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October 15, 2003
University of Wyoming Outreach School
Casper, Wyoming
Representative David Miller, Chairman
Senator Mike Massie
Senator Charlie Scott
Representative Doug Osborn
Representative Ann Robinson
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.
Senator John Hines
Representative Harry Tipton
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 8:40 a.m. The following sections summarize the Committee proceedings by topic.
Chairman Miller asked for a motion to approve the minutes of the meeting held September 9, 2003. Sen. Massie stated that there was one additional bill that was discussed at that meeting that was not included in the minutes. The possibility of a bill amending eligibility requirements for the Medicaid Buy-In Program was discussed during the Department of Health presentation, but was not addressed when the subcommittee later discussed and approved by motion specific legislation to be recommended to the full subcommittee. Sen. Massie requested that the minutes be amended to note the additional discussion and bill request. Approval of the minutes was then moved and the motion carried.
The committee continued to clarify the need to correct eligibility requirements for the Medicaid Buy-In Program. Sen. Scott explained that the problem was that a disabled adult earning less than 100% of the federal poverty level ("FPL") could qualify for the program, would receive vocational training or healthcare enabling the person to increase their earnings, but would then be disqualified because the increased earnings took them above the 100% of FPL. According to Sen. Scott, the legislative intent was that, once enrolled under the buy-in program, the person would remain eligible and would pay premium on a sliding scale.
Sen. Massie called Wyoming's eligibility criteria of 100% federal poverty level problematic. The next most restrictive state, Washington, uses 220% of FPL as its eligibility level and most states use 250% to 300%. Wyoming's lower level misses much of the working poor target population who are employed but at a part-time or low paying job without health insurance. Sen. Scott was reluctant to jeopardize a technical clarification bill by also significantly expanding the program. Sen. Massie than requested that the technical correction bill be drafted, but that an attachment be included which would show the approximate cost of raising the eligibility threshold to 150%, 185% or 200% of federal poverty level. Chairman Miller agreed and stated that he would present such a bill to the full committee in December.
The committee proceeded to review bills drafted at the request of the committee at its September meeting.
Chairman Miller requested that Mr. Laska explain the three variations of the bill. Mr. Laska explained that versions W1, W2 and W3 of the bill were identical in providing for payment to hospitals at a rate equal to 100% of the statewide average for equivalent facilities' charges, as adjusted annually by the Department of Health, but varied in their expression of conditions to that increased payment. Version .W1 (Appendix 2) would condition the increased payment upon the facility obtaining either Planetree designation from the Planetree Alliance or Magnet Hospital certification from the American Nurses Association. Version .W2 (Appendix 3) would condition the increased payment upon the facility being certified by the Department as having a patient care improvement or quality staff retention program as defined in Department rules and regulations. Version W3 (Appendix 4) would condition the payment upon the hospital obtaining the highest accreditation rating from the Joint Commission on the Accreditation of Healthcare Organizations.
Sen. Scott explained that the bill has two purposes: to limit the Medicaid contribution to the cost shifting problem created when government programs pay less than the actual cost of services, and to address hospitals' reluctance to fix staff retention problems caused by poor working conditions.
Sen. Massie explained that the Planetree certification focuses on quality of patient care issues but would incidentally improve working conditions for all disciplines, and that the nurses' magnet designation would dovetail with other programs already passed by the legislature such as the nursing education bill.
Rep. Osborn asked about JCAHO certification. Sen. Massie stated his belief that the JCAHO certification would probably not address quality or workplace improvements, as most facilities already have JCAHO certification but have not been forced to improve workplace quality or patient care.
Dan Perdue, Wyoming Hospital Association, told the committee that there are 25 acute care facilities in Wyoming, of which 17 have JCAHO accreditation No facilities currently have Planetree or magnet certification. Mr. Perdue stated that the bills would deprive the hospitals of flexibility in deciding how best to address their own staffing and morale problems but that, among the alternatives suggested, the Association would prefer that any conditions to the increased Medicaid payment be adopted by the department in its rules.
Rep. Osborn asked how much the increased hospital payments would cost. Iris Oleske, State Medicaid Agent, responded that, if every hospital were paid at the higher rate, it would cost $7 Million per year in total dollars, of which 40% or $2.8 Million would be state general funds.
She added that, if the Department were to adopt the certification requirement, it would solicit input from health care providers and the Office of Health Facilities within the department, while being careful to avoid discriminating against smaller facilities that would have fewer resources than large hospitals to develop their own quality improvement program.
Ms. Oleske commented further on the cost methodology in the proposed bills. The statewide average cost would not address excessive costs and the necessary differences in cost per service based on facility size. The department already has a formula in place for auditing compliance with federal requirements, including the National Inpatient Reimbursement Team, that would be more workable and accurate in calculating reimbursable costs. The department would suggest that language incorporating the existing audit formula be used in any bill.
There followed a general discussion of the reimbursement rates for hospitals under the current system. Ms. Oleske explained that the payment of out-patient services is the bigger problem and unintentionally has created a reverse incentive in favor of in-patient treatment. Sen. Massie requested confirmation that the department's existing formula has safeguards against billing abuses that could occur in a cost-plus billing system. Ms. Oleske confirmed that the existing formula would more accurately address the overcharging possibility, and could be easily amended to add quality incentives.
Sen. Scott requested clarification of the amount paid to hospitals. Ms. Oleske explained that on average the Medicaid payments cover 80% of hospitals' costs but the amount for any particular hospital can vary from 50% to 100% of cost. She explained further that, before the year 2000, there were no budget increases for some time. Programs that had to be paid at cost or market rates consumed a larger share of the budget as those costs increased, so discretionary items such as hospital reimbursements fell further below actual cost.
Rep. Miller asked if the problem could be fixed by simply putting enough money in the program's budget to pay hospitals at cost. Ms. Oleske explained that would work if the out-patient reimbursement were paid using the same prospective formula as is currently used for in-patient and if funding were sufficient to cover out-patient costs at the same level as in-patient costs. She stated that the reimbursement formulas are very complex and are primarily established in rules and regulations. The estimated cost increase would be $5 Million per year if both in-patient and out-patient reimbursements were raised.
Sen. Massie explained that historically the legislature could adjust Medicaid payment levels only through the budget process, giving the department more money for specified programs without changing any statutory provisions. If the department were instructed not to request additional funds in the budget process, then the issue of payment levels did not come before the legislature. If the budget was not increased, the department could only take money from somewhere else in its budget to increase reimbursement rates. Ms. Oleske confirmed that the department had requested a fairly large increase in its current biennium budget for outpatient reimbursement but did not receive the funds.
Chairman Miller asked, if the reimbursement levels are established by rule, why the bias doesn't favor out-patient treatment to encourage cost saving. Ms. Oleske answered that the basic system was established about ten years ago, before her tenure. The prospective payment formula was adopted by rule at that time, using historical payment and cost information to establish reimbursement levels. However, there was much less data for out-patient costs than in-patient. The intent was to improve the accuracy as more data was collected but then the years of budget freeze prevented the correction from happening. The methodology in the rules has provision for annual adjustments for nursing home and in-patient rates, but not for out-patient or physician rates. In-patient services take up about 70% of all hospital expenditures; if reimbursements were normalized, in-patient and out-patient expenditures would be about equal.
Sen. Scott observed that the result of the current payment system is a tax on private patients to pay for the 20% of in-patient and 50% of out-patient costs that Medicaid does not pay. There are therefore two problems to be addressed – correcting the incentive toward in-patient care and removing the tax on private health insurance.
Rep. Miller stated that he was not yet convinced a bill is necessary if a simple budget increase would fix the problems. Sen. Scott responded that it appears the governor will not request the appropriation, and that it would take a very elaborate budget footnote to direct the funds.
Rep. Osborn asked if hospital reimbursement is the best place to be spending a budget increase if, for example, an additional $10 Million were put into the Medicaid budget. Ms. Oleske responded that the department's priority funding needs are out-patient services, dental services and home health care. Home health services under the rules are paid at the level of the 1986 Medicare fee schedule, or about half of the current market rate.
Mr. Laska confirmed that the bill as drafted addresses reimbursement for both in-patient and out-patient services. The committee agreed to go forward with version .W2 of the proposed bill.
Sen. Massie moved an amendment to page 2, line 7, to add after the word "program" the words, "or is in the process of developing a program." Following discussion, the motion carried on a voice vote with no opposition.
Sen. Scott moved an amendment to page 1, line 13, after the word "be" to add the words, "made using a prospective payment methodology that produces a rate approximately equivalent" and to strike the words "at a rate equal…." The motion carried on a voice vote with no opposition.
Ms. Oleske suggested that the phrase "statewide average cost" be changed to "actual allowable cost". Sen. Scott asked how the cost-plus inflationary problem would be avoided. Ms. Oleske stated that the prospective payment methodology has built-in brakes that make sure the program does not reward overbilling, and that the "allowable cost" language would incorporate those provisions. Sen. Scott moved an amendment to page 1, lines 14-15, to delete the words "statewide average" and substitute the words "actual allowable…." The motion carried on a voice vote without opposition.
Rep. Osborn moved an amendment to page 2, lines 1-2, to delete the balance of the sentence after the word "department." The motion carried on a voice vote without opposition.
Sen. Massie moved an amendment to page 2, line 7, to add the sentence, "Department certification may consist of certification under the patient care improvement program by the Planetree alliance, the staff retention quality program by the American Nurses Association or a similar certification program." Following discussion, the amendment failed on a voice vote.
Sen. Scott moved, seconded by Senator Massie, for the subcommittee to recommend the bill to the full committee. The motion carried 3-2, with two absent. Sens. Scott and Massie and Rep. Robinson voted aye. Rep. Osborn and Chrmn. Miller voted no. Reps. Tipton and Warren were absent.
Chrmn. Miller explained the bill (Appendix 5) as a simple one to add transplant coverage to the Medicaid program.
Rep. Osborn asked for the estimated costs of the bill. Ms. Oleske answered that the department estimates $500,000 per year of general fund increase for five transplants per year. The estimate was made based on the numbers of transplants for children under Medicaid and the number and types of transplants covered by the state employees health insurance program. Rep. Osborn stated that he was suspicious of those numbers and asked that the department research other states' Medicaid costs for transplants.
Sen. Scott stated that this is a very tough issue, that it necessarily involves health care rationing, and that it would be a expensive benefit for very few recipients. Perhaps the money would be better spent on expanding dental care or tobacco cessation programs. Sen. Massie responded that 49 other states cover transplants, that Wyoming Medicaid already pays for transplants for children and that a successful transplant could allow a young adult to have 30-40 more productive years. Rep. Robinson added that there are other immeasurable savings such as medical care avoided and foster care for dependent children not becoming necessary.
Rep. Osborn questioned what criteria the department would use to approve transplants. Ms. Oleske stated that the department would put the criteria in its rules, and that it would include requirements that the facility be Medicare certified, that the hospital's own criteria be met and that the procedure be approved through the department's contract reviewer.
Following further general discussion, Rep. Robinson moved and Sen. Massie seconded that the subcommittee recommend the bill to the full committee. The motion carried 4-1 with three absent. Sen. Massie and Reps. Osborn, Robinson and Miller voted aye. Sen. Scott voted no. Sen. Hines and Reps. Tipton and Warren were absent.
Ms. Oleske explained the bill (Appendix 6) as an expansion of Medicaid eligibility to disabled adults who have been approved for Social Security Disability or Supplemental Security Income benefits but who, under those programs, must wait two years before becoming eligible for Medicare. Their Social Security income makes them ineligible for state Medicaid.
Ms. Oleske further explained that the department had reconsidered whether this coverage should be accomplished in a statute, while all other eligibles are covered by rule and through the budget process. Chrmn. Miller asked the staff attorney for further explanation. Mr. Laska explained that the categories of Medicaid eligibility to date are not statutory and that passage of this bill would create a unique statutory extension for this one group; if the history of the program has been to define coverage through the budget and rule process, then this category could be covered in that way also. Ms. Oleske stated that the department would prefer that method.
Sen. Scott stated his belief that all categories of eligibility should be statutory, that the executive branch should not be expanding coverage by simple rule, and that at least this category could be made statutory as a start. Chrmn. Miller stated that may call into question the legitimacy of the regulatory eligibility categories. Rep. Robinson stated that this bill was drafted at her suggestion, and that she would prefer to first attempt coverage through the budget process or, failing that, an individual bill.
Sen. Scott asked for cost information. Ms. Oleske answered that she is still researching that, but probably one-half to one-third of SSDI recipients would be covered.
There being no motion to move the bill forward, the bill was set aside without a vote.
Ms. Oleske explained the bill (Appendix 7) is intended to expand Medicaid general funds by leveraging federal funds through the school system. Almost all states use Medicaid funding as one of the vehicles to provide full services to children who have special healthcare needs identified through an Individual Education Plan. The bill would force the schools into participating as a provider through Medicaid by removing the cost of such services as a reimbursable expense under the school foundation formula.
Sen. Massie stated that it would be important to know the amount of money involved and whether it would be worth creating additional administrative burden. He also noted the timing of the Medicaid payment would differ from the school foundation reimbursement, which comes in the year after the costs are incurred. Ms. Oleske replied that providers must bill Medicaid within a year of incurring the expense, and that Medicaid would be capable of paying the school districts as frequently as monthly. Sen. Scott added that could improve the districts' cash flow, and that in the startup year they might be paid twice.
Chrmn. Miller asked what percentage of special education students are on Medicaid. Ms. Oleske did not know, but said 10% of all students are on Medicaid. Rep. Osborn asked that the department and LSO research the costs before the December committee meeting.
Sen. Massie noted that there are many special education services under a typical I.E.P. that are not related to therapy or health. Ms. Oleske stated that Medicaid would not pay for all special education related services but only those that are therapy or health related.
Sen. Scott moved an amendment to page 2, line 10, to insert after the word "services" the words "eligible to be paid under the Wyoming Medical Assistance Act pursuant to W.S. 42-4-103(a)(xxix)" and on line 11 to insert after the word "under" the words "that Act." while deleting the rest of the sentence. The motion carried on a voice vote without opposition.
Rep. Robinson moved an amendment to page 2, line 8 by inserting at the beginning of the sentence, "For the purpose of reimbursement,…" The motion carried on a voice vote without opposition.
Rep. Robinson moved and Sen. Massie seconded that the subcommittee recommend the bill to the full committee. The motion carried 5-0 with three absent. Sens. Scott and Massie and Reps. Osborn, Robinson and Miller voted aye. Sen. Hines and Reps. Tipton and Warren were absent.
Chrmn. Miller invited comment from the public.
Loretta Wolf, Governor's Planning Counsel for Developmental Disabilities, told the committee that the reimbursement levels for dentists need to be increased. They have not been increased for many years and most dentists as a result do not accept Medicaid patients. Funding also needs to be increased for the waiver program, as there is a several-years long waiting list due to under funding.
Susie Wacker, Wyoming Medical Society, commended the department for its work to improve physician reimbursement. The department worked with the Society on a three-year phase in of a relative value scale for Medicaid payments to physicians. The funding levels must be maintained, however, in order to preserve access to physicians.
There being no further business, Chairman Miller adjourned the meeting at 11:50 a.m.
Respectfully submitted,
Representative David Miller, Chairman