HOUSE COMMITTEE ON

AUDIT & HUMAN SERVICES BUDGET REFORM

 

 

March 17, 2003   Hearing Room 50

3:00 PM Tapes  59 - 60

 

MEMBERS PRESENT:            Rep. Ben Westlund, Chair

Rep. Steve March, Vice Chair

Rep. Alan Bates

Rep. Jeff Kruse

Rep. Jeff Merkley

 

MEMBERS EXCUSED:            Rep. Randy Miller

Rep. Susan Morgan, Vice-Chair

 

GUEST MEMBERS:               Rep. Gordon Anderson

Rep. Mitch Greenlick

 

STAFF PRESENT:                  Rick Berkobien, Committee Administrator

Patricia Nielsen, Committee Assistant

 

ISSUES HEARD:                     Informational Meeting

Committee Discussion on Oregon Health Plan (OHP) Recommendations

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE, 59 A

005

Chair Westlund

Calls the meeting to order at 3:16 p.m.  Opens the meeting for committee discussion.

INFORMATIONAL MEETING

Committee Discussion on Oregon Health Plan (OHP) Recommendations

010

Barney Speight

Keizer-Permanente; OHP Stakeholders Group facilitator.  Refers to submitted Stakeholder Group Initial Recommendations Summary and draft OHP Cost Containment Actions and Issues (EXHIBITS A, B).  Begins with presentation of report on OHP recommendations:

·         Revenue forecast of $933 million, which reflects a reduction of ten percent

·         Federal minimum requirements in Medicaid program

050

Rep. Kruse

Clarifies it is $837 in combined general funds and tobacco funds.

055

Speight

Agrees and continues discussing optional benefit areas over federal minimum program:

·         Prescription drugs

·         Durable medical equipment

·         Mental health

·         Chemical dependency

Clarifies the total cost would be $259.4 million, leaving a shortfall of $163.4 million.  Explains need to find that amount of savings to fund the mandatory minimum Medicaid program. 

080

Speight

Continues and refers to stakeholder group initial recommendations summary (EXHIBIT A).  Discusses prescription drug issues to be considered.  Discusses potential prescription drug cost-containment actions.

155

Rep. Merkley

Asks about not keeping prescription drugs in the OHP.

160

Speight

Explains capitation rate for prescription drugs is higher than it needs to be.  Savings gained from management can be used to offset, subsidize or enhance services in other areas.  Projected 2003-05 rates have been fine-tuned and capitation rates more accurately reflect actual costs.

185

Chair Westlund

Clarifies that this portion can be combined with bulk purchasing to reduce costs.

200

Speight

Confirms it is similar to state purchasing with a broader base, or Oregon could work with other states to increase leveraging power of bulk purchasing.  Expresses support for the concept by fully-capitated health plans (FCHPs).

220

Rep. Kruse

Advises the work group tried to eliminate shifts, to maintain funds in the plan.

230

Chair Westlund

Reminds the committee it will work in same financial box as the work group.

240

Speight

Continues discussing Medicaid cost-containment savings if FCHPs manage non-capitated fee for service (FFS) non-mental-health drugs.

355

Rep. Kruse

Asks whether FCHPs will be asked to manage other areas as well.  Suggests it keeps providers in control of their own formulary rather than going through a third party.

370

Chair Westlund

Explains the fourteen formularies are ninety-eight percent the same, and this approach has proven effective in other organizations.

390

Rep. Kruse

Comments there are some areas that are still pure fee-for-service, so under this model plans may pick up different counties differently.

410

Speight

Points out some techniques have been used in different communities.

TAPE 60, A

005

Rep. Greenlick

Asks about cost estimates.

010

Speight

Responds the group cannot yet estimate.

012

Chair Westlund

Advises agencies are costing these different plans so should have the information fairly quickly.

020

Rep. Greenlick

Asks about size of item.

 

 

Committee discussion of interaction between cost-saving measures.

040

Rep. Greenlick

Asks about development of organizational culture versus external management techniques.

045

Speight

Discusses interest in using FCHPs as vehicle for enhancing management of the fee-for-service population.

060

Speight

Continues discussing Medicaid cost-containment measures. 

100

Rep. Kruse

Asks whether the committee needs to address a mental health carve-out.  Points out a percentage of mental health drugs are issued by FCHPs and by non-mental-health providers; they should be funneled into the mental health system, which should become their primary provider.  Stresses the importance of connection between programs.

130

Chair Westlund

Points out this applies to 5-7 percent of the population with severe mental health problems.

140

Speight

Concludes that when savings are totaled it is possible to save about $30 million.  Recommends increased rebates and tougher management.

165

Chair Westlund

Asks for input about direction of prescription drug program.

170

Rep. Greenlick

Expresses agreement.

180

Rep. Merkley

Recommends additional consideration of mental health drugs.

185

Rep. Greenlick

Agrees and asks about advantage or disadvantage to retail pharmacists with generic prescriptions.

200

Tom Holt

Oregon State Pharmacists Association.  Discusses reimbursement and costs for prescription drugs under Medicaid.  Explains a pharmacy is generally better off using generic drugs than name brands.

230

Rep. Greenlick

Discusses pharmacist dispensing fee.

235

Holt

Describes experiences in other states.

245

Chair Westlund

Clarifies an increase in the percentage of generics sold would not be a disadvantage.

255

Holt

Agrees it would save state money and help achieve goals.

260

Rep. Anderson

Asks whether using generics helps the pharmacy gain more or lose less.

265

Holt

Clarifies they are usually better off.

268

Rep. Anderson

Asks about dispensing fee.

270

Holt

Clarifies.  Continues and discusses overlaps in the proposed considerations.

290

Chair Westlund

Agrees a combination of proposals would generate the most savings.

300

Speight

Discusses OHP delivery system.  Refers to EXHIBIT B, page 4.

340

Rep. Greenlick

Asks about where the minimum line would be.

345

Chair Westlund

Explains intention to provide specific minimum level of services. 

355

Speight

Discusses controversy over inclusion and exclusion of benefits and services.

375

Ellen Lowe

Health Services Commission; work group member.  Discusses review of list of conditions where there was effective treatment available.  Suggests benefit level was not what everyone wanted but will meet definition of basic health package.

420

Rep. Merkley

Asks if there is a different level of waiver which is more acceptable, if the state does not try to get a waiver at this level.

425

Lowe

Explains the current level combines legislative funding, Department of Human Services (DHS) and Health Care Financing Administration (HCFA).  Advises there is some indication in preliminary discussions with the Centers for Medicare & Medicaid Services (CMS) that the range is acceptable.

TAPE 59, B

005

Rep. Kruse

Suggests instead of using mandated services, the line 519 package looks like a commercial package and is defensible and approvable.  Reiterates the attempt is to stretch dollars to cover as many people as possible within existing resources.

035

Chair Westlund

Discusses waivers and service levels, especially for prescription medication and mental health services.

045

Rep. Merkley

Restates desire to provide a basic package.

050

Rep. Kruse

Comments benefits can always be increased later if resources become available.

060

Lowe

Explains the benefit list is a list of conditions and treatments:

·       Some treatments are stepped, and can be limited

·       Some can be eliminated because no longer used

070

Chair Westlund

Discusses example of physical therapy.

080

Rep. March

Comments it is a paradigm shift:

·       Originally, reduce services and offer optional services to more people, including eligibles and broader population

·       Now, reduce services and also offer only to eligibles

090

Speight

Explains the proposal is an incremental work product:

·       Set up a Medicaid program for mandatory minimum population

·       Other populations are next steps in the effort

105

Chair Westlund

Reiterates the group retreated beyond the original concept of the OHP and created a federal Medicaid baseline.  Continues the group then tried to increase services in some areas and include additional populations.

125

Rep. Greenlick

Distinguishes between benefits and services.  Continues under capitated health plans the focus was to provide basis for calculating a capitation rate.  Compares current focus to consider not only capitation rate but also how to drive behavior.

135

Speight

Clarifies expenditures and savings under proposal to create a prioritized list.

160

Rep. March

Asks whether “more benefits” means more than under the OHP or more than the Medicaid mandatory minimum.

165

Speight

Explains it means more than mandatory minimum.

 

 

Committee discussion of benefit levels.

175

Rep. Kruse

Comments on process of determining benefit levels.

180

Speight

Discusses narrowing coverage in some treatment-condition pairs, or reducing the number or quantity of services.  Describes proposal to manage durable medical equipment and supplies.

225

Speight

Discusses savings in reduced FCHP capitation.  Explains proposed actions to further reduce payments to managed care plans.

280

Rep. Kruse

Comments the work group looked at the actuary report and had trouble reconciling the report to reality on its face.  Agrees that those inside Oregon determine the actual amount of money available and what distribution is needed.

310

Chair Westlund

Points out that Price Waterhouse Coopers says Oregon is underpaying, so some numbers are catch-up numbers.  Continues the committee must find what number keeps the delivery system intact and afloat.

320

Speight

Adds that lowering rates to providers may not allow stable network to continue, and provider groups have offered to work with legislature.

345

Rep. Greenlick

Discusses assumption that FCHPs will do business with hospitals at rate set by state.

355

Speight

Explains he posed question to Price Waterhouse Coopers that there is state law that rate must be set at a point that reflects reasonable costs; but there is no such requirement in Medicaid fee-for-service.  Discusses possibility of change to law.

395

Rep. Greenlick

Asks about requiring participation.

400

Speight

Responds and discusses various possible results due to real or perceived inequities.

TAPE 60, B

010

Chair Westlund

Expands on possible results.

020

Speight

Notes other considerations to keep networks viable and providers participating while living within budget reality.

040

Chair Westlund

Discusses moving chronically mentally-ill from physical plan into mental health side, where they would receive some physical health benefits.

045

Speight

Continues describing proposals:

·         FCHPs manage all aspects of fee-for-service clients

·         Block grant funds to the FCHPs

·         Eliminate cost-based payments

060

Chair Westlund

Summarizes.

070

Rep. Bates

Asks about pricing within the package if service provisions are changed or narrowed.

080

Rep. Kruse

Responds and describes earlier discussion.

085

Rep. Anderson

Inquires whether block grants to counties will proceed.

090

Chair Westlund

Advises the issue is under discussion.

095

Rep. Anderson

Asks about funding levels.

100

Chair Westlund

Responds the committee will consider.

105

Rep. Anderson

Asks where control of mental health fits in with independent physician associations (IPAs).

110

Rep. Kruse

Discusses models for mental health delivery.

120

Rep. Anderson

Suggests steering people to most successful programs.

125

Rep. Kruse

Points out county programs will look different from each other. 

130

Chair Westlund

Advises this will be discussed.

150

Rep. Anderson

Recommends giving incentives if some counties do well.

155

Rep. Bates

Clarifies most IPAs focus on physical health, not severe mental illness.  Suggests no IPAs want to take over that segment, but some other groups might do well expanding mental health services.

180

Rep. Anderson

Suggests his IPA might like to come and present proposal.

185

Rep. Kruse

Points out that the (CD) delivery systems must be considered.

200

Chair Westlund

Summarizes.  Closes informational meeting.  Adjourns the committee at 4:52 p.m.

 

EXHIBIT SUMMARY

 

A – Informational - OHP, report “Draft Cost Containment Actions and Issues,” staff, 7 pp

B – Informational - OHP, report “Stakeholder Initial Recommendations,” staff, 7 pp