Program Review and Investigations Committee




<MeetMDY1> August 16, 2011


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Tuesday,<MeetMDY2> August 16, 2011, at<MeetTime> 9:30 AM, in<Room> Room 131 of the Capitol Annex. Senator Jimmy Higdon, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jimmy Higdon, Co-Chair; Representative Fitz Steele, Co-Chair; Senators Perry B. Clark, Vernie McGaha, Joey Pendleton, Dan "Malano" Seum, and Katie Kratz Stine; Representatives Dwight D. Butler, Leslie Combs, Terry Mills, David Osborne, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Legislative Guest: Representative Greg Stumbo.


Guests: Neville Wise, Acting Commissioner, Department for Medicaid Services; Eric Friedlander, Deputy Secretary; Cabinet for Health and Family Services. William Schmidt, Executive Director; Lloyd Vest, General Counsel; Michael Rodman, Assistant Executive Director; Kentucky Board of Medical Licensure. Van Ingram, Executive Director, Kentucky Office of Drug Control Policy.


LRC Staff: Greg Hager, Committee Staff Administrator; Rick Graycarek; Christopher Hall; Sarah Harp; Colleen Kennedy; Van Knowles; Lora Littleton; Jean Ann Myatt; Cindy Upton; Kris Harmon, Graduate Fellow; Stella Mountain, Committee Assistant.


            Senator Higdon asked for a moment of silence to remember Senator Carroll and his family with the passing of his son, Bradley.           


Approve Minutes for July 14, 2011

Upon motion by Representative Osborne and second by Senator Seum, the minutes of the July 14, 2011 meeting were approved by voice vote, without objection.


Consideration of report Medicaid Management and Integrity: Update on Recommendations From Three Program Review Reports

                Senator Higdon said that questions at the previous Medicaid Oversight and Advisory Committee meeting focused on a lack of communication with the managed care organizations. It was noted that the timetable for implementation was probably too aggressive. He asked if the cabinet had a response to that. Mr. Friedlander said that the target date for beginning managed care is October 1, 2011. He noted that it is not a date set in stone, but that the cabinet is being very aggressive in pursuing that date.


            Senator Higdon asked if the Cabinet had looked at the cost to the Medicaid budget for a 90-day delay. Mr. Wise said there will be substantial savings in not delaying and that the October 1 target is reachable. Mr. Friedlander noted that the challenge is to ensure there is an adequate provider network so that the recipients receive the care that they need. Senator Higdon said that the conversion to Passport was not a smooth transition. The key is to educate recipients on the changes that will take place.


            Senator Seum asked how physicians are responding to KenPAC [Kentucky Patient Access and Care] going away when managed care goes into place. Mr. Wise said that the patient management elements of KenPAC will still exist. The KenPAC model is what is becoming obsolete.


            Senator Seum asked how doctors are responding to the upcoming change and how communication with the doctors is going. Mr. Wise said that the department is sending its second explanatory letter to all their providers and is encouraging them to participate with all three plans. The base Medicaid package is not changing; the change will be that each plan has some value-added elements.


            Senator Seum noted that under KenPAC, doctors get a $4 per month per patient reimbursement. He asked how that will change under the new system. Mr. Wise replied that most managed care organizations (MCOs) are not negotiating standing management fees with doctors, but the MCOs can still work out a reimbursement package with doctors.


            In response to questions from Senator Seum, Mr. Wise said the cabinet hopes that the patients will continue to see the same provider. Each plan will assign a physician to each Medicaid member. Letters have already been sent to Medicaid patients notifying them about the change.


            Senator Seum noted that some areas of the state have a shortage of Medicaid physician providers. He asked whether hospitals will be mandated to participate. Mr. Wise said that hospitals are not so mandated. The cabinet has a target of August 29 to know what providers are on board.


            Senator Higdon noted that he received a letter from a physician stating that the loss of his KenPAC payment will cost him about $6,800 per month. This shows that the medical community is concerned about KenPAC payments ending. It might not be profitable to keep doors open to Medicaid patients.


            Senator Stine noted that this is one of the most important studies this committee has done. She referred to page 2 of the report, which says that one problem with the Medicaid system is the lack of written documentation of internal policies and procedures. She asked for elaboration on the progress and changes that have been made. Mr. Wise said that a lot of the procedures will be changing under managed care. The department plans to go a step deeper in its documentation of procedures. The contracts with the MCOs contain detailed reporting requirements. The department has extensively documented procedures set up for the managed care organization plans, but it is a work in progress. The department will write even more detailed procedures.


            Senator Stine asked that the cabinet bring samples of those documented procedures to the upcoming Medicaid Oversight and Advisory Committee meeting. She again referred to the Medicaid report and asked what the cabinet has done to address return on investment. Mr. Wise said that each MCO has a cost effectiveness calculation. Medicaid has a clear contract that tells the cabinet what its projected expenses will be as it goes forward. MCO is a clear-cut model for studying cost effectiveness. The cabinet will be doing simulation models and estimates when entering into contracts with MCOs.


            Senator Stine asked whether the cabinet has a mechanism to determine whether there are savings and whether care is satisfactory. Mr. Wise said savings are known up front. Savings are built into contracts and must be monitored to ensure they do not negatively affect care. Senator Stine noted that it is a delicate balance. MCOs should not be getting their cost savings by negatively affecting the provider network. She asked what the department is doing to prevent this from happening. Mr. Wise said that provider participation is a factor the department always monitors. Each plan is somewhat in competition for members, so there is an incentive for each plan not to do anything to discourage providers from participating in its network.           Mr. Friedlander noted that there are indicators in the contracts to ensure quality care.


            Senator Stine noted that the Medicaid report states that there is no mechanism for recording unreported income or resources and there is no method to estimate them. She is concerned that there is no established way to determine eligibility related to income. Mr. Friedlander said that the Department for Community Based Services can best answer that. He believes the reference in the report is to a small part of the recipient population. The cabinet tries to examine income and resources using means testing. The computer system is antiquated. The cabinet needs more up-to-date systems to enable them to examine recipient eligibility. Mr. Wise commented that a federal stimulus bill limited tightening of eligibility. The prohibition of making a procedural change ended June 30, 2011 with the end of stimulus funding. Mr. Friedlander noted that the department has made a capital spending request for better equipment.             Senator Stine asked him to elaborate on that in the upcoming Medicaid Oversight and Advisory Committee meeting.


            Senator Stine asked whether the Kentucky Board of Medical Licensure (KBML) has used KASPER to investigate fraud and abuse by recipients. Mr. Friedlander deferred to KBML. Senator Stine asked the cabinet to obtain that information.


            In response to a question from Senator Higdon regarding eligibility determination, Mr. Wise said that the cabinet is required by the federal Centers for Medicare and Medicaid Services to use the Social Security determination process.


            Senator Pendleton expressed concern about the mental health portion of Medicaid. He hopes there will not be a downgrade of mental health institutions under the new system. MCOs are urging that contracts be signed, but hospitals do not know what their reimbursement rate will be. He is concerned about mental health issues and about care in rural areas, and concerned about those who have served in the Armed Forces and their families and the care they are going to receive that they need. Mr. Friedlander said that in the managed care system, behavioral health is part of the physical health system. The cabinet has talked with MCOs about that concern and will be measuring quality of care. Senator Pendleton noted that for-profit MCOs have incentives to reduce costs, which may negatively impact services. Also, the impact on mental health care is more difficult to measure.


            In response to questions from Senator McGaha, Mr. Wise said that the department will do expenditure simulations. The expenditure simulation is not a new technique, but the department has not done an actual expenditure simulation on Passport.


            Senator McGaha noted that $70 million was appropriated during the special session to get the department through the rest of the year. The result was a $50 million plus carry-forward. Senator McGaha asked where that money came from. Mr. Wise said it is difficult to predict spending because it is hard to predict all outcomes. Medicaid measures spending at the end of the year. May and June turned out to be light care months. New recipients eligible for Medicaid tend to be less expensive than eligibles already instated. During the recession, the new eligibles do not have high health care needs because they have been getting medical health care before having to go on Medicaid.


            In response to questions from Senator McGaha, Mr. Wise said that the department is using the extra $50 million to pay the existing Medicaid bills as the system transition occurs. In June, the department began paying claims as soon as they were made and it was current with all payments as of June 30.


            In response to a question from Senator McGaha, Mr. Wise said the department entered into a contract to examine Passport and its fiscal processes. The department will do an expenditure simulation for Passport.


            In response to questions from Senator McGaha, Mr. Wise said that the department gets a weekly report from the MCOs on their enrollments to determine the MCOs’ progress. The department also asks for samples of contracts. On August 29, the department will see whether provider networks are in place and that MCOs have primary care physicians and other providers enrolled. Mr. Wise said the MCOs report good progress and say they will make the deadline of August 29.


            In response to a question from Senator Higdon, Mr. Wise said it is not possible to do a comparison of the cost of Passport recipients and the cost of MCO recipients because of the different way they are paid. The department will look at this in the study of Passport. Senator Higdon asked if the department looked at the average cost per recipient. Mr. Wise said it would not be an apples to apples comparison because Passport does not provide behavioral health care; the MCOs will provide it.


            Senator Seum expressed concern about the chain of command in the new Medicaid process. He referenced an August 14 letter from a physician asking whose job it was to inform his patient base of the new system and whether he is participating in it or not. Mr. Wise said the department is sending letters to recipients explaining all three plans.


            In response to a question from Senator Seum, Mr. Wise said that the recipient would get a letter from the MCO noting if the physician has stopped participating in the system. MCOs are required to maintain updated provider directories that members can access online. A patient can follow his/her physician to another plan.


            Upon motion by Representative Simpson and second by Senator Seum, the report Medicaid Management and Integrity: Update on Recommendations From Three Program Review Reports was adopted by roll call vote.


Overview of Prescription Drug Abuse

            Representative Stumbo discussed the history of his concerns. In 2003, Senator Roeding and Representative Stumbo co-chaired a task force on using the KASPER system more efficiently. Task force recommendations were encompassed in KRS 218A.202. The main question was how to use KASPER to identify areas where over-prescribing of controlled substances is taking place and to create a trend report. The concern was that only the Kentucky Board of Medical Licensure (KBML) should be able to investigate and police its own members. The task force agreed that that was a good practice.


            Representative Stumbo referred to a recent letter that Norman Lawson from LRC staff wrote to KBML asking what the board had done in this regard. The response from KBML indicated that it had not followed the practice of using KASPER trend reports it had agreed to. He expressed his disappointment with KBML for not following through with its statutory authority to identify geographic areas in Kentucky that are overprescribing controlled substances. Copies of the minutes of the 2003 meeting and the annual report were distributed to the members. Representative Stumbo asked why KBML has not done anything about this and is not using the KASPER system. Mr. Rodman said that KBML wants the trend reports but has never received one from the Cabinet for Health and Family Services (CHFS). KBML has been told that there are legal reasons for not identifying those specific regions. Speaker Stumbo said the reports being asked for would just show a trend. Only KBML would then investigate specific physicians in that geographic region.


            Mr. Vest said that KBML met with CHFS on a regular basis after that statute was enacted. After shifting focus from movement of drugs to spikes within a particular area, CHFS said their legal staff did not think it was lawful to go to the level needed in order the request the appropriate KASPER reports. KBML wanted enough specificity to find out the specialties of physicians most representative of the trend. KBML has tried to be aggressive about this. The problem has been getting more information than just the geographic areas where overprescribing has taken place. KBML’s understanding is that CHFS staff is trying to change the statute to authorize them to obtain the level of data needed.


            Representative Stumbo said that CHFS does not have the expertise to review physicians’ records to determine who is overprescribing. KBML has that expertise but has not used its statutory authority to do so. He asked that KBML please submit a comprehensive plan to the General Assembly.


            Senator Higdon requested that KBML report to the Program Review and Investigations Committee at its December meeting.


            Representative Combs noted that there had been a task force in January 2011 at which physicians had discussed this topic. At the time, she asked what the consequences would be if a physician was found to be overprescribing. The physicians noted that their licensures could be affected.


            Representative Mills noted that the number one problem in Kentucky is drug abuse. He asked what KBML can do to encourage providers to use KASPER because fewer than one in three physicians accesses KASPER. Mr. Rodman replied that the board has published articles encouraging physicians to use KASPER. The board looks at use of KASPER when it investigates physicians. KBML also sponsors presentations around the state on using KASPER. Representative Mills noted that he thinks providers must become part of the solution to the drug problem. Anything to encourage the use of KASPER would be appreciated.


            In response to questions from Senator Seum, Mr. Schmidt noted that in addition to KASPER checks, KBML opens an investigation of a physician upon a report by law enforcement. Mr. Rodman said that in the last 5 years, KBML investigated 174 cases and took some sort of action on 132 of those. He did not know how many licenses had been revoked. One possible action could be a letter of concern rather than a full investigation. Senator Seum asked that upon their return to the committee in December, KBML provide a track record of physician investigations.


            In response to questions from Senator McGaha, Mr. Rodman said that by looking at KASPER, the board can determine if a physician is not using the system if it is part of an investigation by law enforcement. It is a public record. Mr. Schmidt said that KBML can furnish a list of providers who do not participate in KASPER as soon as they are able to obtain it from CHFS. Speaker Stumbo said that every doctor can access KASPER but a reason not every doctor does so is because not all doctors prescribe narcotics.


            In response to a question from Senator Higdon, Mr. Rodman said KBML has not used KASPER to perform internal audits or investigations into Medicaid. Senator Higdon said an internal audit would be useful.


            In response to questions from Senator Higdon, Mr. Vest said he is not sure that the statute gives KBML authority to use KASPER to investigate abuse within the Medicaid system. Representative Stumbo said that the Kentucky statute gives Medicaid providers authority to utilize and access KASPER. No rampant use of Medicaid to obtain controlled substances had been found because it would be easy to be caught in that system. The main problem now is in-state providers rather than out-of-state providers. He noted that he thought the problem had been addressed in the statute. Senator Higdon said that he hoped the General Assembly can address the necessary issues in the statute during the next session so that KBML can be better utilized to solve this problem.


            Van Ingram gave a presentation on Prescription Drug Abuse. Kentucky has been ground zero for the prescription drug epidemic. He cited statistics from the National Survey on Drug Use and Health that higher percentages of Kentuckians have used prescription drugs for nonmedical purposes and have used psychotherapeutics for nonmedical purposes than the national average. For all ages the percentage of persons using pain relievers for nonmedical use is among the highest in the US.


            Kentucky’s drug overdose deaths increased 164 percent from 1999 to 2004 and have increased since then. According to the Kentucky Medical Examiner’s 2010 report, there were 674 cases of overdose deaths submitted for autopsy in Kentucky; 546 were ruled as accidental overdoses. According to Kentucky Office of Vital Statistics data, the numbers are considerably higher, with 978 deaths in 2009, 931 deaths in 2008, and 898 deaths in 2007. Mr. Ingram showed photos of young people who have died from overdoses.


            KASPER is a prescription drug monitoring program, one of the best tools in the US to combat drug abuse. It is only being used to a fraction of its capability. The users of KASPER are 93 percent prescribers, 3 percent pharmacists, and 4 percent law enforcement. The concerns of abuse of the system have not happened.


            In 2005, eKASPER, a Web-based version of the system, was launched, enabling the immediate generation of a report. The biggest problem is that data in many cases is about 7 days old. Many chain pharmacies report 24-hour batch data and the goal is to get everybody to do that in the near future.


            Mr. Ingram showed several maps of Kentucky with controlled substances prescriptions by prescriber address and by patient address, which indicate that drug abuse is not confined to a specific region.


            Thousands of Kentucky residents have been identified as patients of South Florida pain clinics. Florida has been the state with the highest numbers of oxycodone pills prescribed and dispensed. In 2009, the Florida legislature passed the Prescription Monitoring Law. The process has been delayed but the monitoring program should be online in 2012.


            In June 2011, Florida passed pain clinic legislation and regulations. Florida has already seen pain clinics move from that state and Kentucky needs to make sure those pain clinics do not move to this state. Ohio also passed pain clinic legislation in 2011. In Kentucky’s 2011 session, several pieces of legislation were proposed to combat the drug abuse problem and more needs to be done in this area.


            Other states have implemented various strategies such as requiring accounts with monitoring systems by prescribers, defining pain clinics in statute, requiring licensing of pain clinics, requiring certain levels of study for pain practitioners, requiring continuing education credits, requiring pain clinics be physician owned, requiring pain clinic owners to be certified by one of two national boards, and requiring owners to have never had license denial or suspension based on inappropriate prescribing.


            Recommendations from a study conducted by the University of Kentucky include requiring batch data reporting every 24 hours, increasing outreach and continuing education effort on the use of KASPER, requiring all controlled substances prescribers in Kentucky to have KASPER accounts, and requiring providers to review KASPER reports for all new patients requiring controlled substance prescriptions, with mandatory reviews of KASPER reports every 6 months when prescribing controlled substances for long-term use.


            Legislation needs to be changed to allow KASPER to be able to do proactive reporting; presently, use of data is very limited. Somebody needs to look at the KASPER data on a regular basis. However, there is a fiscal note attached to such changes.


            In response to a question from Representative Palumbo, Mr. Ingram said that he did not know what the two national boards are that Ohio pain clinic owners need to be certified by. He will get the information to her.


            In response to a question from Representative Simpson, Mr. Ingram said there are several legitimate pain clinics in Kentucky. Their practices should not be hindered; the focus should be on the illegitimate clinics.


            In response to questions from Representative Simpson, Mr. Ingram said that a patient might feel a family physician is not managing his or her pain effectively and that would prompt a visit to a pain clinic. Regarding recommended legislation, he is presently working on legislation with Senator Higdon. Senator Higdon noted that it is a complicated issue and should be taken up early in the next session.


            Representative Stumbo pointed out that, in 2003, he and Senator Roeding had envisioned that such information as shown on slides in Mr. Ingram’s presentation on geographic areas would trigger scrutiny by KBML. The intent of their legislation was that KBML would automatically begin a review on licensed physicians in areas with high prescriptions. All that information is available but nothing has been done with it. Mr. Ingram said that he believes some statutory changes are needed to allow CHFS to obtain more specific information.


            Senator Higdon pointed out that the map seems to show that Marion County, in his district, has a high usage rate of prescription drugs.


            Representative Combs noted that there are well-intended needs for pain clinics. The number one issue in her district is drug abuse. That is at the root of the other problems in Kentucky. She mentioned that another area of drug concern is the use of drugs by the elderly. They are being prescribed controlled substances and can end up abusing them unintentionally.


            Mr. Ingram said that between 40 and 50 percent of opiate addicts became addicted through a legitimate need for the drugs for pain. Senator Clark reiterated that people become addicts after needing the drugs for pain. He referred to the slides of young people in Mr. Ingram’s presentation who died as a result of addiction. He asked how they had first obtained the drugs. Mr. Ingram said he only knew about the two young women in his presentation, and that they first obtained the drugs from family and friends.


            In response to questions from Representative Simpson, Mr. Ingram noted that the fear of addiction is lessened among today’s youth because of the erroneous belief that drugs prescribed by a physician are automatically safe. His office has to overcome this misconception through public education. Drug abuse statistics in Eastern Kentucky have dropped due to educational efforts to the youth.


            The meeting adjourned at 11:52 AM.