Medicaid Oversight and Advisory Committee (HB 90)


<MeetMDY1> July 11, 2005


The<MeetNo2> meeting of the Medicaid Oversight and Advisory Committee (HB 90) was held on<Day> Monday,<MeetMDY2> July 11, 2005, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Senator Richard "Dick" Roeding, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Richard "Dick" Roeding, Co-Chair; Representative Rick Rand, Co-Chair; Senators Tom Buford, Julie Denton, and Dan Seum; Representatives James Bruce, Joni Jenkins, Jimmie Lee, and Stephen Nunn.


Guest Legislator:  Representative Tom Burch.


Guests:  Katie Brown, Patti Silvers, and Polly Boylett, DCBS, Family Support; Jim Kimbrough, and Heidi Schissler, Protection & Advocacy; Prentice Harvey, Norton Healthcare; Mary C. Schmidt, Bluegrass Area Agency on Aging; Cathy Allgood Murphy, American Association of Retired Persons; David Allgood, Center for Accessible Living; Pavan Bhatraja, Dr. Garret Adams, Kay Tillow, and Dr. Edgar Lopez, Physicians for a National Health Program; Greta Collins, KAAD & Active Services Center; Hope Dittmeier, REACH of Louisville; Karen Thomas Lentz, Johnson & Johnson; Melodie Shrader, M. Shrader & Associates; Marilyn Minnick, KIPDA; Sarah Nicholson, Kentucky Hospital Association; Tim Veno, Kentucky Association of Homes and Services for the Aging; S. Cunningham, Mental Health Association of Kentucky; and Michael Abrams, Caritas Peace Center.


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


The minutes of the April 18, 2005 meeting were approved without objection.


The first item on the agenda was an update on Medicaid by Shannon Turner, Commissioner, Department for Medicaid Services, and Wes Butler, Assistant Deputy Counsel, Cabinet for Health and Family Services.  Commissioner Turner said due to the $675 million Medicaid shortfall for fiscal year 2006, the Kentucky Medicaid program will add additional co-payments for services and drugs over the next month.  The additional co-payments are estimated to save the program $30 million annually.  The new co-payments will take effect on a staggered timetable, with the first co-payments beginning July 11, on the three tier prescription drug co-payment system to encourage use of generic drugs.  Commissioner Turner stated that the Medicaid Management Information System (MMIS) contract was awarded to EDS and the Kentucky Medicaid Management Agent contract was awarded to First Health.  These have been protested; therefore details related to these contract cannot be discussed.


The next item was a discussion on the Medicaid Management Information Systems, by Ricky Pope, Account Executive, and Mark Noble, Account Operations Manager, EDS.  Mr. Pope said they are currently working on the transfer of the current legacy system to EDS and a new system will be implemented in 2006.  EDS will help Kentucky lead the nation in Medicaid modernization.  EDS has a proven technical solution that will be implemented next year.  It is currently implemented in five other states.  EDS has partnered with two industry leaders, Accenture and Microsoft.  The new system will be web enabled and browser based.  It will have real time for all claim types and real time eligibility.  Capabilities will be added so providers can interact with the Medicaid system.  There will also be a new data warehouse and decision support system.  The goal for EDS is that there will be no impact on the provider community during the transition to EDS.  The date for complete implementation of the new system is November 1, 2006.


Representative Burch asked how much the contract cost.  Commissioner Turner said it is transaction based, and depends on volume.  The estimate is $25 to $30 million annually and the amount of savings will depend on the policy.


Senator Denton asked about the status of the protest.  Commissioner Turner said that on June 16, Finance sided with the Commonwealth and determined that the protest was not valid.


Representative Nunn asked where EDS is located.  Mr. Pope said the Corporate office is located in Dallas, but the claims office will be located in Frankfort in Prevention Park, and will bring 160 jobs to Frankfort, with the majority of the workers being from Frankfort.  Most of the operation will be in Frankfort, and a data center will be in Orlando.


Representative Nunn said the majority of the 700,000 Medicaid recipients are very sick and need services.  He asked if there were any new efforts being implemented.  Commissioner Turner said that Kentucky is one state that was adversely affected by the Medicaid Part D Program.  She also said Medicaid forums are being conducted in Bowling Green and London this week, to hear input. 


Representative Nunn asked what type of reception Kentucky is getting from CMS.  Commissioner Turner said they don't like the latest news they have heard from CMS.  They are analyzing if there is anything more the state can do by looking at successful programs in other states.


Representative Rand asked if EDS was up and running.  Mr. Pope said the transition begins in November of this year.  Next November, it will be up and running.  He said there is a training plan for the next year.  Starting December 1, 2005, the data will be loaded.


Senator Roeding pointed out that due to Kentucky's eligibility requirements, people from surrounding states will move to Kentucky to receive benefits.


The last item on the agenda was a discussion on the Kentucky Medicaid Management Agent, First Health, by Tom Graves, Senior Vice President, Client Relations, and Dr. Ken Kolb, Director, Health Economics.  Mr. Graves said that First Health Services role is to administer Kentucky's Medicaid program, to gather and analyze data and make recommendations for program improvement.  They are to raise the level of care delivered by the Commonwealth, while improving cost efficiency.  They will partner with the Commonwealth and its contractors on implementation and operation of new initiatives.  He said the prescription program is achieving savings with a range of a 9 percent reduction.  He also noted that all the key metrics are moving in the right direction.  He said First Health uses an innovative "fishbone" methodology to target savings initiatives.  He noted that prescription cost containment is not a simple task, and the goal is to drive down the cost per month.  In regard to prescription issues, he said that the prescription initiatives to date have been effective and that the prescription expense per member has decreased.  Kentucky's prescription cost per member is slightly below average when compared to other states.  The cost for Rx has declined, and the Kentucky prescription claim cost is the lowest among compared states.  He also noted that prescription utilization has decreased, but Kentucky prescription utilization is higher than average of compared states.  More good news is that the use of generics has increased and the prescription claim cost for multi-source drugs has declined.  He said that First Health recommends more prescription management, such as expanding the provider coordination and adding clinical edits.  He noted figures related to Kentucky's participation in the National Medicaid Pooling Initiative.  The total estimated net savings annually will be $46,115,920.  Commissioner Turner noted that Kentucky set out to enter the multistate pooling initiative last December and submitted a state plan amendment to enter the pool, but CMS has not made a decision yet.  The Department is waiting on final approval of that state plan amendment.


Senator Roeding asked about the retrospective DUR and how it was handled.  Commissioner Turner said they saw many items that should have been prospective, and many edits were placed on the ProDUR on the front end.


Representative Nunn asked if EDS worked with other organizations.  Mr. Graves said they work 100 percent for the public sector.


Senator Denton asked about the new co-payments.  Commissioner Turner said the first co-payments to take effect will be the three-tier prescription drug co-payment system to encourage use of generic drugs.  Medicaid members will pay $1 for generic drugs, $2 for preferred brand name drugs and $3 for non-preferred brand name drugs.  On July 15, a tiered prescription drug co-payment for optional eligibility groups of $3 for generic drugs, $10 for preferred brand name drugs and $20 for non-preferred brand name drugs.  On August 1, co-payments for all Medicaid members: $6 for emergency room visits, $2 for physician office visits and $50 for inpatient hospital stay, and $3 for outpatient hospital services.


Senator Denton asked for the number of people that are in an income group below the poverty level.  Commissioner Turner said there are about 20,000.


Senator Roeding asked about the education component for physicians, pharmacists and chiropractors.  Commissioner Turner said they are doing letters, mailings, and have call in numbers. She concluded that Medicaid has done a terrible job of educating providers.


Representative Burch asked if supplemental rebates for drugs are part of the pool.  Commissioner Turner said they are currently looking at that.  Representative Burch asked why they don't ask for supplemental rebates.  Commissioner Turner said there is no way to make them do it.


Senator Roeding asked about the clawback provisions of the Medicare Part D prescription drug benefit.  Commissioner Turner said the clawback is based on the amount spent on drugs in 2003.  Kentucky kept the inflation for drug spending below 10 percent which puts Kentucky at a disadvantage.  Ninety percent of the clawback was spent if you kept dual eligibles on the roles.  The big concern is they lose prescription history and that is critical.  They are looking to First Health to find a way to capture that history.


Senator Denton asked about the one day residency requirement for Medicaid eligibility.  Commissioner Turner said it is in federal law and also in the Kentucky Constitution.  She noted that some states have waiting periods.  Representative Lee pointed out that waiting periods don't contain costs though, due to emergency room usage during the waiting period.


The meeting was adjourned at 2:54 p.m.