Call to Order and Roll Call
A joint meeting of the Task Force on Medicaid Cost Containment and the Medicaid Oversight and Advisory Committee was held on Tuesday, July 20, 2010, at<MeetTime> 10:00 AM, in Room 131 of the Capitol Annex. Representative Jimmie Lee, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Katie Kratz Stine, Co-Chair; Representative Jimmie Lee, Co-Chair; Senators Walter Blevins, Julie Denton, Dan Seum, Denise Harper Angel, Bob Leeper, and David L. Williams; Representatives Tom Burch, Bob DeWeese, Joni Jenkins, Rick Rand, David Watkins, and Jill York.
Guests: Don Putnam for PROOF; Dwayne Johnson, Eric Clark and Ruby Jo Lubarsky for the Kentucky Association of Health Care Facilities; Bernie Vonderheide and Bryce McGowan for Kentuckians for Nursing Home Reform; Jeff Presser for Dean Dorton Ford; Marty White and Bill Doll for the Kentucky Medical Association; and Anne Joseph for Covering Kentucky Kids and Families.
LRC Staff: Mike Clark, Miriam Fordham, Lashae Kittinger, DeeAnn Mansfield, Cindy Murray, Cindy Smith, Pam Thomas, and Frank Willey.
Approval of Minutes
The minutes of the November 23, 2009 Medicaid Oversight and Advisory Committee were approved without objection by the members of the Medicaid Oversight and Advisory Committee.
Medicaid Overview
Betsy Johnson, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, gave an overview of Medicaid. Medicaid is the nation’s major public health program for low-income Americans. It finances health and long-term care services for more than 50 million people. Medicaid spending enables the program to make significant contributions to state economies in terms of jobs, income, and overall economic activity. Medicaid provides coverage to over 798,493 of Kentucky’s most vulnerable citizens and provides coverage to over 59,798 children who are enrolled in the Kentucky Children’s Health Insurance Program (KCHIP). For every dollar received, the Department for Medicaid Services spends approximately 2.2 percent for administrative costs. Unprecedented growth in the number of new enrollees is due to a weakening economy. During the last biennium, Medicaid added over 3,000 new recipients each month compared to 930 per month in the prior biennium. Medicaid is the largest payer for long-term care services both in Kentucky and the nation. Medicaid has 40,345 enrolled providers. Medicaid is the primary payer of healthcare in Kentucky.
Discussion of Medicaid Cost Drivers
Betsy Johnson, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, testified in regard to Medicaid cost drivers. Medicaid cost drivers include extraordinary events, unprecedented eligibility growth, and cost and utilization growth. New waivers contribute to Medicaid cost drivers. These include the Michelle P. Waiver, implemented in November, 2008; Money Follows the Person, implemented in October, 2008; and the ABI Long Term Care Waiver, implemented in November, 2008. Also, there has been increased KCHIP enrollment from 53,186 to 59,798 from October, 2008 to May, 2010. Charts were discussed that showed the growth in Medicaid eligibility and Medicaid benefit expenditures average cost per eligible per month from 2007-2010.
Discussion of Medicaid Cost Containment Measures
Betsy Johnson, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, testified in regard to Medicaid cost containment measures. Numerous Medicaid efficiencies were discussed. These include post payment pharmacy audits; prior authorization for certain drugs; changes to the early refill limit; requiring that only prescriptions written by a Medicaid enrolled provider are filled; modifying coverage of over-the-counter medications; an enhanced lock-in program; discontinuing payments for hospital acquired conditions; purchase of diabetic supplies through pharmacy instead of durable medical equipment; new program integrity support vendor; and payment of health insurance premiums if Medicaid recipients are eligible for group health insurance.
Discussion of Medicaid Pharmacy Benefit Administration
Betsy Johnson, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, testified in regard to Medicaid pharmacy benefit administration. Pharmacy is an optional service under the federal Medicaid rules. It is the largest optional service before accounting for rebates and totaled $508 million for SFY 2009, which is about 9 percent of the total Medicaid dollars. Pharmacy costs for dispensing fees are $5.00 for generic drugs and $4.50 for name brand drugs. The Pharmacy and Therapeutics (P&T) Committee and the Drug Management Review Advisory Board were discussed. The requirements for both groups are set forth in administrative regulations. Both committees consist of 15 members, with thirteen of those being voting members.
In response to a question by Representative Lee, Commissioner Johnson said that in regard to post payment pharmacy audits, the Cabinet works closely with the PBA, does desk audits, and reviews files. If something is found to be amiss, letters are sent to the pharmacies involved. Quarterly audits are done, and the Cabinet looks at pharmacies with high spending that is out of the norm.
In response to a question by Representative Lee, Commissioner Johnson said that if a prescription is written for a name brand drug, there is no prior authorization because if it is not on the list then it is not covered. If the prescription drug has the same therapeutic value, that drug would also be covered.
In response to a question by Representative Lee, Commissioner Johnson said there are currently 600 recipients enrolled in the lock-in program, and the Cabinet is expecting up to 4,000 to come out after the claims analysis is done.
In response to a question by Senator Denton, Commissioner Johnson said that the lock-in program does not include dental, but the department can look into adding that.
In response to a question by Senator Williams, Commissioner Johnson said that tracking is done by the Division of Program Integrity, and the division has access to the KASPER system. The department also manages drugs through the PDL and data analysis through prescriber patterns, and also manages preferred drug lists.
In response to a question by President Williams, Commissioner Johnson said that the audits by Magellan are a service required under the contract with Magellan.
In response to a question by Senator Leeper, Commissioner Johnson said that cost savings due to the change in the refill time limits is noticed over time. The longer refill time helps to avoid the diversion of drugs. She also noted that she did not have the figures with her on behavioral health drugs, but she would get that to the committee.
In regard to a question by Senator Leeper, Commissioner Johnson said the Cabinet is continuing to look at the problem of people that are on too many drugs, sometimes in excess of 20 different prescriptions per month. She said it is a difficult issue to fix because certain health issues require a number of different drugs. The Cabinet plans to work with the P&T Committee to address it further.
In response to a question by Representative Stacy, Commissioner Johnson said that the results from studies on cost driver by diagnoses will be discussed at a future meeting.
In response to a question by Representative DeWeese, Commissioner Johnson said that once people are locked-in to a certain hospital, if they use a different emergency room, that hospital will be paid only the assessment fee. It will be the job of the hospital to send them on to their primary physician.
In response to a question by President Williams, Commissioner Johnson said that if a Medicaid recipient qualifies for group insurance through their employer, the money will go directly to the employer for payment. Also, she noted that Medicaid is always the second payer if a recipient has other health insurance.
In response to a question by Senator Williams, Commissioner Johnson said that an analysis is done to determine if Medicaid is going to pay the reimbursement.
In response to a question by Senator Denton, Commissioner Johnson said that the Cabinet is looking for ways to focus on those over-utilizing emergency rooms. She noted that it would not be appropriate for all Medicaid eligibles to be in the lock-in for hospitals. Senator Denton said that emergency room overutilization needs to be a main focus of the Cabinet, and the Cabinet needs to work aggressively to find a solution.
In response to a question by Senator Stine, Commissioner Johnson said that Medicaid does pay dispensing fees for over-the-counter drugs because it is paying for the services since there has to be a prescription from the providers for over-the-counter drugs to be reimbursed.
In response to a question by Representative DeWeese, Commissioner Johnson said that it is complex to compare different states’ Medicaid programs. Costs depend on what drugs are covered and what the rebate issues are.
Medicaid Rebates
Rob Coppola from Magellan testified in regard to Kentucky’s Medicaid Drug Rebate Program. The Medicaid Drug Rebate Program was created by the Omnibus Budget Reconciliation Act (OBRA) of 1990. It requires drug manufacturers to enter into a National Rebate Agreement to ensure that their drugs are covered by Medicaid agencies. Approximately 550 pharmaceutical manufacturers currently participate. The program also establishes minimum rebate amounts. The rebate program in Kentucky is administered by Magellan Medicaid Administration. It is a fee-based contract with 100 percent of the revenue being returned to Kentucky. In Kentucky, the OBRA rebates averaged $51.7 million per quarter in 2009. The supplemental rebates averaged $7.3 million per quarter in 2009.
In response to questions by Representative Lee, Mr. Coppola responded that Magellan is a pharmacy benefits administrator. Magellan makes recommendations to the Cabinet and the P&T committee as to what drugs should be on the formulary. Magellan currently negotiates with 26 states. Magellan receives no additional benefit from the state other than what the contract states, and it has no other sidebar contracts if it uses particular companies. Its reward is a renewal of its contract. All contracts are fee based with no additional benefits to Magellan.
In response to a question by President Williams, Mr. Coppola said that Magellan provides formulary management for 25 states and is the pharmacy benefits administrator for Kentucky and eight other states. There are four other companies that provide the same services. Different states get different rebates, depending on the program they opt-in to. There are 11 states in the national program. Compared to private insurance, Medicaid rates are the best due to best price.
The meeting was adjourned at 11:55 a.m.