Medicaid Managed Care Oversight Advisory Committee (HB 785)


<MeetMDY1> October 20, 2003


The<MeetNo2> Medicaid Managed Care Oversight Advisory Committee (HB 785) meeting was held on<Day> Monday,<MeetMDY2> October 20, 2003, at<MeetTime> 1:00 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 Richard Roeding, Co-Chair; Representative Paul Bather, Co-Chair; Senators Walter Blevins, Julie Denton, and Dan Seum; Representatives James Bruce, Tom Burch, Jack Coleman, Stephen Nunn, and Dottie Sims.


Guests:† Bill Doll, Kentucky Medical Association; Diane Lewis, and Tom Young, Cabinet for Health Services Ombudsman Office; Bill Wagner, Passport; Angie Dorten, Office of Inspector General; Larry Cook, M.D., Passport; Paula Lowery, National Health Services; Jan Gould, Kentucky Retail Federation; Amy Turner, Legal Aid; Ellen Kershaw, Alzheimerís Association; Marie Alagia Cull, Cull Hayden & Vance; Michael Wooden, Eli Lilly & Company; Marybeth Crouch, Doral Dental; Prentice Harvey, Norton HealthCare; Steve Shannon, Kentucky Association of Regional Mental Health/ Mental Retardation Programs; Sheila Schuster, Kentucky Mental Health Coalition; and Rice Leach, Department for Public Health.


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


The minutes of the September 15, 2003 and December 3, 2003 meetings were approved without objection.


The first item on the agenda was a Medicaid update by Mike Robinson, Commissioner, Department for Medicaid Services.† Commissioner Robinson summarized the federal fiscal relief provided under the Jobs and Growth Tax Relief Reconciliation Act of 2003.† Under this Act, Kentucky received a 2.95% FMAP increase.† Kentuckyís blended rate for FY 2004 is 73 percent.† The total estimated fiscal relief funds is $138,763,585.† Kentuckyís federal medical assistance percentages for FY 2003 is 72.89 percent.† Next, he discussed the projected shortfall for state fiscal year 2004.† The projected Medicaid SFY 2004 shortfall was $216.2 million.† After the action by the 2003 General Assembly and the fiscal relief revenue, along with the increased federal match, the revised shortfall is $4.4 million.† He reported that the shortfall for SFY 2005 has not† yet been forecasted.


Senator Denton asked about a durable medical equipment company being able to be a preferred vendor for the state.† If guaranteed a certain volume, this could save the state considerably.† She asked why the any willing provider statute would prevent them from doing that.† Commissioner Robinson said the statute says if someone is willing to provide a service or product to Medicaid, they have to be accepted as a provider and they go through and enrollment process and get a Medicaid enrollment number.† In cases of durable medical equipment, that is a great idea if the law could be amended so the durable medical equipment could be placed on bid to get the best price.† Senator Denton asked if that is done for the Women, Infant and Children's (WIC) program.† Commissioner Robinson could not answer that question, but Commissioner Rice Leach said periodically the best bid for the WIC milk is sought.† Senator Denton asked how they could do that and get around the any willing provider statute.† Commissioner Leach said that the any willing provider statute does not apply because it is not a Medicaid program.† Senator Denton asked if the statute were revised if it would be beneficial.† Commissioner Robinson said absolutely, and it has a possible savings of $19 million.†


Representative Nunn asked about the projected shortfall for FY 2005-06.† Commissioner Robinson said he did not know, but the Cabinet is working on those numbers.† He said the problem in 2005-06 is because a lot of one time funding is lost.† Representative Nunn asked if $350 to $400 million is a close estimate.† Commissioner Robinson said the numbers could be that high and the figures will be available soon.


Next, Commissioner Robinson talked about utilization management. He described the care coordination pilot projects recently implemented for pharmacy and emergency room use. Steps used included: (1) reviewing historical medical paid claims data for the last 12 months; identifying key areas to study based on diagnosis and place of service; and (3) identifying education/training needs for the KenPAC nurses, member and providers.† To support the activities to date the following was done: (1) provided RN training in care coordination; (2) communicated and informed members regarding each pilot initiative; (3) taught the RNís how to educate the KenPAC providers about each pilot initiative; (4) built and tested the MMIS data reports applicable to each pilot; and (5) developed HIPAA compliant electronic case plans to permit information sharing among involved Medicaid staff.† As far as care coordination interventions, the following was completed: (1) the RN introduced to the member and provider by telephone and mail; (2) RN contacted each member by phone and completed an in-depth medical history assessment; (3) RN contacted the membersí primary care physician to share the medical history assessment and detailed Medicaid claims history; (4) RN and primary care physician established an action plan per member to optimize a quality health care plan; (5) RN contacts the member to initiate the established plan of action between the member and the primary care physician; and (6) RN assessments continued on an on-going basis.

In regard to pharmacy over utilization, Commissioner Robinson said the top 100 over utilizers were identified.† The top 100 will be identified each quarter for intervention.† To date, April and June, 2003 quarters were pulled.†† In regard to emergency room over utilization, field tests showed that emergency room over utilization was a dominant factor in all the clinical initiatives.† In August, the branch initiated a provider 24 hour a day, 7 day a week compliance project, auditing every KenPAC provider for contractual adherence for 24 hour a day, 7 day a week member coverage.† Emergency room October 13, 2003 data report identified the top 100 member over utilizers.


Representative Coleman asked if pharmacy over utilization refers to the pharmacy.† Commissioner Robinson said it refers to recipients who have a high cost for drugs.† That information is taken from the paid claims data in the MMIS system.†† Representative Coleman asked for a definition of top overutilizers.† Commissioner Robinson said it goes strictly by cost of the drug.† The top 100 was taken as far as total cost for prescriptions and identified those 100 and distributed those among the eight KenPAC nurses.† The nurses will work with them to manage the drugs they need as a part of the care coordination plan in order to help drive down the cost of those pharmaceuticals.† Duane Dringenburg, Division Director in the Department for Medicaid Services said they started this as a pilot project and looked at all drugs.† They intend to get to all drugs, but had to start with the top individuals using the most dollar amounts.† Commissioner Robinson said they are trying to gather information to better understand the issues and problems associated with expensive drugs and† utilization of those drugs.


Senator Denton asked why they did the top 100 instead of percentage.† Commissioner Robinson said there are only eight nurses and they wanted to gather some information on pharmacy utilization and emergency room utilization.† Then, they could do something more expansive.† Senator Denton asked for the cost of the pilot program.† Commissioner Robinson said it was fairly inexpensive because they are utilizing the same nurses that were already working with the KenPAC program.† Senator Denton asked how long the pilot will be continued.† Commissioner Robinson said they need 12 months of data to determine if there is any savings or cost avoidance.† Senator Denton asked if they could speed up the 12 months due to the stateís financial situation.† Commissioner Robinson said they could possibly do a six month snapshot.† Senator Denton asked for a proposal in January so there is a program that can be tied into the budget.† Senator Denton suggested compiling the information as far a number of scripts per month in order to identify fraud and doctor shopping.† Commissioner Robinson said he would be receptive to compiling by number of scripts.


Senator Denton asked how the Passport high utilizers are handled.† Joyce Hagan, President of Passport Health Plan said they look at it many different ways.† They look at the number of scripts, cost components, and specific drug types.† They look at drugs that are easily abused, and put it all together to determine who would have a reasonable use of high cost medicine and who doesnít.† Senator Denton asked what they do for the people who show inappropriate use.† Ms. Hagan said they lock them in, and work extensively with the physicians to let them know there is a member getting prescriptions from a number of different places.† Senator Denton asked if the pharmacists are involved in this.† Ms. Hagan said the pharmacists are involved in that all the policies and procedures related to pharmacy come up through the partnership council.


Senator Denton asked if Kentucky is looking at putting a co-pay on emergency room usage.† Commissioner Robinson replied that this is being considered. Senator Denton asked what it would take to push forward on this plan.† Commissioner Robinson said they are doing a lot right now in the hospital arena, and they want to be sure some of the hospital initiatives are in place, and they would need to work with the Kentucky Hospital Association to develop a policy that makes sense and is operational.† It would take several months of planning to be sure there is a good implementation plan.† Senator Denton asked if that plan could be ready by January.† Commissioner Robinson said they could be close by January.


Representative Nunn asked if the Cabinet utilizes the information from the Kentucky all schedule prescription electronic report (KASPER).† Commissioner Robinson said the KASPER report is used for the lock in program, but it can not be used in an administrative appeal.† Representative Coleman asked why it canít be used it at an administrative hearing.† Commissioner Robinson said the use of the KASPER information is limited and canít be used at an administrative hearing because it is private information that canít be used against a recipient.† Commissioner Robinson said he would like to use it, but has been told by the Cabinetís legal staff that he canít.† Commissioner Rice Leach said there was a condition in the data that the actual KASPER generated data could not be used as a basis for penalizing anyone, but the KASPER data is regularly used as an indicator that other information should be collected.


Representative Coleman asked if Passport uses the KASPER system.† Ms. Hagan said she canít say much about it, which means they probably donít use that system extensively, but their physicians use it.


Senator Blevins asked if any other state has locked everyone into the pharmacy part of KenPAC.† Commissioner Robinson said not that he is aware of.† Senator Blevins asked if it is costly to lock someone into one pharmacy.† Commissioner Robinson said it is labor intensive to look at the information from the generated MMIS reports, requesting KASPER reports, and making sure the correct decision is made.† There is a lot of staff time involved.


Representative Bruce asked why the Cabinet hasnít tried to start Passport in any other part of the state.† Commissioner Robinson said some of the discussion and activities started before he was Commissioner.† His understanding is that there was a partnership in the Lexington area that was unsuccessful, and in other parts of the state, it was not feasible to establish the networks.† It is possible to go forward, but the attempts made in the last five or so years did not work.


Representative Bather asked that the Cabinet come up with three options for January in terms of different approaches and recommendations about either/or to be implemented in January in this area, and he asked for this information within one month.† Commissioner Robinson said the Cabinetís plan is to provide the General Assembly a list of cost containment options that could be considered and give the Legislature a chance to take a look and comment on those before the 2004 Session.


Representative Coleman stressed that these issues have been talked about for the last ten years, and something substantial must be done.† He said he had the top 100 list in 1993 for dispensing.† He knows what the reports are like and how they should be broken down.† Senator Denton agreed with Representative Colemanís frustration.† She said she doesnít understand why we are not looking to try to expand Passport throughout the rest of the state, because Passport is the only thing saving any money right now and keeping the state afloat with Medicaid.†


Next, Commissioner Robinson discussed the 907 KAR 1:022E appeals.† He discussed data relating to eligibility decisions made by the peer review organization using the nursing facility level of care criteria.† He said the nursing facility approval rate for April through September, 2003 was 99.3 percent, while the denial rate were 0.7 percent.†† The approval rate for Home and Community Based Services was 70.9 percent, while the denial rate was 29.1 percent.† Between January and September, 2003, 1,848 appeals were filed.† In September, 2003, 199 appeals were filed.†


The next item on the agenda was a discussion on qualified income trust and notice issues by Mike Robinson, Commissioner, Department for Medicaid Services; Rich Seckel, Director, Office of Kentucky Legal Services Programs; Amy Turner, Staff Attorney, Louisville Legal Aid Society, and Jim McHugh, Title III Attorney, Legal Aid of the Bluegrass.† Commissioner Robins said a qualified income trust (QIT) is an irrevocable trust funded only by income.† A QIT allows an individual whose income is above the special income standard to become or retain Medicaid eligibility be having the income in the trust excluded in the eligibility determination.†† A QIT allows: (1) income to be excluded for eligibility but counted for patient liability; (2) money in the trust to be used for the medical care of the individual; and (3) Medicaid to receive remaining funds upon the death of the individual.† In regard to the timeframes for QIT submission, letters of notification were sent to active recipient on August 11, 2003 and September 3, 2003.† The original deadline to return the QIT to the local Department for Community Based Services office was September 19, 2003. Letters of intent could be substituted for the QIT if submitted by September 30, 2003.† Benefits would be continued pending receipt of the QIT.† The deadline for submission of the actual QIT is October 22, 2003 if a letter of intent was submitted.† Approximately 1000 individuals were sent QIT letters on August 11 and September 3, 2003.† As of October 13, 2003, 524 QIT proposals had been submitted to the Department for Medicaid Services (DMS), 89 of these were approved by DMS and 224 were rejected by DMS.† The primary reasons for the QIT rejection include early termination, ineligible expenses, and inappropriate order of payments.† Rejected QITís have 30 days to amend and return.


Senator Roeding asked if Representative Bather thought it would be a good idea for the two chairmen of Medicaid committee to write a letter to the Commissioner of Banking asking him that all banks be brought up to date on qualified income trusts for Medicaid.† Representative Bather agreed that it would be a good idea.


Next, Rich Seckel said his officeís senior staff attorney has filed a federal suit challenging both the standard and several of the due process issues.† He said the other legal services programs have stepped up to help people with the changes.


Next, Ms. Turner expressed difficulty in explaining qualified income trusts to the recipients.† People get upset because they donít understand the trusts.† Savings will not be realized from the trusts but will come from the elimination of receipts.† She asked Commissioner Robinson how many people lost benefits in September because they either didnít get a qualified income trust or a letter of intent.† Commissioner Robinson said he didnít have that information.


Representative Bather asked if it is just a legal process nightmare.† Ms. Turner said yes.† Representative Bather said the class of people we are talking about do not have the assets in the bank account, or the legal expertise or sophistication and the people around them donít have it.† Also, a large number of these people have unique situations where you have to go to court.† The notice provisions donít take into account those issues.† Ms. Turner said there are not that many that have to go to guardianship court.† The biggest problem is that new applicants are required to complete the QIT in ten days.† Commissioner Robinson said he wasnít aware of the ten day problem and he will work together with them to come up with a resolution.


Next, Mr. McHugh said he represents about 30 clients who received an appeal on adverse level of care determination.† Notices of adverse action must inform the recipient of the intended adverse action, the statute or regulation supporting the action, the reason for the actions and the explanation for the time frame in which the recipient must appeal in order to have their benefits continued through the hearing.† The notices sent out to recipients by the Peer Review Organization contained many problems.† Many did not cite any regulation or authority.† Many did not advise the client of their right to continue benefits through the hearing process and how to obtain services.† Every notice that went out to a Home and Community Based Waiver service recipients was defective because it did not comprehensively identify the adverse action that the Cabinet intended to take.† The notices sent to waiver clients informed the recipient that they did not meet payor criteria for admission or continued stay to a nursing facility.† Mr. McHugh also addressed the problem of having to relate to attorneys at the administrative hearing.† The Cabinet is contracting with private attorneys to represent the Cabinet at the hearings due to the volume of the hearings.

The last item on the agenda was an update on Passport Health Plan, by Joyce Hagen, President, Passport Health Plan, and Senior Vice-Present and CEO, Kentucky Division, AmeriHealth Mercy Health Plan, Bill Wagner, Chairman, University Health Care Partnership Council, and Executive Director, Family Health Centers, and Larry N. Cook, M.D., Chairman of the Board of University Health Care, Chairman of the Department of Pediatrics, and Chief of Staff of Kosair Childrenís Hospital.† Mr. Cook discussed the Medicaid partnership organizational structure, and also the organization and governance of Passport, which was organized in 1997 in response to an 1115 B waiver.† They entered into a three way contract with Kentucky.† Next, Bill Wagner discussed the Region 3 Partnership Council which he has chaired since its inception.† That council is a coalition of providers and consumers. That provides a voice to the various constituents in determining the policies and procedures of Passport.


Representative Bather asked about the make up of the committees.† Mr. Wagner said many of the members of the council also serve on other committees and subcommittees.† He said he serves as an ex-officio member of the Board of University Health Care and each month he presents the findings and the recommendations of the council to the board.


Next, Ms. Hagan said their three main objectives upon inception were to save money, improve quality, and improve satisfaction of the members.† Over the last five years, $92.4 million has been saved through Passport.† The administrative costs are very low, only about 8 cents of a dollar, which saves money.† Most companies charge and administrative cost between 15 and 20 percent.† Passportís cost is so low because it is a sole source contract.


Representative Bather asked for the amount of the base budget.† Ms. Hagan said $400 million.†


Next, Ms. Hagan provided an overview of the operation of Passport, which consists of the following: (1) heavy concentration on outreach and education; (2) nurse case management; (3) 24 hour nurse line; (4) national benchmarks; (5) flexible, integrated claims/medical management systems; and (6) internet capabilities.† One of the concerns initially from CMS was if there true freedom of choice for the members because Passport is a sole source contract.† Members do have freedom of choice with over 3000 providers.† Member can select a primary care provider from over 220 locations.


Senator Blevins asked if they were getting rebates from the drug companies and how much they were getting back.† Ms. Hagan said they are getting back two percent and Mike Robinson said the state gets back 18 percent.


Mr. Wood discussed improving quality and access.† The most significant event was the 2002 NCQA accreditation, a national organization that provides report cards for health plans.† Passport received the highest rating possible for a health plan.† Other measures of care include early childhood care, childhood and adolescent immunizations, the number of well child visits in the first 15 months of life.† In each of these cases, there has been improvement every year, and every year Passport has exceeded the national Medicaid mean.† In 2002, their prenatal care rate was 90.4 percent compared to a national Medicaid mean of 72.9 percent. Their incidence of postpartum care was also higher than the national rate.† Overall satisfaction with the health plan has improved from 2000 to 2003 for both adults and children.† The adults surveyed were extremely satisfied with their health care and about 82 percent of the parents surveyed were satisfied with the care of their children were receiving.† He also discussed key success factors which included: (1) University Health Care commitment; (2) partnership model; (3) flexibility/change management; (4) AmeriHealth Mercy experience/mission; (5) local management autonomy and expertise; and (6) collaboration with community agencies/health departments.


The meeting was adjourned at 3:54 p.m.