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June 13, 2005
Central Wyoming Counseling Center
Casper, Wyoming
Senator Charles K. Scott, Co-Chairman
Senator Cale Case
Senator Kathryn Session
Representative Doug Osborn, Co-Chairman
Representative Roy Cohee
Representative Pete Jorgensen
John A. Masterson
Michael McVay
Harold H. Gardner
Stephen H. Pecha
Gerald W. Laska, Staff Attorney
Bill Mai, Senior Legislative Analyst
Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.
Max Maxfield (represented by Jeff Conley, State Auditor's Office)
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.
Co-chairman Scott called the meeting to order at 10:00 a.m. Please refer to Appendix 2 to review the Committee Meeting Agenda. He reiterated the committee’s gratitude to the Milbank Foundation for their assistance at the previous meeting. Together, the committee members and members of the Milbank Foundation’s Small States Group identified three key strategies for the committee to pursue in it’s review of Department of Health (DOH) spending. These strategies - the maximization of federal funds, benefit design analysis, and containment of costs associated with the highest-cost users, should help guide the committee with regard to its ongoing efforts to provide the Legislature with a report of this review.
Co-chairman Scott pointed out that Medicaid continues to be the main focus of this review, since it is the single largest cost component in the DOH budget. In order to contain costs, it is imperative to examine the expenditures on the highest cost users. History bears out that 30% of insureds compose 70% of costs, while 1% of insureds account for 30% of costs. In the May committee meeting, the possibility of breaking Medicaid out to a separate department was discussed. That idea has largely been rejected, due to the budgeting reform already taking place within DOH and the Governor’s budget office. However, Senator Scott stated, this committee needs to discuss budgeting/modeling process.
Dr. Hank Gardner presented information regarding highest cost clients (see Appendices 3 and 4). He explained that the Wyoming Health Information Network is a program undertaken by the Governor’s Planning Office, via contract with Dr. Gardner’s Human Capital Management Services (HCMS) company. Under the Health as Human Capital analytic approach undertaken by HCMS, expenditure information is divided into quintiles of cost. The information used for the analysis consists of data for state employees, recipients of workers’ compensation benefits, Department of Family Services clients, and Department of Health clients. The total number of people for whom information was gathered from the various departmental databases is approximately 100,000 for calendar year 2004. This data bears out that approximately 3% are in the 5th quintile of expenditure, averaging $66,700/year, and experiencing a 0.3% turnover rate. Additionally, 6.5% of the subjects in the study fall in the 4th quintile, averaging a cost of $4,199/year, and experiencing a turnover rate of 2.4%. 90.5% of the population falls in the 1st quintile. The average cost per individual in this group amounts to $3,068/year, and they have a turnover rate of 17.9%.
Dr. Gardner explained the detailed breakouts of categories recipients. His research indicates that the most significant cost savings, while impacting the fewest participants, would be in the high cost areas. The fewest number of participants fall into this category, and ironically, the least amount of positive result is derived from this highest cost ratio expenditure. Dr. Gardner explained that many of these participants receive services from multiple providers, and that often communication between the providers is inadequate. He continued to explain that the economic concept of diminishing returns is apparent at this level of service consumption.
Solutions to the problem of the high cost of operating these programs include giving responsibility for selection of services and payment for those services directly to the participant, direct contact and payment between the provider and the recipient, controlling poly-pharmacy use and costs, changing technical services (i.e. CAT scans, x-rays, etc.) incentives, and tighter controls on case management efforts.
The Committee recessed for lunch at 12:00 p.m.
Co-Chairman Osborn resumed the meeting at 1:15 p.m.
Dr. Gardner discussed the pilot programs currently being developed by the Executive Branch in consultation with the University of Wyoming and Dr. Gardner’s organization. These pilot projects will focus on the high cost risk groups, and multiple program risk groups. The rationale behind this focus is, again, that a disproportionate level of expenditure occurs in the procurement of services for participants who fall into these two groups.
The pilot programs will adopt a “drug-court method” such that the families using the service have to appear before a governing body to ensure that they are adhering to their plan. Components of the plan include a master’s level nurse and a pharmacist visiting the participants’ home to do primary prevention, and tracking the participants’ use of multiple health services. Pilot projects will be located in Albany and Laramie counties. Results will be available early next year, and 100 control families will be involved. Among the goals of the project, is the provision of direction for nursing and pharmacy curricula.
Ms. Iris Oleske, State Medicaid Officer; Mr. Greg Gruman, Office of Healthcare Financing Administrator; Ms. Ginny Mahoney, Chief of Staff, presented information regarding the maximization of federal funding. Among the strategies considered for maximizing funding for Medicaid activities, the implementation of provider fees was the first to be discussed.
Mr. Gruman told the committee that provider fees are allowed under federal provisions, and that 25 states currently employ provider fees. Senator Scott asked Mr. Gruman if implementing a provider fee would ultimately mean a tax on the consumer. Mr. Gruman responded by saying that the fee would be passed on by the provider to the consumer. Senator Scott also asked if the federal government would be likely to increase its share of Medicaid reimbursement to cover provider fees. Mr. Gruman said that the federal match likely would not increase to cover a provider fee, and that the provider would either have to absorb the costs of new fees, or pass them along to non-Medicaid patients.
Ms. Oleske reviewed a document outlining provider taxes/fees entitled “Overview of State Medicaid Provider Tax Programs,” which was distributed to the committee, and is included here as Appendix 5. Among the federal requirements for provider taxes/fees, Ms. Oleske pointed out that they, at a minimum, must be broad-based, uniformly imposed, and cannot hold providers harmless.
States that have imposed these fees include Illinois, which imposed a hospital tax, the proceeds of which go into a trust fund, the proceeds of which are used to fund various special Medicaid programs; Louisiana, which imposed a tax on patient revenues, and is expected to result in $203 million of new federal funding primarily to be used to cover the costs of uncompensated hospital patient care; and Pennsylvania, which imposed a nursing home tax of $13/day/bed, and is expected to yield $344 million per year to be used to increase Medicaid nursing home provider reimbursement rates. Additionally, Missouri established a provider tax on licensed retail pharmacies, hospitals, nursing homes, and Medicaid managed care plans.
Mr. Pecha asked Ms. Oleske if there are costs associated with implementation of these fees/taxes. Ms. Oleske replied that there are costs associated with implementation, and that they are considered administrative costs under federal guidelines, and therefore are included as reimbursable costs in the Medicaid match rate.
Senator Sessions discussed the Department of Education’s coordination effort, which is primarily concerned with court-ordered placement matching funds. Ms. Oleske told the committee that proposed statutory changes would allow DOH to seek a waiver which would allow the use of school foundation program monies for court-ordered placements for the purpose of generating federal matching dollars. All states except Wyoming and Hawaii have this provision in place.
Senator Scott reminded the committee that this bill has failed in each of the prior two legislative sessions.
Ms. Oleske presented information about a concept known as “Cash and Counseling.” She provided a written summary to the committee regarding this subject (Appendix 6). Under this arrangement, a fiscal agent counsels consumers in the area of utilization of service providers. Funding is provided to the client, and the client then makes his own decision about how best to utilize services to meet his needs. The result of this funding method is increased consumer satisfaction, and decreased fraud.
Senator Case presented information about the importance of maintaining the Wyoming State Training School (WSTS) as an option for those clients, and their families, who desire to utilize its services. He stressed that the material he was presenting represented his own work and thinking, and not that of the committee. His handout is included as Appendix 7. Senator Case told the committee that, in his view, WSTS is a very different place than it was in the early 1990s at the time of the Weston, et al lawsuit. He stated his belief that it is a viable option for clients with developmental disabilities who require small group home settings, and at the same time have need for the specialized medical care that is available at the facility. Senator Case believes the WSTS rivals any of the local community facilities, and may be the best option for many of the people requiring these services.
Public Input on Wyoming State Training School Operations / General Public Comments
The committee accepted public testimony regarding all of the issues it has taken under consideration. Several speakers addressed the members. A brief summary follows:
Mr. Loren Richards, representing Protection &Advocacy, Cheyenne, discussed the issue of placing people in the Wyoming State Training School as a cost-based decision. He told the committee that cost would probably not be a defensible determinant of placement in a court of law. He did not disagree that it is a viable alternative that probably ought to be made available as a choice to clients and their families. Senator Case reiterated that he did not favor cost-based decisions, but does favor needs-based decisions.
Mr. Chris Boston, representing NOWCAP Services, Casper, asked the committee to take a close look at the services provided at community-based facilities versus those provided at WSTS. He stated his belief that the community-based providers are more transparent, and provide better service for less expense than does the WSTS. He invited all committee members to visit the NOWCAP operations, to meet the people being served there, and to compare the operation with WSTS.
Ms. Ruth Sommers, representing community service providers, stated her agreement with the goal of choice presented by Senator Case. She contended that the quality of life for the people in community-based programs is better than it would be at WSTS. As a result, capacity in the community-based programs has tripled since 1990. Because of inadequate funding, however, Ms. Sommers does not believe that increased choice is going to make much difference in the lives of the people who have been waiting for services to be available to them. In that regard, cost is still a driver.
Ms. Brenda Oswald, representing the Governor’s Council on Developmental Disabilities, told the committee that the State needs to improve the availability of services at the community level. She believes the community-based programs need to have available for their clients all the services that the WSTS has, such as dental care, in order to accurately judge the effectiveness of one program versus the other. She also said WSTS should continue to make its services more like those in community-based programs.
Mr. Dan Lex, Quality Healthcare Foundation of Wyoming, stated his belief that any provider taxes imposed by the state would be passed on to private payers. He believes the “cash and counseling” concept discussed by the committee would be a good approach, but probably would not end up saving the state money. Because there are so many medication issues, the “green house” concept probably would not work well in Wyoming, he said.
Mr. Dan Perdue, Wyoming Hospital Association, discussed the provider tax issue as it pertains to his constituency. He told the committee the issue would have to be researched, but that it probably would not impact the state’s hospitals to a large degree.
Ms. Diane Hudson, WSTS director, discussed her role in attaining a higher degree of community involvement for people at the WSTS. Since recently accepting the director’s position, she has been reviewing the rules to determine the need and capacity for changes of procedure.
Co-Chairman Osborn announced the next meeting of the committee, set for July 28 & 29 in Casper.
Senator Scott suggested Senator Case and Mr. Masterson review rules and statutes dealing with WSTS and the ability of people to choose its services versus community-based services, and examine the issue of the “level playing field” brought up by representatives of the community service providers. He volunteered to work with Dr. Gardner to develop general ideas for Medicaid benefit and operational changes for discussion at the next meeting.
The committee discussed approaches to finalizing recommendations to be included in the final report to be issued to the full legislature by the September 1 date specified in the language which created the committee.
There being no further business, Chairman Osborn adjourned the meeting at 5:00 p.m.
Respectfully submitted,
Senator Charles K. Scott, Co-Chairman Representative Doug Osborn, Co-Chairman