Medicaid Oversight and Advisory Committee



<MeetMDY1> November 23, 2009


The<MeetNo2> Medicaid Oversight and Advisory Committee meeting was held on<Day> Monday,<MeetMDY2> November 23, 2009, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Senator Katie Stine, Co-Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Jimmie Lee, Co-Chair; Senator Katie Kratz Stine, Co-Chair; Senators Walter Blevins Jr., Julie Denton, and Dan "Malano" Seum; Representatives Bob M. DeWeese, and Joni L. Jenkins.


Guests:  Marty White and Bill Doll for the Kentucky Medical Association; Murray Wood for the Cabinet for Health and Family Services; Wayne Johnson for the Kentucky Association of Health Care Facilities; and Anne Joseph.


LRC Staff:  Miriam Fordham, Jonathan Scott, and Cindy Smith.


The minutes of the August 24, 2009 meeting were approved without objection.


The first item on the agenda was election of a Senate Co-Chair.  Senator Seum made a motion to elect Senator Katie Stine as Senate co-chair, seconded by Senator Denton.  There were no other nominations.  There was a motion by Senator Seum, seconded by Senator Denton, and approved by voice vote to elect Senator Stine by acclamation.


The next item on the agenda was a presentation on the Medicaid Transformation Grant, by Betsy Johnson, Esq., Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services.  Commissioner Johnson said that the Cabinet received a $4.9 million Medicaid Transformation Grant.  The contract was awarded to Affiliate Computer Services (ACS) in mid-September.  The scope of the project is aligned with the emerging national direction for health information exchange. The pilot implementation date is expected to be the second quarter of 2010.  In regard to the Medicaid Transformation and development of the Kentucky Health Information Exchange (KHIE), the next steps are: developing requirements for vendor on-site gathering; conducting connectivity meetings; holding weekly interoperability forums; developing integration requirements; prioritizing hospitals for connection; developing a strategic and operational plan; and developing the state Medicaid HIT plan.  Next, Commissioner Johnson spoke about funding provisions under the Health Information Technology for Economic and Clinical Health (HITECH) Act of the American Recovery and Reinvestment Act (ARRA) of 2009.  She said ARRA was passed and signed by President Obama on February 17, 2009.  ARRA provided funding for HITECH initiatives at the state level including: $2 billion to the Office of National Coordinator (ONC) for  state grants to develop and promote health information technology (HIT) and health information exchange (HIE); state loan programs for the adoption of electronic health record technology (EHR), and additional grant opportunities. The Centers for Medicare and Medicaid Services received $35 billion to provide payment incentives for the adoption of EHR technology in Medicaid and Medicare.  Other HITECH funding totaled $5-10 billion. 

In regard to provider incentives, Commissioner Johnson said CMS Medicaid funding will be available to qualified providers and hospitals for EHR technology beginning no sooner than 2011.  There will be 100 percent federal financial participation (FFP) incentive funds to providers.  In order to receive ARRA HITECH funding, certain criteria must be met.  The criteria to receive Medicaid Provider Incentive Payments include the following: status as an eligible provider; use of certified EHR technology; and meeting the “meaningful use” criteria in the employment of the certified EHR technology.  In order to receive incentive payments, acute care hospitals must have a Medicaid patient volume of at least 10 percent; children’s hospitals have no Medicaid patient volume requirement.


Senator Stine asked what ACS stands for.  Commissioner Johnson said it stands for Affiliated Computer Services.


Senator Stine asked how the system coordinates with eHealth.  Commissioner Johnson said that they work with the eHealth board to implement eHealth in Kentucky, and it will add to what has already been done.


Senator Stine asked how much of the $2 billion from the Office of National Coordinator that Kentucky will see. Commissioner Johnson said the state will find out in the middle of December what it will receive. 


Senator Stine asked about the HITECH funding and when Kentucky will find out about its share.  Commissioner Johnson said it will be mid-December as well for these dollars.


Senator Stine asked Commissioner Johnson to let the committee know when and if Kentucky is receiving those funds.  Commissioner Johnson said she would. 


Representative Lee commented that physicians would see a sizable outlay of dollars and wondered how many would make an investment that may take over five years to recoup.  Commissioner Johnson said it has not been decided if the money would be an upfront payment or would have to be recouped.


Representative Lee said the physicians are excited about eHealth, but not about the expensive outlay for technology.  Commissioner Johnson said that it is still in the planning stages and their goal is to encourage it and make it as easy as possible. 


Senator Denton asked how rehab hospitals could access funds if they are not included. Commissioner Johnson said they have to meet the definition of eligible provider to be included.  Commissioner Johnson will look up more information on this and get it back to the committee.


The last item on the agenda was an update on cost containment measures by Betsy Johnson, Esq., Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services.  Commissioner Johnson said premium and cost sharing has a $17.9 million state fiscal year (SFY) savings.  The Department for Medicaid Services report was filed with the Legislative Research Commission on October 7, 2009.  Recent cost containment measures include preferred drug list management with a savings of $4,000,000 in SFY09; generic utilization and maximum allowable cost with a savings of $1,000,000 in SFY09.  She reported that generic utilization has increased to 72.7 percent.  Generally, a 1 percent increase in utilization will equate to $1 million in savings.  Also, prior authorization is now required for Zanaflex caplets; the tablet version has a generic equivalent, but the caplet does not.  This is a savings of approximately $190,000 per month.  In regard to the health insurance premium program, she reported that as of November, 2008, there were six individuals enrolled.  As of November, 2009, there are 29 individuals enrolled.  There is an estimated cost savings of $1.3 million for the 29 enrollees.


Commissioner Johnson said in regard to the commitment to reform and cost containment, there is a state-wide disease management program focused on chronic diseases or conditions where interventions can make a positive clinical and financial impact in the short term.


As of January 1, 2009, the Department for Public Health took over the diabetes disease management activities for approximately 400 Medicaid members who were previously managed by a third-party vendor.


In reference to the Division of Program Integrity, Commissioner Johnson reported that the division was created in June, 2008 within the Department for Medicaid Services.  The Division has recovered $2.8 million more in 2009 (through October) than all of 2008.  Program integrity policy recommendations will result in additional savings over a five year period.  CMS conducted a comprehensive program integrity review of Medicaid in July, 2009 to verify compliance with federal regulations and the effectiveness of program integrity.  During the exit conference, CMS staff commented that “Kentucky has improved greatly from the last review,” and the new KY model is an “efficient use of resources.”


Commissioner Johnson also discussed the pharmacy management program.  She said that the preferred drug list (PDL) program is ongoing.  The generic utilization and substitution rate has improved from 69.5 percent in June, 2007 to 72.7 percent in 2009, a savings of approximately $3 million.  She said that on-site pharmacy audits began in June, 2009.  Thirteen pharmacies were audited during the second quarter of 2009, with anticipated recoupment of $38,000.


Next, Commissioner Johnson commented on the web-based KenPAC Project.  She said that a short pilot demonstration of the first phase involving two KenPAC providers has been completed.  Providers were very impressed with the functionality and benefit to their practices.  Fifteen additional providers have agreed to participate in the second phase, which is scheduled for early 2010.


Lastly, Commissioner Johnson reported on emergency room (ER) utilization.  ER utilization continues to be high, and other state Medicaid programs are having the same experience.  The Medicaid population has increased by 13 percent since January 1, 2006.  Emergency room trips per member have remained steady at .08.  Statewide disease management programs will assist in lowering ER visits, and the web based KenPAC program will assist in lowering ER Visits.


Senator Denton asked what the generic utilization rate was before it was 72.7 percent.  Commissioner Johnson said it was 69.5 percent in June, 2007.  Senator Denton asked for the figures on generic utilization per quarter for the last two years.  Commissioner Johnson said she would get that data to the committee. 


Senator Stine asked if Medicaid is a better payor than employer sponsored health insurance plans.  Commissioner Johnson said that Medicaid is usually more generous.


Senator Denton asked if other states are paying copays.  Commissioner Johnson said she is not sure, and that she has not seen the regulations yet.


Representative Burch asked how program integrity errors are found.  Commissioner Johnson said that is a function of the SURS contractor.


Representative Lee asked how many eligibles are in the lock-in currently.  Commissioner Johnson said currently there are 1,000.  Representative Lee said he hopes to see that number go up within the next year. 


Senator Denton asked if the Cabinet is looking at high users of emergency rooms across the board since the number of emergency room visits per member is staying at .08.  Commissioner Johnson said they are looking at that.  Senator Denton asked for a resolution date by the next meeting.


Representative Jenkins asked if the Cabinet has compared the utilization rate to that of Passport.  Commissioner Johnson said they can look at that.


The meeting was adjourned at 2:10 p.m.