Program Review and Investigations Committee




<MeetMDY1> December 10, 2015


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> December 10, 2015, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Danny Carroll, Chair, called the meeting to order. He opened the meeting with the Pledge of Allegiance and a prayer. The secretary called the roll.


Present were:


Members:<Members> Senator Danny Carroll, Co-Chair; Senators Perry B. Clark, Dan "Malano" Seum, Stephen West, and Whitney Westerfield; Representatives Terry Mills, Ruth Ann Palumbo, Rick Rand, and Arnold Simpson.


Guests: Judge Roger Crittenden, Chair, Child Fatality and Near Fatality External Review Panel; Lisa Lee, Commissioner, Department for Medicaid Services; Aaron Smith, Warden, Kentucky State Reformatory, Cookie Crews, Health Service Administrator, and Jim Erwin, Deputy Commissioner, Adult Institutions, Department of Corrections; Betsy Johnson, President, Kentucky Association of Healthcare Facilities; Sean Alteri, Director, and John Goins, Technical Services Branch Manager, Division for Air Quality.


LRC Staff: Greg Hager, Committee Staff Administrator; Mike Clark, Staff Economist; Chris Hall; Colleen Kennedy; Van Knowles; Jean Ann Myatt; Perry Nutt; Chris Riley; Meredith Shores; William Spears; Shane Stevens; Joel Thomas; and Kate Talley, Committee Assistant.


Staff Report: 2015 Update On The Child Fatality And Near Fatality External Review Panel

Colleen Kennedy said a statute requires the Program Review and Investigations Committee monitor the operations, procedures, and recommendations of the panel annually. The panelís charge is to conduct comprehensive reviews of child fatalities and near fatalities suspected to be a result of abuse or neglect.


The panel is in compliance with six of the seven administrative requirements in statute. The requirement has not been met that a voting member absent from two consecutive meetings be considered to have resigned and is to be replaced. Four members had two consecutive absences. Three of them are still on the panel; the other memberís term ended in June 2015.


Statute requires that all copies of records provided to the panel on individual cases be destroyed, although a deadline for destruction is not specified. Paper documents are being shredded with verification provided following case reviews. Electronic records are awaiting completion of data extraction and have not yet been deleted from the panelís online system SharePoint. The Program Review report recommends that the panel may wish to create a formal policy for deleting cases stored in electronic form in SharePoint.


The panel has addressed all recommendations in its 2014 annual report. Two of the recommendations would require action by the General Assembly. One is that a process be developed for law enforcement to upload district and family court preventive and restrictive orders into the Law Information Network of Kentucky. The other is that legislation be considered to open dependency cases in Kentucky courts. The term dependency cases encompasses neglect and abuse cases tool.


In response to a question from Representative Mills, Ms. Kennedy said that the panel had not publicly discussed replacing members who have missed two or more consecutive meetings.


Representative Mills said that he was concerned with the apparent violation of the statute. Senator Carroll agreed.


Judge Crittenden said that the policy of the panel is to excuse absences for illness. No member has missed more than one half of meetings. Any member who has missed a meeting has done so due to illness or a work obligation. All panel members are engaged. The panel is not in strict compliance with the statute but is substantively in compliance.


Judge Crittenden explained that the panel has discussed destruction of electronic records. The panel still has analysts reviewing data but will discuss and develop a solution as to when electronic data are deleted.


In response to a question from Senator Carroll, Judge Crittenden explained that SharePoint is a site set up by the Commonwealth Office of Technology. Abuse reports are uploaded to the site for panel members and analysts to review. Reports can be thousands of pages. Comments and questions can be posted on the site for panel members and analysts to see.


In response to questions from Senator West, Judge Crittenden said that the panel has 20 members. Fatalities in the state have decreased. The panel has found that a large majority of fatalities and near fatalities are the result of unsafe sleeping habits and abusive head trauma. Eighty percent of fatalities and near fatalities are children less than 4 years old; 51 percent are children less than 1 year old. In those cases, the caregivers are often under the influence of drugs or alcohol. Kentucky is consistent with other states. A report from Reuterís Network was recently released about newborns being sent home with caregivers who are under the effects of opiates. The panel will look at this report in the near future. The panelís 2015 report recommends that the General Assembly enact legislation requiring that information about abusive head trauma and safe sleeping habits be sent home with parents of newborns. The panel is working with the Administrative Office of the Courts about distributing this information at drug courts.


In response to a question from Senator Carroll, Judge Crittenden said the panel looks for system flaws and communication issues. The panel is trying to get information from the Department for Community Based Services on caseload data.


Senator Carroll said based on his experience in law enforcement, workload and compensation are serious issues. He said a child in his district had burns that appeared to be from cigarettes. Nurses agreed and reported it to the state, which determined an investigation was not warranted. Upon his bringing the case to the attention of law enforcement, an investigation was conducted by law enforcement.


Judge Crittenden said the panel has seen cases in which it questioned why abuse was not substantiated by the Cabinet for Health and Family Services. The only cases the panel reviews are those in which abuse or neglect are suspected and a fatality or near fatality occurs.


Upon motion by Representative Simpson and second by Representative Mills, the report 2015 Update On The Child Fatality And Near Fatality External Review Panel was adopted by a roll call vote.

Minutes for November 12, 2015

Upon motion by Representative Mills and second by Representative Palumbo, the minutes for the November 12, 2015, meeting were approved by voice vote, without objection.


Staff Report: Medical Care For Kentucky Inmates In Community Medical Facilities: Feasibility And Savings Are Uncertain

Jean Ann Myatt said that the report covers admission of inmates who are still in custody into secured hospital or nursing facilities. It also covers admission of medical parolees into open facilities.


Medicaid will not cover health services in prisons but it will cover services for eligible inmates who are admitted as inpatients for 24 hours or longer. Some inmates are eligible for Medicaid because of age, disability, or pregnancy. Most other inmates are eligible as low-income adults under Medicaid expansion.


Secured units for inmates in hospitals save money and have been used in many states, but it appears that only one has received explicit federal Medicaid approval. If the Department of Corrections (DOC) could arrange for secured units in the Louisville area, it might save up to $833,000 in security costs annually.


As the number of inmates with nursing care needs has increased, states have looked for ways to obtain nursing care outside prisons, usually focusing on placing parolees in nursing facilities.


Shane Stevens said that savings for the state budget are limited, at least in the short term, because the DOC budget does not decrease much when someone is paroled. A prison has fixed and semi-fixed costs that it continues to pay after an inmate is released such as facility, utility, and personnel costs.


DOC would save some variable costs. In Kentucky, many state inmates are housed in local jails, for which DOC pays $31 per day. If an inmate were paroled to a nursing facility, another inmate would be moved from a local jail, so DOC would save $31 per day. There would also be smaller savings from prescriptions, consumables, and outpatient care.


For an inmate paroled and placed in a nursing facility, the state Medicaid budget must cover the cost of the nursing facility for the parolee, including its fixed costs, effectively duplicating some DOC costs. Federal Medicaid funds would probably cover most of the nursing facility payment. If the variable costs saved by DOC were greater than the state portion of the Medicaid payment, then the budget as a whole would realize some savings. An analysis of the variable costs indicates that DOC savings and state Medicaid payments are likely to be nearly the same in the short term. In the long term, there would be limited savings if enough inmates could be released to reduce the cost of the prisonís medical care contract.


Van Knowles said that federal Medicaid funds are available for parolees generally, but states have had difficulty finding nursing facilities willing to accept parolees. Indiana appears to have a successful placement program.


If a nursing facility could be dedicated to serving parolees and other hard-to-place individuals, it might be possible to ensure placements and to apply federal Medicaid funds.


Some parole procedures and conditions might jeopardize federal Medicaid funds. Connecticut reported that federal funds were denied because its medical parole required the parolee to return to prison if no longer needing nursing care. Other factors that might bring funding into question are limiting the paroleeís movements and not involving the parole board in the process.


A secured unit in a nursing facility similar to a secured hospital unit would be able to serve more inmates than could be paroled. There are obstacles to creating such a unit. Almost certainly, federal Medicaid funds would be denied because the inmates could not leave the unit. The state could argue that nursing facility rights do not apply to inmates, but the legal argument is untested and might require litigation.


In response to a question from Senator Carroll, Mr. Knowles said hospitals with high occupancy are less likely to have a unit for inmates. The hospital in La Grange probably did not find it profitable to have medical prisoners.


In response to questions from Representative Mills, Mr. Knowles said that the 52 inmates in need of medical care are located at the Kentucky State Reformatory and the Kentucky Correctional Institute for Women. Indiana has a successful program of placing 5 to 10 inmates per year. There is no extra security in the facilities and no known safety breaches.


In response to questions from Senator Carroll, Mr. Knowles said local jails have an agreement with the state to house class D felons. The jails receive $31 per day to care for the inmates, including $1.90 for medical expenses. If medical expenses become too high for a jail to cover, it asks the state to take the prisoner back. In regards to page 11 of the report explaining a federal regulation allowing Medicare payments for inmates, staff do not have a recommendation for the state to recover an inmateís medical cost after the inmate is paroled.


In response to questions from Senator Carroll, Mr. Erwin said the state has a medical contract that provides discounts on hospital care, pharmacy care, and specialty care. The contract does have a discount for hospital care for inmates. Ms. Lee said the report demonstrates that Medicaid approval for long-term care could be difficult, though there are potential savings to cost shift some services from DOC to the Department for Medicaid Services. Ms. Johnson said member facilities have limited protection in regard to litigation and regulatory enforcement. Facilities are unlikely to accept patients unless those conditions change. Mr. Erwin said DOC can provide information on the cost to the state of civil suits for insufficient medical care, though it is not a significant concern for the department. Ms. Crews said the healthcare company DOC contracts with is working on bringing treatments, such as chemotherapy, into the prisons rather than transporting inmates to healthcare facilities. Mr. Erwin mentioned that telehealth is part of the contract between DOC and the healthcare company.


Staff Report: Motor Fuel Taxes And Reformulated Gasoline In Kentucky

Perry Nutt said that Kentuckyís motor fuels tax has three components. The motor fuel excise tax varies based on the average wholesale price (AWP) of gasoline. The supplemental highway user tax (5 cents for gasoline, 2 cents for diesel) and the petroleum storage tank environmental assessment fee (1.4 cents) have fixed rates per gallon. The Department of Revenue surveys fuel wholesalers quarterly to calculate the survey AWP. Maximum and minimum values for the excise tax rate are in statute. The minimum AWP is fixed. The maximum AWP may increase up to 10 percent each year. The survey AWP is compared to the maximum and minimum AWPs to determine which value is used to calculate the 9 percent excise tax. The maximum AWP is used if the survey AWP is greater than the maximum. The minimum AWP is used if the survey AWP is less than the minimum. The survey AWP is used if the survey AWP is less than or equal to the maximum and greater than or equal to the minimum. Since 2005, the maximum AWP value has been used to calculate the excise tax rate, with a few exceptions. Some quarters in 2014 and 2015 used the survey AWP to calculate the excise tax rate.


The excise tax rate increased from 10 to 26.1 cents per gallon from 2004 to the first quarter of 2015. In FY 2015, the excise tax rate fell to 21.2 cents per gallon. HB 299, enacted in 2015, increased the minimum AWP to $2.177 per gallon, froze the excise tax rate at 19.6 cents per gallon for five quarters, stipulated that the AWP will be adjusted once annually based on a 4-quarter average, and limited the annual change in the AWP to plus or minus 10 percent. The excise tax of 19.6 cents was lower than in the third quarter of FY 2015 but higher than the rate (the minimum of 16.1 cents) that would have resulted had HB 299 not been enacted.


Kentuckyís gasoline tax rate of 26 cents per gallon is about 1 cent below the national average and is close to the average of surrounding states. Kentuckyís diesel tax rate of 23 cents per gallon is almost 5 cents below the national average and 3.6 cents below the average of surrounding states.


Motor fuel tax receipts are tax rates multiplied by the number of taxable gallons. Over the past 20 years, taxable gallons in Kentucky have averaged a little over 3 billion gallons per year. This means that each penny of the fuel tax equals approximately $30 million in tax receipts. Because taxable gallons have declined since 2004, the increase in motor fuel tax receipts over this period is due to higher excise tax rates.


Vehicle miles traveled and the fuel efficiency of vehicles affect the number of taxable gallons. After the 2001 recession, the number of vehicle miles traveled began to decline and then stabilized. Since 1990, average vehicle miles per gallon has increased 7.3 percent.


Meredith Shores said that the Clean Air Act (CAA) gives the US Environmental Protection Agency (EPA) the authority to regulate levels of six common pollutants under the National Ambient Air Quality Standards. One of the monitored pollutants is ground-level ozone, also known as smog. Ozone forms when nitrogen oxide and volatile organic compounds, for both of which gasoline emissions are a major source, combine with heat and sunlight. Reformulated gasoline (RFG) undergoes increased processing methods designed to decrease the amount of pollutants emitted when it is burned. The process specifically targets nitrogen oxide and volatile organic compounds.


Retailers in any region determined to have high levels of ozone in 1990 were required to sell RFG rather than conventional gasoline once the program officially began in 1995. States with regions that had some areas with higher levels of ozone had the option to opt in to the program. Governor Jones issued an executive order in 1993 enrolling Louisville and Northern Kentucky into the program. Retailers in Boone, Campbell, Jefferson, and Kenton counties, and portions of Bullitt and Oldham counties, were included.


According to the executive director of Louisvilleís Air Pollution Control Board, as of 2008 RFG accounted for an estimated decrease in emissions in Louisville of 7,000 pounds per summer day.


CAA has an anti-backsliding provision, which means that once pollution decreases to the desired level, that level has to be maintained. If the use of RFG were no long required, Kentucky would have to adopt other policies that would yield similar emissions reductions.


At the national level, RFG cost approximately 18 cents more per gallon in 2014. There was a 10 cent difference between prices in Louisville and Covington, which use RFG, compared to Cincinnati and Lexington, which do not. Nearly 400 million gallons of RFG were sold in Kentucky in 2014. If these differences represent the additional cost of RFG over conventional gasoline, RFG could cost Kentucky residents and businesses an estimated $40 million to $72 million per year. However, the differences could represent other factors as well as RFG.


Inhaling ozone can cause inflammation in the lining of the lungs, which can aggravate pulmonary and cardiopulmonary functions. Empirical evidence suggests that African Americans, women, children and the elderly and those with inhibited cardiopulmonary function may be at a greater risk of severe reactions from ozone exposure. Ozone levels can also produce negative environmental impacts.


In response to questions from Senator Seum, Mr. Nutt said this study deals with noncommercial vehicles.


Senator Seum said he and others have advocated eliminating the weight distance tax. He observed a 15 cent difference in the price of gas from Louisville compared to Waddy. His mileage reduction from RFG is more than 1 to 2 percent.


In response to a question from Senator Seum, Ms. Shores said the study did not address air quality credits.


In response to questions from Representative Arnold, Ms. Shores said Ohio does not have a RFG requirement. The Cincinnati area does have additional requirements for conventional gas during the summer. If Kentucky were to get rid of RFG, the state would be required to cut emissions in another way. Mr. Alteri said the CAA does take into consideration cross state pollution. Ozone is more regional in nature. The airport is a significant factor in the levels of ozone in northern Kentucky


In response to a question from Senator Seum, Mr. Alteri said that RFG was one of 10 options that Governor Jones chose to implement into the State Implementation Plan (SIP). Senator Seum requested to see the other options.


In response to questions from Senator Seum, Mr. Alteri said that Kentucky does have the option to stop using RFG, though the state will need to address the anti-backsliding provision of the CAA, get approval from EPA, and meet other requirements. Air quality continues to improve in Kentucky.


Senator Seum said that the cost of RFG cited in the report puts Kentucky at an extreme disadvantage. RFG is required in some local areas because the areas do not want to lose polluting industries. Air quality credits are used to allow polluting companies to conduct business.


In response to questions from Senator Carroll, Mr. Alteri said the industry in Calvert City, Livingston, and Paducah cause the areas to have high levels of ozone. Mr. Nutt said instead of the gas tax, a flat fee is paid by drivers of electric cars.


In response to questions from Senator West, Mr. Alteri said Covington has RFG; Cincinnati has the Reid Vapor Pressure (RVP) requirement. RVP is about 6 cents cheaper but reduces less ozone. Kentucky could use RVP if the state addresses the anti-backsliding rule. Mr. Nutt said Ohio has a flat tax on gasoline. He will provide trend information on the tax receipts. If the trend in taxable gallons is flat, it is likely that receipts have not increased much. There is not much paperwork for the state to collect the tax because the tax is collected at the wholesale level. It is possible to piggyback onto federal gas tax collection.


In response to questions from Representative Simpson, Mr. Alteri said there is no automatic mechanism in place to determine if an area no longer requires RFG. State action would be required to remove RFG in compliance with standards. EPA designates monitored areas using the metropolitan statistical area.


In response to a question from Senator Seum, Mr. Alteri said the offset program is not a 1:1 ratio as outlined by the CAA. If an area is out of attainment and emissions are added to the area, they must be offset with reductions. Offsets are tangible and monetized through the offset program.


Senator Carroll said that the plan is for the committee to meet during the session to choose topics for 2016.


The meeting was adjourned at 12:07.