Medicaid Oversight and Advisory Committee


<MeetMDY1> August 17, 2016


Call to Order and Roll Call

The Medicaid Oversight and Advisory Committee meeting was held on<Day> Tuesday,<MeetMDY2> August 23, 2016, at<MeetTime> 1:00 PM, in<Room> Room 129 of the Capitol Annex. Senator Ralph Alvarado, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Ralph Alvarado, Co-Chair; Senators Dan "Malano" Seum and Morgan McGarvey; Representatives Robert Benvenuti III and Joni L. Jenkins.


Guests: Adam Meier, Deputy Chief of Staff for Policy, Office of the Governor; Vickie Yates Brown Glisson, Secretary, Cabinet for Health & Family Services; Stephen P. Miller, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services; Brandon Carlson, Office of Administrative & Technology Services, Cabinet for Health & Family Services; Lesa Dennis, Division Director, Department for Community Based Services, Cabinet for Health and Family Services; Wayne Johnson, Kentucky Association of Health Care Facilities; Sharon Netherton, Kentucky Association of Health Care Facilities; Michael Wright, Kentucky Office of the Attorney General, Medicaid Fraud Control Unit; Cara Stewart, Kentucky Equal Justice Center; Sarah Nicholson, Kentucky Hospital Association; and Scott Wegenast, AARP Kentucky.


LRC Staff: Jonathan Scott, Ben Payne, and Becky Lancaster.


Discussion on Section 1115 Waiver Application Proposal - Kentucky Helping to Engage and Achieve Long Term Health (HEALTH)

Vickie Yates Brown Glisson, Secretary, Cabinet for Health & Family Services, stated there has been three public hearings regarding the Section 1115 Waiver Application Proposal - Kentucky Helping to Engage and Achieve Long Term Health (HEALTH). Meetings were held in Bowling Green, Frankfort, and Hazard. The waiver comment period was extended until August 14, 2016. The cabinet is taking those comments and working to revise the waiver. The waiver will allow the state to preserve Medicaid expansion.


Stephen Miller, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, stated approximately 1.4 million or one-third of Kentuckians are now on Medicaid. Medicaid enrollment is up approximately 500,000 people since Medicaid expansion began on January 1, 2014. From January 1, 2017 to January 1, 2021, Kentucky will have to pay approximately $1.2 billion for the Medicaid expansion. The unsustainable growth in the cost of the Medicaid expansion threatens the traditional Medicaid program. The cost increase begins at 5 percent in 2017 and graduates to 20 percent in 2021, which is estimated to be $400 million in 2021 alone. The Medicaid budget was increased by 20 percent for the next two years to maintain current benefits. The current budget estimates new state revenue to be $585 million, however Medicaid’s budget was increased to $587 million concluding that every new dollar coming into the state would be consumed by Medicaid. A report from Milliman ranks Kentucky as first in profitability for Medicaid managed care in 2015. There was a sizeable difference from the national average profit of 2.6 percent to Kentucky’s average profit of 11.3 percent.


Secretary Glisson stated Kentucky leads the nation for obesity, smoking, and cancer deaths. Kentucky has a high poverty level, and 20 percent of Kentuckians live in poverty. Kentucky is facing a substance use disorder (SUD) epidemic. The waiver would preserve all mental health and SUD benefits. The Centers for Disease Control and Prevention (CDC) recently identified 220 counties in the nation, 54 located in Kentucky, that are at risk for a related HIV or hepatitis C outbreak resulting from intravenous drug use.


The Cabinet for Health and Family Services has proposed a Medicaid transformation plan using a four-prong approach. The first prong is the Section 1115 Kentucky HEALTH waiver, a 5-year waiver or pilot program that is specific to Kentucky’s need for Medicaid expansion. The second prong is to address SUD delivery system improvements. The third prong is to focus on chronic disease management to allow people to be healthier and more productive. The fourth prong is Managed Care Reform to concentrate on improving Managed Care Organizations (MCOs) contracts and using more available resources.


Adam Meier, Deputy Chief of Staff for Policy, Office of the Governor, stated the goal of the waiver is to improve participants’ health and help them to be responsible for their health coverage. The cabinet recognizes that teaching Medicaid members how to use commercial insurance is very important. The cabinet hopes to empower people to seek employment and transition to commercial health insurance coverage. The waiver targets able-bodied adults, not the aged, blind, or disabled. The benefits of the waiver were modeled after the Kentucky State Employees’ health plan benefits. There are two paths to coverage: the employer premium assistance program option and the consumer driven health plan option. Premiums are in lieu of copayments. Premiums range from $1.00 to $15.00 per month depending on the member’s federal poverty status. After two years on the waiver, cost sharing will increase for individuals above the 100 percent federal poverty level (FPL). There will be an open enrollment period. If beneficiaries do not return re-enrollment paper work during the specified time period, they must wait 6 months for next open enrollment period. Members select a managed care plan at enrollment and must maintain that plan choice for the entire 12 month period. The waiver includes non-payment penalties. Individuals may re-enroll earlier than six months by paying two months of missed premiums and a one month premium, and also completing a health or financial literacy course. The waiver states there will not be retroactive benefits.


Secretary Glisson stated in July of 2015, the Centers for Medicare and Medicaid Services (CMS) outlined a new Section 1115 waiver that would allow states to obtain a waiver of the Institutions for Mental Disease (IMD) exclusion and require states to develop a comprehensive program to reform SUD delivery and services. Kentucky will develop an SUD pilot program in 10 to 20 select high-risk counties based on a recent CDC HIV and hepatitis C outbreak study, the existing Shaping Our Appalachian Region (SOAR) initiative, and public input.


The waiver will help improve management of chronic diseases such as cancer, heart disease, stroke, and diabetes. The waiver would utilize existing resources to support efforts in improving disease prevention and management. The cabinet wants to coordinate and align the Kentucky Department for Public Health, local health departments, and MCOs to better address the issues of chronic disease.


Commissioner Miller stated MCOs contract reforms started on July 1, 2016. The contracts strengthened medical loss ratio (MLR) to require more spending on direct beneficiary medical care. The current budget was premised on a 4 percent increase, however through contract negotiations the state anticipates 4 percent deductions. The waiver is expected to save tax payers $2.23 billion dollars over a five year period; the state portion saved is $331 million.


In response to questions from Representative Benvenuti, Mr. Meier stated people who voluntarily decide not to work to get free health care benefits are a serious concern. Four out of ten Kentuckians are not in the workforce. The waiver provides people with tools and incentives to be engaged in their community and employer. The cabinet for Health and Family Services wants to build programs to make people more employable. Commissioner Miller stated that, in previous contracts, the MLR required at least 85 percent of every dollar of premiums to be spent on medical related items. The current contracts have changed the MLR to 90 percent.


In response to questions from Representative Jenkins, Mr. Meier stated actuaries have projected that more than 200,000 people in the expanded Medicaid population are full or part-time workers. Requirements for Supplemental Nutritional Assistance Program (SNAP) are federally mandated. The Section 1115 Kentucky HEALTH waiver would be a pilot program that is drafted county by county. Through the implementation phase, the cabinet would be building partnerships with non-profit agencies, county and local governments, state and local parks, and the Transportation Cabinet to easily identify opportunities to meet the community engagement requirement. Mr. Meier has met with the Kentucky Nonprofit Association regarding taking on additional volunteers and possible volunteer background checks. The cabinet is looking at software and applications that will track and identify the best opportunity to volunteer for each individual.


In response to questions from Senator McGarvey, Commissioner Miller stated the budget, starting on July 1, 2016, established state funding for Medicaid for the two year budget period would increase to $587 million. However, in the same two year budget period, the budget was predicated on $585 million as increased tax revenue in the general fund. Other areas such as pension, education and corrections would be crowded out of future budgets and that all new dollars coming into the state would go to Medicaid. Secretary Glisson stated, that numbers show that the current Medicaid expansion does not pay for itself and health outcomes have not improved despite additional funding. The cabinet’s goal is to spend the money allocated to Medicaid expansion more effectively and improving health outcomes. There is a much larger payment for Medicaid that will start in 2017 and increase until 2020. Secretary Glisson stated the cost of the administration of Medicaid expansion is reimbursed at a 50/50 rate not at the previously assumed rate of 90/10, not improving the administration cost burden.


In response to questions from Senator Alvarado, Mr. Meier stated if someone becomes ill, has a sustained injury, or is hospitalized, he or she will be qualified as medically frail. The member’s doctor could initiate the MCOs to declare the patient as medically frail. The cabinet is working with the SOAR initiative to coordinate programs in eastern Kentucky. The cabinet has discussed reducing the number of MCOs used by the State to help reduce MCOs profitability. Secretary Glisson stated the cabinet wants to better align local and state health departments to help educate the public of the resources available in all 120 counties of Kentucky. Mr. Meier stated programs in public health departments are underutilized by Medicaid members and the waiver will help incentivize members to use these programs.


In response to questions from Representative Jenkins, Secretary Glisson stated some hospitals use their own system of triage to defer non-emergency cases from their emergency room. It is not within the waiver to incentivize hospitals to route patients from the emergency room to nearby clinics or urgent treatment centers. The waiver will incentivize members to use the emergency room correctly. The waiver will also penalize the member for using the emergency room for a non-emergency purposes. Mr. Meier stated the cabinet is looking at best practices in other states to find ideas for implementing this change.


Update on Benefind

Brandon Carlson, Office of Administrative & Technology Services, Cabinet for Health & Family Services, stated the cabinet is committed to using every resource to make the Benefind system work. In 2012, Benefind became an extension of the Health Benefit Exchange (HBE) requested and approved by the previous administration. Kynect and Benefind are two releases of the five release plan. Benefind is a single system for economic stability programs such as Supplemental Nutritional Assistance Program (SNAP), Kentucky Transitional Assistance Program (KTAP), Medicaid and Waiver services. Benefind has enabled the Commonwealth to bring systems into compliance with federal regulations. Pre-rollout releases started in August of 2013, and kynect was released in June of 2014.


The Benefind release was postponed on December 4, 2015 because the cabinet did not want to conflict with open enrollment dates. Benefind was also delayed on December 28, 2015, because the cabinet administration determined the Benefind system was not ready to be released. Benefind was released on February 29, 2015. The cabinet’s administration was given assurances that the system was ready from the contractor. In addition, the federal government directed state leadership to “go live” with Benefind. As of December 2015, an investment of $70 million of federal match funds was spent on Benefind release five. Each month the Benefind rollout was delayed, it cost an additional $1.7 million to keep contractors working on the program. Through feedback from Kentucky communities, help-line phone calls, and individual members, the cabinet became aware of large issues with Benefind between February 29, 2016 and March 3, 2016.


One large issue was that incorrect notifications were mailed to members. User acceptance testing (UAT) testing needed more involvement of business analysts in test scenario planning and for correspondence generation. All notifications to members were stopped on March 23, 2016. The cabinet established a rapid response team to quickly respond to cases that required immediate action. On April 25, 2015 Operation Field to Frankfort (O.F.F) was created to clear a backlog of more than 50,000 cases. By May 31, 2016, notifications were reviewed, turned back on, and sent to members if necessary. The cabinet would like to establish a permanent centralized processing facility to harness the operational flexibility and abilities of 64 dedicated employee processors by October 31, 2016.


The Benefind release did not include a feasible roll back or contingency plan. By the time the scope and magnitude of the systematic issues were fully identified, the contingency plan - to revert back to the Kentucky Automated Management Eligibility System (KAMES) - was not feasible to implement. However, Benefind did provide the ability for workers to do a system override for emergency cases. In addition, CMS and Food and Nutrition Services (FNS) policies contradicted each other in the integrated system, and did not properly allow utilization of kynectors. The cabinet requested and received approval from FNS for kynectors affiliated with non-profits to assist with SNAP applications.


Training would have been more effective with a proficiency test. Proficiency thresholds and timeframes will be established and verified prior to any future system roll-outs. The pilot project was insufficient and was not fully representative of local offices. The pilot project was only in 10 of 120 counties. Future pilot programs will incorporate all special populations and geographic areas. Small populations saw a disproportionate volume of errors during roll-out. Department for Community Based Services (DCBS) has been working with community partners such as Kentucky Center for Equal Justice, Kentucky Association of Health Care Facilities, Kentucky Refugee Ministries, and Catholic Charities to ensure the cabinet is addressing citizens’ concerns, while implementing changes to the organizational processes in order to better serve the citizens.


Currently, the cabinet has worked through more than 50,000 backlogged cases and applications, responded to more than 1000 cases that escalated to the rapid response team, decreased call wait time from over 49 minutes to 20 minutes, and reviewed all system generated correspondence templates. The cabinet plans to conduct consistent reviews of system operations to confirm positive trends and fewer defects that impact member service or caseworker productivity.


In response to questions from Representative Jenkins, Mr. Carlson stated long-term care cases are more difficult to process and sometime have a longer phone waiting period. The cabinet is working to move from a state model to a more localized model system to easier navigate the issues of long-term care.


Lesa Dennis, Division Director, Department for Community Based Services, Cabinet for Health and Family Services, stated the cabinet has recognized the need to redirect long term care back to the local office. The cabinet has identified a contact, a back-up contact, and supervisors of primary contacts for each local DCBS office. Those contact names were given to each nursing facility so that they can email DCBS with questions or set up an appointment in a local DCBS office.


Stephen Miller, Commissioner, Department for Medicaid Services, Cabinet for Health and Family Services, stated the cabinet has met and will continue to meet with long-term care providers in efforts to implement a formal examination and re-design of the DCBS workflow and associated organizations.


Mr. Carlson stated the cabinet is currently operationally caught up but a centralized processing facility is needed to maintain that balance. The centralized processing facility will allow the cabinet to devote a specific workforce to strictly working cases and inputting data.


In response to questions from Senator Alvarado, Commissioner Miller stated there has been some discussion regarding interim payments to long term care facilities to help with the backlog of payments due to these facilities. Commissioner Miller stated when everything pays correctly, the State will spend approximately $80 million a month to long term care providers.



There being no further business, the meeting was adjourned at 2:52 p.m.