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September 09, 2003
Oil and Gas Conservation Commission Building
Casper, Wyoming
Representative David Miller, Chairman
Senator John Hines
Senator Mike Massie
Senator Charles K. Scott
Representative Doug Osborn
Representative Ann Robinson
Representative Harry Tipton
John Rivera, Senior Staff Attorney
Gerald W. Laska, Staff Attorney
Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.
Representative Jane Warren
All meeting materials and handouts provided to the Committee by the Legislative Service Office (LSO), public officials, lobbyists, and the public are referenced in the Meeting Materials Index, attached to the minutes. These materials are on file at the LSO and are part of the official record of the meeting.
Chairman Miller called the meeting to order at 8:42 a.m. The following sections summarize the Committee proceedings by topic.
Brent D. Sherard, M.D., State Health Officer, and Iris Oleske, State Medicaid Agent, presented a report on the Department of Health's Medicaid Cost Containment Program (Appendix 3). Ms. Oleske reviewed statistical highlights of the report.
The Prior Authorization Program has been implemented for two classes of drugs, proton pump inhibitors and Cox-2 inhibitors, producing savings of $1.2 Million. The Refill Too Soon limits have produced savings of over $1 Million between September, 2002 and June, 2003.
Antoinette Brown, Medicaid Pharmacy Specialist, joined in the presentation. In response to a question from Senator Scott, she explained that the calculated savings are based on comparison to a reference month, which was six months before the cost containment program began. Senator Scott asked if some of the claimed savings represented shifting of usage to other drugs or cost categories. Ms. Brown confirmed that was possible, but she did not have that information because she inherited the program when she started in May, and would have to collect additional information. Chairman Miller and Senator Scott asked that that information be provided, as the numbers are very misleading without it. Ms. Brown and Ms. Oleske stated that there will definitely be savings shown because the programs deter excessive use and encourage use of generic drugs, which cost approximately 25% of brand name drugs.
Ms. Oleske next described the Lock-In program, which deters excessive use by limiting recipients of narcotic drugs to the use of one prescriber and one pharmacy. Although no cost savings have been calculated, the doctors and pharmacists are very much in favor of the program because it leads to better patient care and discourages drug-seeking behavior.
Ms. Oleske next reported on the department's utilization management strategies, including pre-certification of hospitals for emergency and extended psychiatric care, rehabilitation, transplants and residential care, random audits, hospital outliers and focused reviews. Most of those services are contracted out by the department, and realized net savings of approximately $2.9 Million after contract costs.
Senator Massie asked how the legislature could facilitate cost containment. Ms. Oleske stated that the cost per service and cost per recipient have been fairly steady, but that the number of eligibles is increasing sharply due to increasing poverty and cost of private health insurance. The costs of the blind, disabled and aged recipients are increasing faster than other categories.
Chairman Miller asked why those costs are increasing faster. Ms. Oleske stated that there had been a pay increase for caregivers, and that the care needs of a relatively small number of people are becoming much more acute. Senator Scott observed that, since the numbers have primarily increased for low-utilization categories such as children and the poor, the cost increase must be attributable to increased utilization. Ms. Oleske agreed.
Representative Tipton asked if providing home-based care produces significant savings. Ms. Oleske stated that the Department does an annual cost effectiveness report to the federal government, and will provide a copy of that to the committee. There followed a general discussion of the potential benefits of and possible cost shifting caused by the Long Term Care Home and Community-Based Services Waiver (LTC/HCBS) program. Senator Scott asked whether some recipients are on waivers who would not otherwise necessarily be in a long term care facility. Ms. Oleske stated that might be possible, although recipients must meet the long-term care requirements before being eligible for a LTC/HCBS waiver. Representative Tipton observed that early reports are that the problem of staff turnover in long term care facilities has improved due to last year's 'footnote 9' funds, with the turnover rate down from 80-90% to 50%.
Aimee Lewis, Pharmacy Consultant for the Department of Health, then reported on the Preferred Drug List program. The Wyoming program is being developed by a contractor, is modeled on a successful program in Oregon, and is expected to have the first three drugs listed in January, 2004. Ms. Oleske added that the contract provides access to research reports and data from a consortium of 15 states. The current cost is $950,000 per state but will be less if more states join the consortium.
Ms. Oleske next addressed the Medicaid Program Status Report, referencing spreadsheets showing the number of recipients, costs per recipient and total expenditures by service category for mandatory Medicaid services and for optional Medicaid services. (Appendix 3, second tab).
Senator Scott asked if school districts are paid as providers when they supply services such as therapy. Ms. Oleske responded that some school districts use contractors to supply therapy, and that the contractors are paid as providers, but that generally school districts do not bill Medicaid for those services because federal funds are used to pay for court-ordered placements. Senator Scott then asked if Medicaid involves too much paperwork for the schools. Ms. Oleske stated that the school districts have the choice of whom to bill if using local money. Senator Massie observed that school districts probably don't bother with Medicaid because all school funding is now either federal or state money, but their choice affects the state general fund and they may need to be encouraged to participate.
Senator Massie asked about the gap between Medicaid's provider payment levels and private insurance levels. Ms. Oleske was not sure, but stated that the goal is to pay 90% of Medicare levels, that this year's payments were about even with Medicare, and that Medicaid payments were about 60-65% of the amount billed by providers.
Senator Massie next asked if doctors are refusing Medicaid patients. Ms. Oleske replied that she has not heard of that being a problem, and that 88% of doctors in Wyoming bill Medicaid. However, only 50% of dentists are enrolled because Wyoming pay rates for dentists are at the tenth percentile of third party payors.
Senator Scott observed that Wyoming's provider payment rates are about the same as other states, and asked what percentage of facility costs are not paid by Medicaid. Ms. Oleske stated that Medicaid covers approximately 80% of in-patient costs and 46% of outpatient costs, creating an unintended reverse incentive to the use of less expensive out-patient care. Senator Scott commented that this payment schedule results in a hidden cost shifting to private hospital patients and private third party payors, and asked if it would help the private payors if Medicaid paid 100% of facility costs. Ms. Oleske stated that the department is currently studying the fiscal impact of such a change, and that preliminary indications are that the change to 100% payment would cost an additional $5 Million per year. Senator Scott stated that legislation to implement that change might be indicated.
Senator Massie asked if federal Medicaid regulations would allow the state to tie the increased reimbursement to performance conditions. Ms. Oleske stated that such conditions were allowable, and could be tied to the desire of some hospitals to become staff magnet facilities or patient magnet facilities under the Plaintree approach. She believed that there would have to be a transition period whereby facilities could be paid the higher rates while they are in the process of being certified under the new standards.
Representative Tipton asked if the department would favor allowing increased authority for allied dental care professionals to provide care and be paid as providers. Ms. Oleske agreed.
Senator Massie asked if the department would favor authorization to pay for medical transplants, and if a statutory change would be required. Ms. Oleske stated that the department has investigated the question, and that it appears there would be on average one or two bone marrow transplants, two kidney transplants and one heart or liver transplant per year under Wyoming Medicaid – not much money to save a life. She stated that the department's assistant attorney general has advised that the change could probably be made by rule and regulation, but that the department would prefer having statutory authority for transplants.
Senator Scott observed, and Dr. Sherard agreed, that because of the shortage of donor organs there probably would be no additional lives saved, just a difference in whose life is saved. Ms. Oleske stated that any transplants would only be approved if the facility were certified and the recipient eligible under accepted treatment protocols.
Representative Osborn asked if other states pay for transplants. Ms. Oleske believed that Wyoming might be the only state not paying for transplants under Medicaid. She estimated the cost at $500,000 per year for five transplants per year.
Ms. Oleske next addressed proposed federal actions and their impact on Wyoming Medicaid. The Medicare drug bill in the Senate would make Medicaid the primary payor, while the house bill would make Medicare primary. The pharmaceutical industry is lobbying hard to prevent cost containment measures being included in the legislation.
Senator Scott stated that the federal government is attempting to shift health care costs to the states through block grants, that the governors' association could not agree on a recommendation, and that the National Conference of State Legislatures will probably recommend "best-price" legislation with stronger manufacturer audits. Ms. Oleske agreed, and stated that the federal share of Wyoming Medicaid is expected to decrease from 64% to 56% over the next biennium.
Representative Osborn asked what the total Medicaid budget is. Ms. Oleske stated that it is currently about $350 Million, with 64% federal funds. Senator Scott observed that the decrease to 56% would therefore be approximately a $14 Million decrease to current funding.
Ms. Oleske next reported that the federal HIPPA regulations, in addition to addressing medical records privacy, also require providers to comply with a standardized health records and billing process. The department's HIPPA-compliant computer program, which will go live September 29th, will make it easier to catch fraudulent or duplicate bills, but will be very difficult for some providers who are not ready for the new system despite numerous warnings and training sessions.
Ms. Oleske next addressed the "Wyoming Medicaid State Plan: Options and Opportunities" (Appendix 3, tab three), and concerns or problems with selected categories of eligibility. Committee members expressed the following concerns:
- Senator Scott asked if the HCBS Waiver group could be made available only if the parents of the child were working. Ms. Oleske thought that could be done through income disregards;
- Senator Massie asked if the Buy-In program could be expanded by use of a sliding income scale. Ms. Oleske said that is possible;
- Senator Scott asked if the 1996 Standard of Need is indexed to inflation. Ms. Oleske stated that it is not, and that it is currently equivalent to about 50% of the federal poverty level;
Ms. Oleske stated that several other categories of eligibility have problems:
- Some people who are medically eligible lose that eligibility as a result of the medical treatment, which they receive, from Medicaid. They then forego the treatment when they lose the eligibility, which renders them medically eligible again;
- SSI recipients with income between 100% and 300% of SSI are now optionally covered. The department is checking the effect of cutting off the coverage at 275% of SSI;
- The medically needy category currently requires a spend-down of income to qualify. The department would prefer a premium buy-in program;
- Wyoming currently covers the fewest classes of health care providers. Possible additions include speech pathologists for adults, physical therapy, preventive services for adults, personal care services and podiatrists.
Senator Massie noted that Utah Medicaid pays for personal care services if they render the recipient employable. Representative Osborn stated that preventive health care should be emphasized. Senator Scott inquired how the department distinguishes between optional services that require legislative authority from those that can be adopted by rule and regulation. Ms. Oleske stated that the distinction is not entirely clear, and is based mostly on history and tradition. In response to Senator Scott 's asking if Wyoming's reputation as a low-coverage state is deserved, Ms. Oleske stated that Wyoming's categories of eligibles is typical but the level of compensation for mandatory coverages is low.
Robert Clabby, Administrator of the Developmental Disabilities Division, presented a report on his program's current status and anticipated changes for the next biennium (Appendices 4, 5). The division estimates that there are 8,000 eligibles in the state, of which 4,000 are currently being served. There are 90 people on a wait list. The average time on the wait list has been reduced to less than one year because of supplemental funding. The division's study projects modest growth in the service population. Service capacity is limited by funding limitations and staff turnover due to non-competitive salaries.
Beverly Morrow, Administrator of the Aging Division, presented a report on the long-term care waiver program. The fastest population growth over the next ten years will be among the elderly, especially among those over 85. There are 1,000 waiver slots available, with 135 people wait-listed. Time on the wait, using the first in/first out rule, averages six months. Medicaid pays 65% of nursing home costs, at an average of $26,874/person/year. The number of waiver slots is determined through the budgeting process; funds for additional slots are being requested in the exception budget.
The committee proceeded to discuss possible legislation for the 2004 session:
Preferred Drug List. Ms. Oleske requested legislative support for continuing the preferred drug list program, similar to last year's bill 03LSO-155. Senator Scott stated his belief that legislation is not necessary, that the department already has regulatory authority for the program and the legislature expressed its approval in a budget footnote, which could be renewed. Representative Tipton stated that the appropriations committee would probably support renewal of the footnote at its meeting in January. Senator Hines' motion to table resurrection of 03LSO-155 was seconded by Senator Massie. The motion carried on a voice vote.
Hospital Payment Rates. Senator Scott moved to have a bill drafted to increase Medicaid's payment of hospitals' facility charges, for both in-patient and out-patient services, to 100% of the statewide average of the actual cost of such services, as adjusted annually using the institutions' cost reports. Eligibility for the increased payment would be conditioned upon the facility having a certified patient care improvement program such as Plaintree or a patient magnet program, or the functional equivalent of those programs, or having a plan in place to become certified within two years. Following discussion, the motion carried on a voice vote.
Medicaid Payment – Special Education. Senator Scott moved to have a bill drafted to modify the reimbursement to school districts under the school foundation program, such that the districts would not be paid from the foundation for therapy services to the extent the services are payble by Medicaid for a Medicaid-eligible student, and providing for a transfer from the school foundation to Medicaid for the state's share of the services.
Senator Massie agreed with the idea but suggested that the mechanism simply be to deny payment to school districts for special education costs to the extent that those costs are payable from Medicaid's federal matching share for a Medicaid eligible student. Ms. Oleske and Senator Scott agreed that the latter mechanism would be easier to administer.
Ms. Oleske stated that it would only be possible to identify those students already enrolled in Medicaid, not those are who eligible but unenrolled. Senator Massie agreed that the bill should apply to Medicaid-enrolled students, not Medicaid-eligible students.
Representative Robinson suggested that language be added to the bill to encourage school districts to apply for federal funding for the costs of administering the program. Senator Scott agreed, adding that could be accomplished by adding to the authorized powers of the school district boards of trustees.
The motion to draft a bill as described carried on a voice vote.
Organ Transplant Coverage. Representative Robinson moved that a bill be drafted to authorize Medicaid payment for human organ transplants, and requested the department to provide cost estimates. The motion carried on a voice vote.
Medicare Gap Coverage. Representative Robinson moved that a bill be drafted to afford Medicaid coverage to those disabled individuals who have been approved for Supplemental Security Income or Social Security Disability Income but who must wait two years before becoming eligible for Medicare coverage. The motion carried on a voice vote.
There being no further business, Chairman Miller adjourned the meeting at 4:11 p.m.
Respectfully submitted,
Representative David Miller, Chairman