September 23, 2005

Filing Period for Special Elections Closes
Secretary of State Robin Carnahan has closed the filing period for three special elections scheduled for this Fall. Two vacancies occurred because of deaths - those of Senator Larry Gene Taylor and Representative Richard Byrd. Republican Jack Goodman of Mt. Vernon, Democrat Nolan McNeill of Cassville and Libertarian Robert Hempker of Hollister have filed for the Senate seat left vacant when Taylor died. Republican Moira Byrd of Kirkwood and Democrat Jane Bogetto of Kirkwood have filed for the seat left vacant upon the death of Byrd. Moira Byrd is his widow. The other vacancy occurred when Representative Frank Barnitz won a Senate seat. Republican Jason Smith of Salem, Democrat Bobby Simpson of Salem and Libertarian Brent Caudill of Steelville has filed for that seat.

 Medicaid Reform Commission Meeting September 12-15
The Commission met for four days in Jefferson City in conjunction with the legislative special and veto sessions. Topics of discussion were Medicaid reform in other states, managed care for Medicaid, and Providers.

A large portion of expert testimony focused on developing a system that rewards those that are proactive in their own healthcare, such as health savings accounts, enhanced benefit accounts, or a voucher system. Such accounts would allow Medicaid recipients to earn extra money if they displayed healthy behavior, i.e.; regular checkups, attending anti-smoking or weight loss programs, or a regular exercise program. The money earned could be used for services not covered by Medicaid, such as optional services cut by the legislature; dental and optical.

EXPERT TESTIMONY

Matt Salo with the National Governor’s Association informed the Commission that Medicaid covers over 50 million people nationwide. This has driven NGA to ask Congress to look into Medicaid reform. Congress was moving forward in efforts to save the federal government $10 billion over 5 years, but with the Hurricane Katrina disaster most of those efforts have been put on hold. Salo told the Commission that Congress feels this may not be the right time to move forward on reform, but there would be some recommendations that would probably be implemented this year, including limiting prescription drugs, cracking down on elders who are shielding assets, cost-sharing, and increasing flexibility in benefits states can offer.

The two issues that have gained the greatest bi-partisan support were prescription drugs and long term care reform.

Prescription Drugs – Salo stated that Medicaid is paying too much for prescription drug coverage and there needs to be more transparency and tools to bring drug costs down. Those tools would include: closed formulary; increased minimum rebates for brand name drugs; “authorized generics;” purchasing pools; and a federal upper limit. Salo said, “States need a better sense of what prices are really being paid in the real world” for prescription drugs; more transparency is needed to see those real prices. Also, Medicaid is the largest payer of prescription drugs and the only payer who can not operate with a closed formulary. States should be given the option of closed formularies. (VA has a system with the new Medicare PDP) The option of having closed formularies would mean the state would not be guaranteed a rebate or the “best price,” but some states would have enough negotiating power and leverage they could negotiate lower overall drug prices than the current system even with supplemental rebates. Salo said with the introduction of new price methodology states should have flexibility to determine appropriate dispensing fees for drugs. Dispensing fees should not be linked to the price of drugs or capped. Another suggestion would be to increase the minimum rebates states collect on brand name drugs by 20% with out eliminating Medicaid’s “best price” provision. States that continue to rely on drug rebates and “best price” should be made to ensure all drugs are included in these calculations, including “authorized generics.” Salo suggested that a federal reimbursement ceiling for payment for all drug products should be established based on the AMP and the current FUL, which is applied to classes of drugs with three therapeutically equivalent products should be maintained, but should reflect 150% of AMP not 150% of AWP. The Commission discussed the “clawback” provision requiring states to make payments to the federal government to offset the cost of transferring prescription drugs for dual eligible from Medicaid to Medicare. Dir. Dittmore said the state would lose approx. $30 million and asked Salo his recommendation. Salo told the Commission that some states would be saving money, but others would experience a significant loss. He didn’t really recommend Missouri take any certain action, but informed them that some state are simply refusing to make the payment, while others are trying to block the payments by filing lawsuits.

Rep. Sater told the committee that closed formularies may be the only way to force manufacturers to offer more competitive pricing.

Long Term Care – Salo informed the Commission that Medicaid provides half of all LTC costs in the country and has become the default for LTC. Statistics show that 80% of seniors own their home with 70% owning them free and clear; amounting to $2 trillion in assets. With many new ways to transfer significant amounts of assets to trusts, etc. to make people look impoverished on paper reform in this area is a necessity. Recommendations at the federal level include: 1) increase look-back period to 5 years (from current 3); 2) penalty periods begin at the time of application; 3) crack down on sheltering of assets to annuities, trusts or promissory notes. Salo also said that the White House and Congress agree that a clear message needs to be sent to the people that those with assets will finance their own LTC. Salo recommended the Commission look at encouraging LTC insurance, reverse mortgages, and state recovery programs.

Benefits Packages and Cost Sharing – Benefits flexibility and increased cost sharing should be considered in all Medicaid reform discussions. States should be able to implement enforceable cost-sharing practices throughout the Medicaid program by increasing participant’s responsibility for the cost of their health care and encourage cost-effective care. Since the Medicaid population is very diverse and includes medically frail as well as relatively healthy, benefit packages should not be the current one size fits all, but should be tailored to meet thedifferent health care needs of the beneficiaries.

Jim Frouge, Center for Health Transformation , gave the Commission recommendations for a “21 st Century Intelligent Health System” to create a “21 st Century Responsible Citizen Medicaid Act.” This organization was founded by Newt Gingrich and is sponsored by corporations and providers. The center promotes a Medicaid program with less red tape and regulations that constrain states in their progress to modernize Medicaid. With the majority of the uninsured being employed, but not on the employer’s health plan, it is essential for incentives such as tax credits to help the uninsured gain access to private health insurance even if it is supplemented with Medicaid money. Medicaid should also be result-oriented and not process based and must eliminate racial and socio-economic health disparities. Frouge suggested the implementation of medical records systems and stronger disease management programs. Frouge gave the Commission several short-term solutions that would produce more than $10 billion in savings collectively: 1) eliminate waste, fraud and abuse; 2) bridges to excellence – incentives provided by employers to physicians and patients with chronic disease who engage in proven practices to improve their health; 3) apply proven best standards of care, including electronic health records, bar-coding, and e-prescribing. He also recommended health savings programs and mandating hospitals post all prices on care available. Frouge suggested that hospitals need to get out front on this issue or it will be a mandate.

Laura Tobler with National Conference on State Legislatures informed the Commission on what other states were doing to reform Medicaid. Most proposals are being submitted to CMS and it is still unclear how many will be implemented. Some of the reforms states are looking at include: 1) using private industry successes and implementing them in Medicaid; 2) delivery of care thru managed care; 3) employer premium assistance programs; 4) lowering administrative costs and red tape; 5) investing in counselors to help educate Medicaid recipients; and 6) alternatives to long term care. Tobler ran through Florida’s “Empowered Care” program. Florida has applied for 4 waivers that include pilot programs in two of the states counties. The 4 main elements of the Florida plan include: 1) risk adjustment premiums – comprehensive – catastrophic; 2) enhanced benefit accounts – rewards for healthy behavior; 3) employer opt-out – if recipient has an option of employer sponsored insurance they can apply Medicaid money toward the premium and pay any difference. 4) low income pool – payments to safety net providers. Tobler also encouraged the Commission to look at reform in long term care because that is where most of Medicaid dollars are going.

Dr. Kimmie with Missouri Foundation for Health started with a history of Medicaid. Stating that in 1966, 75% of the population was covered by employer health insurance with hospital costs at $28 per day. In 2005, 59.8 % are covered by employer insurance. And hospital costs have risen to $1,400.00 per day. He recommended Medicaid reform to include; cost sharing; cutting eligibility; disease and case management; premium assistance for employer provided health insurance; and information system changes. He recommended primary goal be to provide universal coverage and focus on developing a healthy population via prevention programs.

National Women’s Law Center represents low income women nationwide and stated that 80% of Medicaid adults are women. NWLC believes personal savings accounts moved away from the pooling of risk model and towards an individual risk. Waxman recommended concentrating reforms on long term care and prescription drug costs.

MANAGED CARE DAY

Bob Finuf - Children’s Mercy Family Health Partners
Dr. Mary Mason - Health Care USA
Donna Checkett - Missouri Care Health Plan
Dr. Frank Ditirro and Steve Bledsoe - Blue Cross Blue Shield Kansas City
John Monohan and David Smith - Blue Cross Blue Shield/WellPoint, Inc.
Rick Fredrickson with Centene

The Commission heard from several Medicaid managed care plans that currently serve the SCHIP and CHIPs programs. With savings documented at $118 million a year, they would like to see the managed care portion expanded to the elderly, blind and disabled as well as into areas of the state that are not served. They promoted their accountability standards which include satisfaction surveys, quality of care data, solvency standards, and data transparency. Recommendations for the Commission included: expanding managed care to focus on high cost populations; provide pharmacy cost management; concentrating on utilization and case management; and addressing fraud and abuse in the system.

Testimony from providers and vendors as well as advocacy groups and Medicaid recipients took place the last two days, with some testimony cut short due to the special and veto sessions.

Recommendations from these groups included: 1) educating the public on the proper use of 911 and ambulance services; 2) doing better triage or needs assessment before an ambulance is called; 3) establishing a pilot program for ambulance utilization that protects ambulance providers from liability when triaging ambulance call needs; 4) more parity in the system for the severely disabled.

ROUNDTABLE DISCUSSION

The roundtable discussion was also cut short due to time constraints. Chairman, Sen. Charlie Shields told the commission that there were still two topics that they needed to cover; Mental Health and Pharmacy. Shields also told the committee that a pivotal discussion needed to take place on access to care and eligibility. The Commission agreed the issue of delivery of care vs. system of care needed to be further addressed.

The sub-committee on access to care and eligibility was disbanded. They did not officially meet, but have covered these issues in other meeting and plan to address them further in future discussions.

The meeting scheduled for October 12 & 13 th in Cape Girardeau was cancelled. They will probably be meeting on the last two issues in Jefferson City to save on money (travel and staff), but the dates have not been determined. It is possible they will still be held on October 12 & 13, but a date has not be confirmed.

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