Medicaid Oversight and Advisory Committee (HB 90)



<MeetMDY1> February 7, 2005


The<MeetNo2> meeting of the Medicaid Oversight and Advisory Committee (HB 90) was held on<Day> Monday,<MeetMDY2> February 7, 2005, at<MeetTime> 10:30 AM, in<Room> Room 131 of the Capitol Annex. Senator Roeding, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Richard Roeding, Co-Chair; Representative Rick Rand, Co-Chair; Representatives James Bruce, and Joni Jenkins.


Guest Legislators:     Representative Jimmie Lee.


Guests:  Tom Beringer, Beringer Drug; Bob Cull, North Park Pharmacy; Gary Hamm, R.PH.; Jeff Arnold, R.PH.; Chuck Priddy, EDS; Dan Howard, KARP; Joel Thornberry, KPHA; Jan Gould, KRF; Mike Maye, Pharmacist; George Hammons, KPHA; Nancy S. Horn, Pharmacists; Ellen Kershaw, Alzheimer's Association; Bob Yowler, APSC; Denise Hall, APSC; Kerrie Stewart, APSC; Mildred Pruitt, Board Seven Counties Services; Carolyn Barnes, APSC; Doug Kennedy, UNNYS CORP; Joe Gross, KHA; Milton Brooks, KHA; Mike Rust, KHA; Sarah Nicholson, KHA; Mary Beth Crouch, Doral Dental; Tony Womack, Home Care Pharmacy; Jean Cox, SHPS; Janet Meyer, Taylor Manor Nursing Home.


LRC Staff: Barbara Baker, Eric Clark , Robert Jenkins, and Pat Patterson.


The first item on the agenda was the nomination and election of the House co-chair for the committee. A quorum of the House members was present. Rep. Lee nominated Rep. Rick Rand for the House co-chair, and Rep. Bruce seconded the nomination. Rep. Rand was elected by voice vote.


Senator Roeding welcomed Rep Rand., Rep. Lee and Rep. Jenkins to the committee. He stated that the committee usually meets four times yearly. However, with agreement from the other committee members, Senator Roeding stated that the committee would meet more often if necessary.


Joel Thornberry, KPHA, discussed the negative effects that 907 KAR 1:018, filed as an emergency regulation in December, 2004, will have on pharmacies in the Commonwealth. He stated that small, independent pharmacies will not be able to absorb the reductions in payments because of decreased profit margins. The payments received now by pharmacists provide jobs, but the reductions in payments will require his and other small pharmacies to reduce salaries or terminate some workers. Additionally, regulatory changes in the Medicaid pharmacy program could result in eighty statewide pharmacists being terminated. He explained that pharmacists provide more services than filling prescriptions for drugs, and these services save additional costs to the Medicaid Program. He asked for assistance in reversing the regulations to avoid the "band-aid" approach to providing services.


George Hammons, KPHA, addressed the committee by stating that he is a community pharmacist from Barbourville, Knox County. He has experienced ten (10) minute to forty-five (45) minute telephone waits for pre-authorization of drugs. Forty percent (40%) of his patients are Medicaid recipients. The reduction in payments will mean decreasing extra services. He stated that the acquisition cost plus the $4.50 dispensing fee would not cover his cost of $5.60 per drug, and this reduction will necessitate terminating employees. He stated that the three brand name prescription limit should be increased to four, and that the 30 day payment cycle should be reverted to the 14 to 21 day payment cycle. His discounts are based on a weekly pre-payment and the 30 day payment cycle results in a 30 to 45 day turnaround on his Medicaid reimbursement.


Next to address the committee was Bob Yowler, APSC, member of the Pharmacy and Therapeutics (P&T) Committee. He stated that the P&T Committee is an advisory committee only. He questioned if the Pharmacy Benefit Administration (PBA) is returning the full rebate to the state, and if it was counted in the budget. He stated that the (P&T) Committee has saved the Commonwealth $1 million, and has identified problems such as any new drug being automatically placed on the drug formulary until reviewed. The P&T Committee identified Medicaid procedural problems such as lack of communication.  Mr. Yowler suggested the change from UNISYS to First Health has resulted in slow pre-authorizations, too many help telephone numbers, and the pharmacists not being made aware of changes in the program. Medicaid now notifies providers of regulatory changes only through emails and the Medicaid website homepage.  He stated that without providing the necessary drugs, communities will incur more problems with school children and the elderly.


Next to address the committee was  Jeff Arnold, R.PH., and President of MedCare. He stated he represents the issues faced by long term care facilities and institutionalized patients. The first set of program reimbursement cuts were in August, 2004, and the second set occurred in December, 2004. He stated that the long term care pharmacists were overwhelmed with the cuts. He explained that the emergency Medicaid pharmacy regulations were not appropriate for long term care pharmacies, as their clients are 66% Medicaid, 9% Medicare, and the rest are private pay. He pointed out that Medicaid is working with long term care pharmacies. He provided that the average dispensing cost in Oregon is $11.97, $10.97 in California, and $4.50 in Kentucky. He also suggested that Kentucky reconsider the three brand drug limit for long term care patients.


 Joe Gross, President, St. Elizabeth Medical Center, addressed the committee. He suggested that a cap be placed on the hospital tax. Senator Roeding stated that the hospital provider tax is a tax on sick folks in Kentucky.  Gross stated that in the 1980's, 100% of the hospital tax and the federal match was returned to the hospitals.  Health Maintenance Organizations (HMO's) are not taxed. He stated that only 25% of the population is covered by private insurance, with the remaining population receiving Medicaid, Medicare, or being uninsured. Hospitals are the first or second largest employers in most Kentucky communities. Because hospitals are such large employers, Kentucky should cap the tax on hospitals at the 2003 level which will make them more competitive. The DSH funding mechanism is included in the Governor's budget and  Gross urged passage of the budget.


 Tom Beringer, Beringer Drug, Warsaw, Kentucky, stated there are 900 Medicaid children in Gallatin County. If the regulations are not revised, he will not accept Medicaid patients any longer. 


 Bob Cull, North Park Pharmacy, Owenton, Ky, said he has the same concerns. With twenty employees now, he will be required to eliminate some services to Medicaid patients. These include providing deliveries, charge accounts, and assistance with pre-authorizations.


 Jan Gould, Kentucky Retail Federation, stated that 80 percent of each dollar spent on medications is passed through to the manufacturer. The cuts imposed by the December emergency regulations will have to come from the remaining 20 percent of each dollar. Based on other state's reimbursement, Kentucky is 44th in a nation wide comparison.


 Shannon Turner, Commissioner, Department of Medicaid, testified that the Department is fully aware of the impact of the regulations. As a result of the $526 million deficit, cuts had to be made before cutting or eliminating program benefits. Program reductions will have the program in balance in State Fiscal Year 2005. She stated that the P&T Committee is valued because of its clinical expertise, and that the rebate dollars are being accounted for. She remarked that the transition from UNISYS to First Health has proceeded smoothly, and that suggestions have been implemented during the transition. Pharmacy expenditures for SFY 2005 are expected to be $820 million. With a $37 million reduction, Medicaid will expend $784 million on the pharmacy program, as compared to $779 million in SFY 2004. The Department is trying to slow the growth of the program. Without reductions, the Department's last resort is to reduce eligibility. Drug rebates and $150 million dollars of Hospital Provider Tax is included in the Governor's budget. In 2004, hospital payments were $1 billion. Commissioner Turner stated that suggestions from the pharmaceutical community is appreciated to solve proble She stated that the P&T Committee is important to act as a buffer and the recommendations from the committee are taken seriously.


Representative Jimmie Lee remarked that there is too much pressure on financial issues rather than clinical issues. He stated that the PBA is by contract only, and does not realize any funds if a deal is negotiated. He emphasized that the modernization of the Medicaid program is important because we do not want to reduce benefits and requested concrete suggestions to save Medicaid money. 


Deputy Secretary Mark Birdwhistle challenged the chain pharmacies to look at other state Medicaid policies, and if Kentucky's is outside the norm, to provide empirical information to Medicaid because the staff has not been able to find that information. 


Due to the late hour, Senator Roeding stated that the Kasper Update will be first on the agenda at the next meeting.


The meeting was adjourned at 12:37 p.m.