Call to Order and Roll Call
The Program Review and Investigations Committee met on Monday, March 19, 2012, at 2:00 PM, in Room 169 of the Capitol Annex. Representative Fitz Steele, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Jimmy Higdon, Co-Chair; Representative Fitz Steele, Co-Chair; Senators Julie Denton, and John Schickel; Representatives Dwight D. Butler, Leslie Combs, Terry Mills, David Osborne, Ruth Ann Palumbo, and Arnold Simpson.
Legislative Guest: Representatives Hubert Collins, Keith W. Hall.
Guests: Auditor of Public Accounts Adam Edelen. William E. Collins, DMD, private practitioner, Chairman, RAM (Remote Area Medical) Kentucky. Rosemary Smith, Pharmacist and Owner, Jordan Drug, and Board Member, Kentucky Independent Pharmacist Alliance. Luther Smith, Pharmacist and Owner, Jordan Drug. Jason Wallace, Pharmacist and Owner, Grant County Drugs. Managed Care Organizations: Marty White, Vice President of External Affairs, Kentucky Spirit Health Plan. B. Russell Harper, Director of Government Operations, CoventryCares of Kentucky. Dora Wilson, WellCare of Kentucky. Kay Tillow, Kentuckians for Single Payer Health Care. Garret Adams, MD, Physicians for National Health Program Kentucky.
LRC Staff: Greg Hager, Committee Staff Administrator; Christopher Hall; Sarah Harp; Colleen Kennedy; Katie Kirkland; Van Knowles; Lora Littleton; Jean Ann Myatt; Kris Harmon, Graduate Fellow; Stella Mountain, Committee Assistant.
Approve Minutes for February 13, 2012
Upon motion by Representative Mills and second by Representative Combs, the minutes of the February 13, 2012 meeting were approved by voice vote, without objection.
Medicaid Managed Care
Auditor of Public Accounts Edelen testified that his office started a preliminary investigation of the Medicaid managed care organizations (MCOs) after receiving complaints. The investigation, which is not a full audit, was based on data supplied by the MCOs at his request. He supports managed care if it is done properly, but the investigation found problems. A letter to the MCOs, which was supplied to the members of Program Review, made 10 recommendations to reduce the problems in implementing managed care. Seven of the 10 recommendations are to the MCOs; three are directed to the Cabinet for Health and Family Services. One of the recommendations to the cabinet is that it should study whether behavioral health patients would be better served under a fee-for-service system.
He is shifting existing resources within the office of the Auditor of Public Accounts to create an Office of Medicaid Accountability and Transparency.
Discussing some of the recommendations, he said that there are different metrics among the MCOs as to how performance is measured. The cabinet gets 140 reports from MCOs. A common metric needs to be agreed upon so that meaningful measurement and comparisons are possible. Secure, up-to-date technology should be used. Communication and the preauthorization process should be streamlined. Adequate staffing is needed for these and other tasks such as addressing backlogs.
He is pleased with how the MCOs have addressed the recommendations. Two MCOs responded in writing. He is aware that the cabinet has convened several meetings related to improving implementation.
His office will be conducting a full audit of Medicaid managed care to be reported in 2013.
Representative Steele commented that he is still getting calls from frustrated providers.
Mr. Edelen said that he still hears anecdotal evidence as well but that the situation is getting better. The providers had an obligation to be prepared for the system too. The third-party billers must be held to account; they are not communicating effectively with providers about why claims are rejected.
Senator Denton asked Mr. Edelen which two MCOs had responded to his letter. He replied that one was Coventry; he did not remember the other but could provide that information.
Senator Denton said that the federal waiver for Passport has not been renewed. She does not want to see the same situation in the Passport region as is now happening in the rest of Kentucky. She urged Mr. Edelen to keep preparation for the Passport region in mind. Mr. Edelen agreed. There is need for better communication, and adequate time for effective rollout has to be built into the system.
Senator Denton said she wondered how the MCOs could have passed the state’s readiness reviews. Mr. Edelen replied that he would be involved in this issue as long as he is in office.
Representative Palumbo said that she appreciated the attention to third-party billing and behavioral health.
Dr. Collins testified that he has been a private practitioner in Pike County for 21 years. He is the chairman of RAM Kentucky and provides care to military personnel on weekends. The dental problems with Medicaid managed care include a decrease in access to care; denial of claims; reductions in fees to providers; lack of uniformity among the three MCOs; patients being unaware of services available to them, which may be due to cumbersome patient manuals; MCOs cutting deals with certain providers; too many layers of administration (three medical MCOs, three dental MCOs, three vision MCOS, and the regular Medicaid system); treatments being approved, reevaluated, and then denied; providers trying to get patients to sign with MCOs they can more easily work with; MCOs being good for one area of care but not all; too much time spent verifying Medicaid patients; a cumbersome appeals system; and delays in treatment to patients and payments to providers. MCOs want paper copies of documents, but they will not accept certified mail. His view is that the subcontractors make money by delaying treatments to patients and by delaying payments to providers.
Tooth decay is the greatest problem in this population of children. As they become adults, they work, but in low-paying jobs because they are not presentable to the public.
Senator Denton asked him to be specific as to which MCOs are responsible for which problems. Dr. Collins said that Dr. Fred Sharpe, chief dental officer with Avesis, is good to work with. The biggest problems are with WellCare and DentaQuest. He noted that the last case he submitted was a Coventry case. Dr. Sharpe waited all day for an answer from the MCO. This was not an Avesis problem; it was an MCO problem.
Dr. Collins said that Tennessee has carved out its dental program from its Medicaid MCOs. He referred to an insert in his printed report on how much they have done in Pikeville.
Patients often are on the phone with an MCO for a long time to convince the MCO that they are Medicaid patients because they are not in the MCO’s system. Some of the MCOs will not even talk to him.
The greatest damage is the decrease in access to care. Dr. Collins noted that he cannot get approvals in a timely manner. Patients are denied procedures that are in the guidelines. When the decision is appealed, the procedure may be approved. This tactic of delaying payment hurts the patient the most. He described the recent case of a 7-year-old girl who was shown as ineligible on the MCO site but who was active on the Kentucky Medicaid site. Dr. Collins did the extraction with no assurance that he would be paid. Payment was made after the claim was resubmitted. Dr. Collins also noted some cases in the US of people with abscessed teeth who died due to lack of care.
Kentucky pays its providers $38 for an extraction; West Virginia pays $80. Kentucky pays $78 for a periodontal deep scaling; West Virginia pays $148. West Virginia also has programs to provide dentures. He described how patients who are now employed after having been provided dentures through the RAM clinic in Pike County. Dr. Collins described a patient who had three strokes over a short period of time who also had four abscessed molars. The MCO did not want the patient in the hospital. The patient waited all day and was finally authorized late in the day. Knowing that Dr. Collins was coming to testify at the meeting, the MCO asked to not be taken to task over this. He described problems in referring patients. No orthodontists are taking new managed care patients. No oral surgeons are taking patients from WellCare and Kentucky Spirit. No pediatric dentists are taking new patients from Kentucky Spirit.
Representative Palumbo thanked Dr. Collins for his work. She referred to the child patient in the photo on page 14 of his handout. Dr. Collins responded that the child has likely consumed Mountain Dew since the child was a baby. Initially, Coventry would not pay for surgery with her. Dr. Sharpe had to take up the issue with Coventry to get care for the child.
Representative Palumbo asked whether he refers patients to periodontists. Dr. Collins replied that no periodontists take Medicaid patients. He noted a case of a patient who tried to appeal a refusal by WellCare and WellCare would not let the patient appeal the matter.
Representative Palumbo said that more education on early care is needed, particularly regarding children and soft drinks. Representative Combs agreed and recommended that legislators should review the materials provided by Dr. Collins.
In response to a question from Senator Denton, Dr. Collins said that MCOs or dental counterparts do not provide guidance on deep scales; there were no manuals until January. He has had no problems with billing so far; the problems have been with preauthorizations. Senator Denton asked whether preauthorization was required for deep scales. Dr. Collins replied that he does not think he would get paid without a preauthorization.
In response to a question from Senator Denton, Dr. Collins replied that he had to go through Coventry and Avesis for eligibility and preauthorizations, not payments. The problem is not with the claims; it is with the MCOs’ knowledge of patients’ eligibility. The MCOs do not keep their records up to date. Senator Denton, noting that Murray Wood and Neville Wise of the Department for Medicaid Services were in the audience, stressed the need for fast notification of the Medicaid eligibility of clients.
In response to a question from Representative Hall, Dr. Collins said that recent work in providing care to people outside of his practice included clinics for military personnel.
Representative Hall asked about enrollment problems. Dr. Collins said MCOs cut patients off at the end of a month. They are not picked up by another MCO until the next month. This was particularly a problem in January. Patients need to be able to switch MCOs because MCOs cover different medications and services. In response to a question from Representative Hall, Dr. Collins said that providers should be involved in making decisions.
Representative Hall asked whether the one thing that legislators should know about patients in Eastern Kentucky is that they must go to the University of Kentucky for care. Dr. Collins said yes.
Representative Hall commented that he is appalled that West Virginia is doing a better job than Kentucky. The bottom line is that people are not being served.
Representative Steele explained that RAM is medical providers who provide free care on weekends.
In response to a question from Representative Steele, Ms. Smith said that the situation with independent pharmacies and managed care has not improved.
Ms. Smith said that she is testifying on behalf of 560 independent pharmacies in Kentucky and thousands of employees, their families, and patients. She is a cofounder of the Kentucky Independent Pharmacist Alliance (KIPA). The more than 40 independent pharmacists who attended the February meeting of Program Review sat in disbelief as officials of the MCOs and pharmacy benefit managers (PBMs) misled the committee.
Independent pharmacies face the same issues as when she testified at the January Program Review meeting. Independent pharmacy is in danger of being obliterated. There are two new administrative layers of people who do not work directly with patients. These are not Kentucky companies; tax dollars are going out of state at the expense of Kentucky providers.
Problems have gotten worse. Coventry and WellCare rolled pharmacies into their existing national contracts on November 1. The pharmacy services administration organizations (PSAOs) used by independent pharmacies objected. The PSAOs were told by the PBMs that if they refused to accept the Medicaid members, then each PSAO and all of its pharmacies nationwide would have all its contracts with Medco [PBM for Coventry] and Catalyst [PBM for WellCare] cancelled. If the MCOs were subject to the managed care laws of the Department of Insurance instead of just being licensed by the department as required by Medicaid, this would have been in violation of KRS 304.17A.150(4). The contracts that pharmacies were rolled into have cut professional fees by up to 80 percent.
The second major unresolved issue is co-payments, which are required under 907 KAR 1:604. Kentucky Spirit, through its PBM US Script, is the only MCO to keep the co-payment requirement. HB 262, which passed the House, is one of three bills that are crucial to the survival of independent pharmacies. Implementing the co-payment requirements required by law costs the MCOs no money. The state’s contracts with the MCOs say nothing about collecting co-payments being optional. The co-payments were in effect when the contracts were executed, so they are not a material change in the contracts. The MCOs should be required to increase dispensing fees in an amount equal to the co-payment; the co-payment can be deducted from the professional fee and tracked. When they were asked at the February Program Review whether they would oppose HB 262, the three MCOs said no. It appears that they have changed their minds.
The biggest complaint remains that independent pharmacies are being paid less for many generic drugs than it costs the pharmacies to purchase these drugs. Because the maximum allowable cost (MAC) list of each MCO/PBM is secret, the pharmacies do not know they will be losing money until after a drug is dispensed. Medicaid’s fee-for-service MAC is posted and is reasonable. Kentucky Spirit allowed a review of its MAC list prior to November 1; most prices that did not cover costs were adjusted. Coventry and WellCare rarely make changes and give no direction on which drug they base their price and where that drug could be purchased at that price. They should be required to base pricing for their Kentucky MAC list only on prices available in Kentucky.
Ms. Smith asked for support for SB 125, which would require that a MAC price be based on nationally recognized compendia and based on products available locally. The bill also requires that pharmacies be notified prior to the implementation of a MAC on a particular drug and that there be a reasonable appeal process.
KIPA members support Auditor Edelen’s recommended changes for the Kentucky Medicaid system.
Pharmacies deserve to be paid for their claims for durable medical equipment such as diabetic supplies. Two MCOs have paid no durable medical equipment claims since November 1; the other is way behind.
She described the case of a Jordan Drug patient with bone cancer who was denied pain medication because she already had two controlled medications that month. The result was that the patient had to be hospitalized.
She concluded by saying that passing HB 262, SB 125, and HB 349 (the audit bill) is vital to the survival of independent pharmacies.
Representative Steele commented that he heard the same messages from three pharmacies he visited today.
Senator Denton said that she had been called by a pharmacist in western Kentucky that WellCare has a new limit on opiates per month per patient and that getting preauthorization is difficult. In response to a question from Senator Denton, Mr. Wallace said that preauthorizations are a problem. The MCOs’ practice is to refuse claims and hold payments. The most frustrating issue is that pharmacy, when rebates are included, was less than 8 percent of Medicaid spending. Independent pharmacy was cut because it was an easy target. The one word for their treatment by the MCOs is abysmal.
Senator Denton said that at the February 13 Program Review meeting, the MCOs and PBMs testified that they did not have a problem with HB 262. Kentucky Spirit still has no problem with the bill because they already collect co-payments. Coventry and WellCare now do have a problem because they say keeping track of co-payments is a material change to their contracts.
Mr. Wallace said that the bills were easy to implement and fiscally neutral. What was said by Coventry and WellCare at last week’s meeting of the Senate Health and Welfare Committee was a blatant misrepresentation. Senator Denton said that she intends to ask all three MCOs about this.
Mr. Smith said that the situation is so bad that it cannot be allowed to go on. Independent pharmacies need legislators’ help.
Ms. Tillow referred to a study by the Commonwealth Fund that found that for-profit MCOs have higher administrative costs and lower quality. Connecticut has taken Medicaid away from MCOs and returned it to state control to improve care and save money. Oklahoma has done the same. She recommended that Medicaid should be provided publicly, not for profit.
Mr. Adams said that he is an advocate for publicly provided national health care. MCOs exist for profit. The best chance now is for Kentucky to back out of managed care.
Mr. White said that Kentucky Spirit had responded in writing to Mr. Edelen’s letter and that he could share the letter. Many of Mr. Edelen’s recommendations are already in place. Kentucky Spirit will look at other recommendations, particularly those related to technology. The situation is getting better. As of mid-February, Kentucky Spirit has about 145,000 members. It is paying claims weekly, approximately $13 million a week in total claims. On average, its pay time on claims is 11 days. Kentucky Spirit pays interest on claims that are not satisfied within 30 days.
Senator Denton asked Mr. Harper about Coventry’s response to HB 262. Mr. Harper said that senior pharmacy advisors were meeting on this and he will provide information to Senator Denton by March 20.
Senator Denton asked Ms. Wilson about WellCare’s response to HB 262. Ms. Wilson said that implementing HB 262 would be challenging.
Representative Steele said that the situation is not improving. The MCO executives should stop dragging their feet.
The meeting was adjourned at 3:40 p.m.