months behind, prior to the time he asks for the information.  Representative Coleman said that when the KASPER program system was set up in 1998, the state was looking at about 5,000-7,000 reports a year.  Because of the recent crisis situation, the system is online to do about 75,000.  The KASPER system is a very good system, but it is not designed to do what is being asked of it at this point.


Next, Dr. Yalamanchi, a Cardiologist from Hazard talked about the supplies and drug costs to the offices.  He said they use drugs in the office to diagnose some of the conditions, like coronary artery disease and chest pains.  Medicaid does not reimburse all services to the physicians, but they reimburse for these if done in a hospital.  All other carriers, including Medicare and private carriers, reimburse the cost to the physicians.  For most of the Medicaid patients, they cannot provide those diagnostic services in the office.  Sometimes they have to refer the patient to the hospital to have these tests done.  He  also said that some of the cancer chemotherapy drugs are very expensive, and those costs also are not reimbursable when these are delivered in a physician’s office.  If these costs are not reimbursed, they are going to be a financial burden to doctor's practice.  Patients may subsequently have to go to the hospital or other facilities to obtain these drugs.  Also, when the patient has a tracheotomy tube that needs to be changed, it cannot be done in the physician’s office for the same reason, because the supplies are not reimbursed.  They have to go to the emergency room to be taken care of because it cannot be done in the physician's office.  The same for orthopedic surgeons removing casts or placing casts on fractures is an issue because of reimbursement for supplies.


Next, Nancy Lane, Vice-President of Planning and Development at Appalachian Regional Healthcare System, a system of nine hospitals, 19 clinics, 13 home health agencies in 19 different locations between eastern Kentucky and southern West Virginia provided testimony.  Most of their locations are in eastern Kentucky.  Collectively they have 64,000 emergency room visits a year and have approximately 250,000 clinic visits a year.  They employ approximately 61 physicians, and have a total of  4,800 employees.   She said her agency is very supportive of the SKYCAP program of lay case managers.  In the ARH home health program, they have expanded lay case managers for the more chronically ill and are demonstrating for the UMWA a major savings.  She said few programs are perfect in their design, but their early experience from the UMWA is very positive.  She said for the past nine months ARH has been taking a very hard look at what is happening in emergency rooms.  Their data base is fairly substantial, 164,000 visits, with 60 percent of those visits were for pain, 10 percent were for trauma or accidents, and three percent were for primary care.  They noticed a peak of emergency room usage around the lunch hour and then as physician's offices started to close.  Her agency is  working to see if changing some of the doctor's hours could absorb some of the peak.  They are happy to have their primary care program under Medicaid.  Some clinics, where the payment per visit is down around $15 or $16, are staffed by a nurse practitioner and that is about all the service that is there.  Others with higher costs include pharmacy, x-ray, laboratory, physician visit, and nursing coverage. She said they are learning that ARH is a safety net provider for many people who would be Medicaid eligible, but because of the locations of the Medicaid offices, they are not signing up.   She said it would be easier to qualify more people who are eligible for Medicaid if there were more offices where patients could apply.  She said they are concerned about malpractice, and the cost of malpractice is going up again.


Representative Bather asked why the malpractice charge is getting higher.  Ms. Lane said there are fewer physicians so they collect less premium.  One malpractice case makes a big dent in the total of the premiums collected.  If there are a few large malpractice cases in an area with a scarcity of physicians, it makes a big peak on the percentage chart.


Ms. Lane said the electronic medical records programs have an initially high capital cost.  They have payoff down the road and as a system they definitely want to move in that direction, but the threshold startup costs are high.


Next on the agenda was testimony from Dr. William Black, representative of the Kentucky Medical Association and chairman of the Medicaid Technical Advisory Committee on physicians' services.

Dr. Black said KMA is extremely interested in the future of Medicaid.  They feel that the frontline health care providers who serve Medicaid patients and the recipients who receive those services are the ones who can offer some of the best advice on how to make the program better. KMA stands ready to do those things necessary to make the program better and more efficient.  They welcome the opportunity to offer suggestions about Medicaid to the legislature or to the administrative and executive branches.  Dr. Black said there have been times where the KMA has felt somewhat frustrated with their interaction with Medicaid.  There have been times in the past that they have felt that their suggestions have fallen on deaf ears. They worked closely in the past to develop, establish, and implement the KENPAC program.  Years later it was abandoned in an attempt to set up the managed care programs in the various regions across the state.  Early on, while that process was being designed and implemented, KMA expressed its concern that there was not the backing or the technical know how to put that kind of a program together.  Now, in retrospect, their fears about that program are proven.  It did not work and they feel that they were justified about their concerns at that time.  Now Medicaid is promoting the KENPAC program as a potential model for improving general delivery of health care to everyone in Medicaid.  KMA firmly believes that KENPAC is a care delivery model that can work and they are willing to assist and share in any way that they can to better the KENPAC  program.  The Association has been involved in Medicaid for about 36 years now, and they believe they have earned the right to speak for patients and physicians alike in trying to improve the KENPAC program and Medicaid.


Next, Dr. Black gave some examples of issues discussed with the administration of Medicaid.  These included the following:  (1) the establishment of a medical home for Medicaid patients; (2) the use of nurse consultants around the state by the Medicaid department; (3) the need for additional information to be communicated to primary care physicians by Medicaid; (4) the need to decrease emergency room utilization.  He said this is just some of the concerns that have been discussed with the Department for Medicaid Services.  The Department has demonstrated willingness to listen and have realized that this is tough problem and there is no one solution.  He also said that KMA discourages co-pays for physician services, because they are simply not collectible for a number of reasons.  The burden is put on the physician if the reimbursement is lowered by the amount of co-pay, because they will end up accepting less reimbursement.


Representative Coleman asked how behavior modification has been developed in the physician base to properly prescribe prescriptions when needed instead of just thinking certain drugs are great.  He also asked how the physician can be educated regarding prescribing practices.  Dr. Black said KMA is not opposed to a formulary and they are not opposed to prior authorization providing that prior authorization is not cumbersome.  Medicaid had prior authorization several years ago and that involved telephone prior authorization.  If that process can be streamlined, they are not opposed to that at all.


Representative Coleman asked what types of incentives they think would work for enhancing KENPAC to reduce the ER visits, to increase preventive care, and screenings.  Dr. Black said the biggest incentive would be to those people into their primary care physician's office for that first visit.  The sooner that can be done after enrollment in Medicaid and KENPAC, the better.


Representative Bather asked how KMA would feel about coming up with new strategies to get primary care on weekends, not necessarily 24 hour care, but outside the 9 AM to 5 PM, Monday through Friday appointments.  Dr. Black said that if the goal is to improve access to the home office and to decrease seemingly inappropriate emergency room utilization, there is no question that greater access to the primary care physician would decrease emergency room utilization.  He continued to explain that it is important to figure out how to get people in the primary care office on a more regular basis.  If that means extended hours, weekend hours, then those are good goals.  It is easier where you have groups of physicians that can share extended office hours.  There comes a point where there is not that much to gain with this approach.


Next, Dr. Michael Rie, a full-time intensive care physician and Associate Professor of Clinical Care in anesthesia from the University of Kentucky, spoke by video conference.  He said his proposal is very specific.  He suggested that Kentucky look at a multi-state buying group for pharmaceuticals.  He thinks that is the only way to get the attention of the drug companies to come to the table to deal with some free market solutions to the cost of drugs for the poor.  There needs to be a higher policy approach to this which is coherent across the system as opposed to the tremendous amount of money put in by the drug companies simply to obstruct the nature of such a group purchasing power by state governments as opposed to private purchasing groups.


Senator Mongiardo said there are many biotech drugs that are going to be coming out in the next few years and certainly even in the next several weeks or few months, which will cost anywhere from $10,000 to $15,000 per treatment.  That will shorten the ICU stay, but could be a major budget buster.  He asked if Dr. Rie was aware of these drugs that are coming out and asked what he thinks of their role in the cost to Medicaid.  Dr. Rie said Senator Mongiardo was referring to the Protein C drug.  The question with that drug is nobody knows the right subset of patients to whom it should be administered.  The right population that is going to need that drug isn't known at the present time.  If there are not going to be some kind of formulary restrictions, then a drug like that may encourage the termination of services, or the use of other drugs.  Senator Mongiardo asked if Dr. Rie was opposed to formularies.  Dr. Rie said he is not opposed to a formulary.  He thinks it is a form of rationing.  Intelligently done, it would make sense.


Next, Phil Peters, State Director of AARP, provided comments in regard to long-term care.  He said there are over 400,000 AARP members in Kentucky.  When the AARP members are polled, one of the things that continually comes up is a concern with long-term care is one of the things that is continually noted.  Long-term care is primarily provided in the broad sense by family members.  When looking at the institutional setting, long-term care is being paid for by Medicaid, and this is true throughout the country.  In every state there is a struggle to try to balance the amount of funds that are being spent on institutional care for long-term care versus home and community based services.  In Kentucky, that is the same situation as it is in the rest of the country.  The preponderance of the Medicaid funds are going for institutional care.  While it is recognized that care is very necessary and AARP is very concerned about the quality of that care, they also think there needs to be a counter balancing of an array of services to give people choices.  If they get to the point in their life where they need some help, there be programs for them to stay in their own homes.  AARP is also interested in Kentucky looking into a concept that several other states are using under Medicaid where elderly or disabled people are given control of their care.  This is called person centered funding.  This is an experiment that has been approved by HCFA and approved in several states.  AARP thinks a person with disabilities or the frail elderly who is trying to stay out of a nursing home should have control of their own care and be able to purchase services under some guidelines and structured programs. In looking at Kentucky’s Medicaid system, he does not think it is flexible or creative.  He think Kentucky should look at some of the flexibility and creative things that are being done in other parts of the country.  He said that 21 other states that have passed some sort of prescription drug program for older citizens and some of those have been based on combined purchasing pools.  Next, Mr. Rogers provided testimony regarding the value of home health services to the Medicaid recipient.  Mr. Rogers showed a video on home health services.


Senator Mongiardo asked how many visits Medicaid will pay for per day, and how much they cost.  Mr. Rogers said that is not limited and there is no cost right now.  It is cost based reimbursed, and there is a spread around the State of Kentucky.


The meeting was adjourned at 6:40 p.m.