Thursday, December 22, 2011

Medicaid Briefing

Secretary Miller briefed the full House earlier this week on the implementation of Medicaid Managed Care.  She had Carrie Banahan and Commissioner Neville Wise with her to answer questions, but she handled the majority of the briefing and many of the questions.

She started with a statement that she knew legislators had been receiving calls, because she was receiving calls.  She said they would still receive calls as they move into each phase of the implementation.  They anticipated the first month would involve calls relating to the change in process and an education process on billing claims and pre-authorization under the new system.  They also anticipated the second month to be calls from providers on non-payment of claims.

She believes, and I think had the members believing, that for such a massive change in process, it had gone pretty well considering they had enrolled or registered 560,000 lives.  She thinks many of the original problems are getting resolved and the communication system has improved.  She had Neville address the Independent Pharmacy issues and Carrie address the claims payments issue.

The independent pharmacy issues relate mostly to the cuts in reimbursement and aren't going away.  Medicaid reimburses more than Medicare and more than commercial carriers.  The MCO's have moved very quickly to reduce the amounts.  The Cabinet has met with many of the independent pharmacists and the MCO's.  Their message to the pharmacies is they are working with the MCO's to see if they can improve the situation and in some areas they have been able to up the levels some.  Their message to the MCO's is these independents are vital to the communities, especially rural areas and if they are forced out of business will certainly impact access that is required under the contract.  As the Secretary put it, they are working with both groups to balance the access with the costs.

Carrie is leading the effort to handle the claims issues and is working with the MCO's directly on any calls she receives.  Initially the problem was with achieving clean claims to process.  That is getting better and where there have been problems, the MCO's have done some "gap" payments to alleviate pressure while they resolve the claims.  The Secretary believes the providers are getting better at billing and the MCO's better at reviewing.

The Secretary addressed the prior authorization issues.  She said that early in the transition it was taking an hour or so to get prior authorization and it was basically a communications problem.  Providers could not get through, but when they finally did, they were pre-authorizing 8-10 in one call.  She believes that is getting better.

The Commissioner stated he would be working at putting the state P and T committee with the P and T committees of the individual MCO's to see if they can normalize the formulary issues that have come up. Secretary Miller stressed that every drug for which a rebate agreement exist with the feds is covered under state Medicaid, if it is medically necessary.  She tried to refer to the formulary as a mechanism to get to whatever drug was medically necessary.

Specialty drugs have been a problem as the MCO's are apparently requiring they be obtained through their providers and that involves mail order.  That has created some confusion over whether or not the MCO's were trying to drive everyone to mail order.  The Secretary explained that the MCO's are not pushing anyone to mail order, and don't necessarily want it, but they do accept it.

There were several questions by legislators and nearly all were related to independent pharmacies and payments.  The Cabinet was staying over to get what information the individual legislators had.  They stressed it was important to get as much information together from their constituents on specific problems so they could track back to get to the problem.

KY Revenue Estimates

Consensus Forecasting Group Official Estimates

The Consensus Forecasting Group met earlier this week to develop an official budget forecast that the Governor and General Assembly will use to develop the state's budget during the 2012 legislative session. The Consensus Forecasting Group (CFG) is a group of nonpartisan economists from around the state who meet several times a year to look at economic indicators and receipts, and then estimate the expected revenues in the upcoming years.  

The group met in October and put together a preliminary forecast, however today's meeting produced the official numbers upon which the Governor's budget will be based when he presents in next month.  The overarching themes from the meeting are that an economic recovery is inevitable, but the timing continues to vary among different economic analysis and the strength of the recovery is dependent upon policy decisions by Congress and the Federal Reserve.  

Now let's get to the numbers.  The CFG looked at three models - optimistic, control, and pessimistic - and they also discussed and looked at a couple different blends of the control and pessimistic models.  The consensus of the group was to move forward with the control estimates - primarily because some members felt that there was a good amount of pessimism already built in.  The estimates show marginal revenue growth above what was discussed when the group met in October.

General Fund
  • FY 12 - 2.8% growth - 136.5 million in additional funds above the previous official FY 12 estimate.
  • FY 13 - 2.4% growth - 216 million in additional funds
  • FY 14 - 3% growth  - 276 million in additional funds
The CFG also put together an official estimate for the state Road Fund.  Like the General Fund, the control model was chosen for estimates for the next biennium.  The Road Fund has proven to have consistent growth during these slow economic times, primarily because of the motor fuels tax and an index provision tied to the average wholesale price of gasoline.

Road Fund
  • FY 12 - 5.5% growth - 71.6 million in additional funds above the previous official FY 12 estimate.
  • FY 13 - 6.1% growth - 86 million in additional funds
  • FY 14 - 4.6% growth - 69 million in additional funds
* the reduced growth in FY 14 takes into account that the the index will not be triggered for an increase in the motor fuels tax going into FY 14.

Also of note, the longtime chair of the CFG, Larry Lynch announced he will resign from the group at the end of the fiscal year.  Lynch has been a member of the Consensus Forecasting Group since 1974.

Tuesday, December 13, 2011

Chamber Conference Update

The Kentucky Chamber of Commerce held their annual policy conference yesterday in Lexington.  Below are the takeaways on specific issues discussed.

Budget
Senator David Williams stressed that the state's fiscal situation is not good and the budget process will not be easy this session.  He said there is a 500 million dollar deficit over the next biennium, which doesn't include an additional 200 million dollars the Medicaid program is requesting or 120 million is SEEK funds that schools are entitled too due to an issue with how the formula is applied.  Williams also said that it will be a priority of the Senate to keep the debt capacity under 6% and that if you include the state pensions unfunded liability, there really is no room for additional bonding.  Rep.Rick Rand said the House feels that budget issues are not quite as serious as Williams indicated.  He recognized that it won't be an easy session, but that the House thinks that now is the time fund some needed projects - because of low interest rates and to help stimulate the economy.  

Tax Reform
Rep. Rand said he thinks the best approach is to convene members of the legislative and executive branches and the business community and meet during the summer to put together a tax reform proposal that could be voted on during the 2013 session.  He said that it will take great efforts by all and that there will be winners and losers - he noted that the current sales tax exemptions all have constituencies, which will make changes difficult.  
Senator Williams wants to see the personal income tax repealed and said that whatever proposal is addressed must be initiated by the House and he doesn't envision that happening with the current make-up.

Gaming
There was some back and forth on this issue between Rand and Williams over where the issue should start.  Rand noted that the House has passed gaming before and that it should start this session in the Senate. Williams disagreed, saying the House has never passed a Constitutional Amendment - which is the only way it will ever pass both chambers.  He went on to say that this is the Governor's issue and the Governor should submit a proposal and meet with all legislators to get sign off, before it is introduced - and until that happens the issue won't go anywhere.

Unemployment Insurance
Williams talked about UI more so than Rand, and said that it's his understanding that the administration will propose a bill to look at UI standards and fix the way the state is able to make the interest payments on money loaned by the federal government. He said he would prefer that policy makers address these issues and that they not be negotiated by labor and industry.  Rand said he doesn't believe the situation is as dire as Williams was making it out to be.

Redistricting
Both agreed that they would like to see redistricting voted on as early as possible during the session, Rand mentioned the first 5 or 6 days of the session and Williams agreed.

Education
The discussion focused mainly around K-12 issues like differentiated teacher pay, teacher training, charter schools, and raising the dropout age. Sen. David Givens (R) and Rep. Carl Rollins (D) each staked out their Chambers respective positions and it appears this will be a key issue during the next session.

Energy
The panel discussion consisted of representatives from the coal and utility industry, Bruce Scott with DEP, and Sen. Brandon Smith (R). There were not specific policy initiatives discussed in regards to the next session, though Sen. Smith made it clear he wants to see incentives that will allow Kentucky to benefit from low energy rates to create jobs. The focus was on the cost that ratepayers and businesses will experience due to increased EPA regulations.

Healthcare
A representative from HHS in Washington shared his thoughts on the creation of health insurance exchanges. He was joined by Sen. Tom Buford and Rep. Tom Burch who shared their thoughts on topics from exchanges to a statewide smoking ban. Both seem to support exchanges though Buford seemed to be more apt to be part of a national exchange ran by the Federal government.  In his comments later in the day, Senator Williams said that if exchanges are approved by Executive Order, he thinks there would be a court challenge. He said that everyone should be very concerned that the administration hasn't proposed how the states plans to handle the exchanges thus far, and that small businesses particularly associations should be concerned about the exchanges.