Medicaid Managed Care Oversight Advisory Committee (HB 785)


Minutes of the<MeetNo1> 16th Meeting

of the 2001 Interim


<MeetMDY1> November 28, 2001


The<MeetNo2> 16th meeting of the Medicaid Managed Care Oversight Advisory Committee (HB 785) was held on<Day> Wednesday,<MeetMDY2> November 28, 2001, at<MeetTime> 12:00 PM, in<Room> Room 131 of the Capitol Annex. Representative Paul Bather, 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, Vernie McGaha, Dan Seum, and Johnny Turner; Representatives James Bruce, Jack Coleman, and Dottie Sims.


Guests:  James Millard for Equity Technologies; Fran Feltner and Sheree Bailey for the University for Kentucky Center for Rural Health; Dianna McClure for the Department for Medicaid Services; Pat Padgett for the Kentucky Medicaid Association; Mike Porter for the Kentucky Dental Association; Pete Walton for the University of Louisville; Bob Barnett for the American Pharmaceutical Council; Bob Esterhay for the University of Louisville; Marybeth Crouch for Doral Dental; Mason Butler for IBM; Peter Hassellbacker for the University of Louisville; Sean Cutter for McBrayer, McGinnis, Leslie & Kirkland; Prentice Harvey for Norton Healthcare; John Brazel for the Kentucky Pharmacists Association; Lowell Jones for Catholic Health Initiative; Ann Gordon for the Cabinet for Health Services; Marcia Morgan for the Cabinet for Health Services; Dr. Henry Goodman, physician; and Anne Joseph for the Kentucky Task Force on Hunger.


LRC Staff:  Barbara Baker, Eric Clark, Perry Nutt and Cindy Smith.


The minutes of the October 12, 2001 meeting were approved without objection.


The first item on the agenda was testimony from Medicaid recipients, recipient advocacy groups, and other interested citizens.  Fran Felter and Sheree Bailey from SKYCAP presented an update to the Committee on the numbers of participants in the SKYCAP program, and the impact of the program in terms of reduced health care costs.


Representative Bather said he wants to work to get state funding in order to expand the SKYCAP program in Eastern Kentucky.


Next on the agenda was a presentation on the use of information technology to improve quality of care by Janet Corrigan, PH.D, Director, Board on Health Care Services of the Institute of Medicine.  Dr. Corrigan reported that many studies document quality of care shortcomings.  There are large gaps between the care people should receive and the care they actually receive.  The current system of care cannot do the job, but changing the system of care will, and information technology must play a central role in the redesign of the health care system if a substantial improvement in quality is to be achieved over the coming decade.  The current model of health care delivery is based on face-to-face encounters, which are resource intensive, slow, and physician-oriented.  There are over 830 million face-to-face visits annually to physician’s offices in the United States.  Currently, only about 10 percent of physicians use e-mail to communicate with patients, and about 64 percent of health centers use some form of electronic communication with patients. She reported that benefits of e-health delivery would be efficiency, decreased cost, convenience, patient education, frequent monitoring of conditions, and self-documentation.  Possible risks would be payment, privacy, unreceived messages, untimely responses, unclear legal standard for malpractice, and jurisdictional issues.  Another benefit would be that consumer reminder systems improve compliance.  For example, mothers receiving on-line reminders regarding immunizations for their children, resulted in a much higher on-time immunization rate for the children.  Dr. Corrigan also reported that computerized decision support can improve quality and decrease costs by pointing out redundancies, suggesting alternatives, identifying errors of omission, emphasizing important abnormalities, and making guidelines accessible.


Representative Sims asked how the email part of the program will work.  Dr. Corrigan said email is one way the patient can communicate with the doctor or the nurse.  They believe that most people will have access to email, but they do not expect everyone to have access to email.  Not everyone will take advantage of this, but many people will use it.  It will decrease costs and help with the nursing shortage.


Senator Mongiardo asked Dr. Corrigan if she knew of anything available now or on the horizon that has the potential to reduce costs and improve quality as this type of system would have.  She said this is the only option, and it is number one on the list.


Senator Mongiardo asked if  funds would be available to support the program if Kentucky became a model for the nation.  Dr. Corrigan said she would hope so since there is a keen interest in the model that would be developed.


Next, Peter Walton and Bob Esterhay with the Department of Health Informatics at the University of Louisville presented information regarding the University of Louisville health information technology initiative. First, Dr. Walton said the University became aware that quality is a system problem.  In order to deal with a system problem, there needs to be a lot of information gathered about how the system operates.  They are in the process of proposing a School of Public Health and Information Sciences at the University of Louisville to be a compliment to what is going on at the University of Kentucky in regard to public health.  They will focus on (1) electronic health data; (2) research; and (3) surveillance.  He also said they have built a Louisville Medicaid Center Network (LMCnet), a fiberoptic communications channel between all the hospitals and the University of Louisville.  Dr. Esterhay identified the National Library of Medicine as a possible funding source for the Integrated Advanced Information Management Systems.     They have also been involved in three other areas which are (1) development of an electronic health record, a web-based patient registry; (2) disease surveillance, and electronic reporting; and (3) the Kentucky Telecare Network.  They have also managed the HIPPA consortium group for the Louisville Medicaid Center, dividing it into two pieces, the business and technology aspects.


Representative Bruce asked if they cooperate with Passport in Louisville.  Dr. Walton said they do.


Next on the agenda was a report on the New England Healthcare EDI Network by Greg DeBor of the Computer Sciences Corporation.  Mr. DeBor said healthcare has traditionally been slow to adopt electronic document interchange (EDI) and other forms of e-commerce, but recent changes are resulting in increased adoption.  Quantifiable benefits included administrative efficiency, direct financial benefit, potential reduction in write-offs, and potential improvement in collection rate on reworked claims.  Other benefits could also include customer satisfaction, infrastructure for future capabilities, audit trail available to track eligibility inquires and responses, and improved collection of co-pays.  Dr. DeBor provided some information relating to the New England Healthcare EDI network (NEHEN).  He said they receive a 700 percent return on their investment.  He said NEHEN is a consortium of regional payers and providers who have designed and implemented a secure and innovative electronic-commerce solution for reducing administrative costs in healthcare.  The key objectives of NEHEN are to address upcoming HIPAA compliance issues, reduce bad debts and other financial exposures by improving service efficiencies through EDI, shorten the elapsed time to achieve EDI at scale, and reduce the cost of EDI implementation through coordination and standardization.  The principles of NEHEN include open participation, low intrusion into individual participants IT agenda, participant value derived from transactions sent and received, and data ownership retained by participating organizations.  NEHEN is jointly-owned by the participating payers and providers.  Ownership is open to qualified payers and providers, as defined by HIPAA. Governmental and regulatory participation has been voluntary and supportive.  He reported the current status as: (1) newest members are expanding the network into smaller, more geographically dispersed institutions; (2) HIPAA deadlines are increasingly driving strategy and business planning; and (3) group has recently focused on building a better business community understanding of NEHEN. In summary, Mr. DeBor said that collaboration offers the following advantages:  (1) a potential for an “all-player” solution which offers the greatest potential for efficient, standard process; (2) shared development cost; (3) the clearinghouse can be minimized or eliminated; and (4) collaboration would maintain control and allow for low level of intrusion into individual business or information technology agenda.  He stated that collaboration attracts all major partners to a single venture, by coordinating implementation with common standards, providing technical infrastructure, and establishing a business forum for future initiatives and shared learning. 

Senator Mongiardo said there is not a central exchange system or server due to the cost factor, and he asked how the clinical data would flow.  Mr. DeBor said the first hurdle is that there is willingness.  Their gateway will work the same way on the clinical side as it does with the administrative functions.  Data is aggregated at each institution.  The same thing could happen when asking for clinical information.


Senator Mongiardo said there will have to be some type of central indexing system.  Mr. DeBor said there needs to be the same indexing method for the same resolution system at each point.


Next on the agenda was a presentation relating to the KY e-Health Network by Mason Butler, Public Sector Manager for IBM.  Mr. Butler said IBM employees 2300 Kentuckians, and they supply technology around the world.  They have decided to partner with industry specific companies that provide technology in the healthcare industry and other industries globally.  They have chosen to integrate the systems together.  In 1994, IBM started an initiative inside the IBM corporation to link together all the systems.  Since then, the ability to link and integrate has been extended.  One of the things they have been talking about is how to link all of the various entities together.  He noted the importance of a buy-in from a group of people that make up the public/private partnership.  They look at a holistic approach to lowering the time it takes to register a patient in a hospital and to process claims.  In some of their discussions they have found that in order for a system to be up and running, the membership has to be involuntary.  Furthermore, the standards to be adopted need to be open standards.


Representative Sims asked if information can be shared from one hospital to another.  Mr. Butler said that medical records could be shared securely.


Representative Sims asked about the cost of the information technology system.  Senator Mongiardo said there is not a cost estimate yet because the architecture is not known at this point.  No matter the cost, there will be a significant return on investment. 


Next on the agenda was an update on Medicaid by Kathy Kustra, Special Medicaid Assistant to the Governor, and Secretary Marcia Morgan of the Cabinet for Health Services.  Ms. Kustra reported that to date, the following has been accomplished: (1) SSI population has been added to KenPAC, Phase I; (2) Governor Patton issued an Executive Order for a Certificate of Need Moratorium; (3) Intergovernmental transfers have been aggressively pursued; (4) Program integrity for KCHIP and Medicaid programs has been assured; (5) Medicaid Services has been reorganized with divisions reflective of provider groups; (6) Hospital admission and length of stay criteria has been strengthened to reduce hospital inpatient utilization; (7) Prior approval process for home health has been initiated; (8) Presumptive eligibility or pregnant women has been implemented; (9) Rate validation process for nursing facilities has been initiated; and (10) Complete enrollment of SSI into KenPAC using auto-assignment for remaining population has been completed.  Ms. Kustra reported that the following were in progress: (1) Enhancement of post-payment, third party liability process; (2) Investigation of alternative procurement and/or reimbursement systems for incontinence products and enteral supplies; (3) Institution of modest co-pays for ER and, perhaps, brand name drugs purchases; and (4) Rate restructuring as necessary to achieve goals.

Next,  Secretary Morgan discussed the Impact Plus program.  She said the programs size was approximately $5 million for fiscal year 1998.  The expenditure projections for a status quo program are $31 million for FY 2002, $35 million for FY 2003, and $41 million for FY 2004.  A budget target for $28 million has been established for FY 2002.  The report of Program Review highlighted program design flaws which contributed to the exponential growth of the program, including (1) broad eligibility criteria; (2) federal entitlement requirements; (3) lack of effective utilization control procedures; (4) lack of uniform reimbursement rates; and (5) lack of effective program management.  Current Cabinet efforts to restructure the Impact Plus Program include: (1) redefining eligibility to focus on the populations most at risk for institutionalization; (2) redefining the services that are needed to transition children to and support them in the community; and (3) restructuring reimbursement methodologies.  The next steps include: (1) magnetic swipe card or web-based technology to replace the Medicaid card; (2) improve monitoring and management of Supports for Community Living programs; (3) control growth in adult day care program; (4) institute diagnostic related groups (DRGs) for hospital inpatient and a prospective payment system (PPS) for hospital outpatient; and (5) engage administrative services organization for Enhanced KenPAC program.  Secretary Morgan also discussed intergovernmental transfers (IGTs), which are the transfer of funds between different governmental entities.  She discussed how IGTs work, the process of IGTs within the federal government, along with recent federal restrictions.  She also discussed IGTs in Kentucky and said that the estimated 2002 realization is $80 million in IGTs.


Next, Dr. Henry Goodman a Neurologist in Ashland Kentucky testified regarding his experiences.  He said the introduction of surrogate health care delivery through physician assistants and nurse practitioners has lowered the standard of care and increased the cost of health care delivery.  He stated that the Cabinet has failed to educate Kentuckians on proper birth control methodologies.  He stated that the Cabinet has failed in educating the undereducated, and the psychosocially deprived people with regard to proper parenting, vocational education, and employment opportunities.  As a corollary to that, the system seems to promote single parent families.  That has been his impression for some time.   Increased medical technology has also increased medical costs.  He suggested the following solutions: (1) creation of a screening examination for non-emergent health care needs so that patients can receive a list of physicians and their phone numbers; (2) creation of  a standardized cap for pill cost for medication; (3) increase the time limit for patents; (4) work with congressional members to develop a risk free co-pay system; and (5) enforce existing regulations regarding surrogate health care delivery with mandatory random monthly chart reviews.


The meeting was adjourned at 5:10 p.m.