MINUTES OF THE meeting

of the

Assembly Committee on Ways and Means

AND THE

Senate Committee on Finance

JOINT Subcommittee on K-12/Human Resources

 

Seventy-Second Session

February 27, 2003

 

 

The Assembly Committee on Ways and Means and the Senate Committee on Finance, Joint Subcommittee on K-12/Human Resources, was called to order at 8:09 a.m., on Thursday, February 27, 2003.  Chairman Raymond D. Rawson presided in Room 3137 of the Legislative Building, Carson City, Nevada.  Exhibit A is the Agenda.  Exhibit B is the Guest List.  All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

Senate COMMITTEE MEMBERS PRESENT:

 

Senator Raymond D. Rawson, Chairman

Senator Barbara Cegavske

Senator Bernice Mathews

Senator William Raggio

 

Assembly COMMITTEE MEMBERS PRESENT:

 

Ms. Sheila Leslie, Vice Chairwoman

Ms. Chris Giunchigliani

Mrs. Dawn Gibbons

Mr. David Goldwater

Mr. Lynn Hettrick

 

 

COMMITTEE MEMBERS ABSENT:

 

None

 

GUEST LEGISLATORS PRESENT:

 

None

 

STAFF MEMBERS PRESENT:

 

Mark Stevens, Assembly Fiscal Analyst

Steve Abba, Principal Deputy Fiscal Analyst

Gary Ghiggeri, Senate Fiscal Analyst

Catherine Caldwell, Committee Secretary

Susan Cherpeski, Committee Secretary

Chairman Rawson called the meeting to order at 8:09 a.m.  He directed the committee secretary to note subcommittee members as they arrived.

 

HEALTH CARE FINANCING AND POLICY

BUDGET PAGE HCF&P 1 –VOLUME II

 

Michael Willden, Director, Department of Human Resources, introduced himself and said he was presenting the Medicaid budgets because Chuck Duarte, the Medicaid Administrator, was unable to attend the meeting due to the recent death of his father.

 

Mr. Willden introduced Debbra King, Administrative Services Officer IV, and Mary Wherry, Deputy Administrator, Division of Health Care Financing and Policy.  He said between them they would make the budget presentation and respond to the Subcommittee’s questions.

 

Mr. Willden referred the Subcommittee to the first handout (Exhibit C), and said there had been a number of telephone and e-mail inquiries regarding recent caseload trends and the handout was designed to answer those questions.  The first page of the handout had been provided to committees at earlier hearings, and gave the breakdown of the caseload mix for Medicaid enrollment.  He noted the columns for projected Medicaid recipients for FY 2004 and FY 2005.  The number of FY 2003 Medicaid recipients was around 165,000; the average number of recipients in FY 2004 was almost 185,000; and they had projected almost 204,000 for FY 2005.  He said there had been several questions regarding how the projected numbers were derived and what the current trends were for the last four or five months.

 

Mr. Willden referred the Subcommittee to page 2 of the handout that showed the detailed summary of the caseload projections used to build The Executive Budget.  He said they used data points for FY 2002 collected through September and October for the forecasted projections.  Mr. Willden identified in the details of page 2 the types of Medicaid eligible populations such as Temporary Assistance to Needy Families (TANF), Child Health Assurance Program (CHAP), Medical Assistance to the Aged, Blind, and Disabled (MAABD) qualified Medicaid beneficiaries, and County Match cases.  He said the caseload types, along with independent model formulas combined into total caseload projections, were used to develop The Executive Budget.

 

Mr. Willden said there had been decreases in some caseload numbers in the last four or five months.  The Department of Human Resources had been asked how the projections would look by incorporating the downturns and using the same projection methodologies used in developing The Executive Budget.  Mr. Willden referred the subcommittee to the Total Medicaid lines on pages 2 and 3 of the handout.  Using the FY 2005 figures on page 2 as a reference point, there was a total projected Medicaid caseload of 203,777.  By adding in four additional methods of historical data, the FY 2005 Medicaid caseload projection decreased by 1,777 to around 202,000, as shown on page 3 of the handout.  Mr. Willden said that might not seem like a significant decrease but by looking at the details in the FY2005 column, and the total TANF Grants line on pages 2 and 3, during six of the last eight months the TANF cash caseload decreased by 4,299 from 46,807 to 42,508.  He said by using those projections, TANF Cash Recipients would project substantially lower into the next biennium.

 

Mr. Willden noted that TANF related medical caseloads continued to grow.  Families that accessed the system could choose to receive cash and medical assistance, or medical assistance only.  Additionally, there were transitional medical categories that were continuing to grow.  He emphasized the decline in caseload was for monthly cash recipients.  He pointed out that for the total Medical Assistance to the Aged, Blind, and Disabled (MAABD) caseloads at the bottom of the charts on pages 2 and 3, the projection totals from October 2002 to February 2003 totals were around 49,800 each and reflected no substantial change.

 

Mr. Willden referred the Subcommittee to page 4 of the handout (Exhibit C).  He said the chart on page 4 showed the large caseloads that the Department monitored and covered a 12-year period.  The first ten lines showed how many Medicaid recipients were served from 1990 through 2000.  The remaining lines gave a month-to-month break out beginning in July of 2000.  The middle column was for Medicaid Eligibles and showed that September 2002 and January 2003 were the only months in the entire history where the caseload monthly average decreased.  All other months reflected caseload increases.  He said that there were a few decreases and several increases when all the caseloads were combined into the total Medicaid Eligibles, and the numbers reflected a steady growth.

 

Mr. Willden referred the Subcommittee to tab 5 of the “Division of Health Care Financing and Policy” budget presentation booklet (Exhibit D).  He said page 6 showed an analysis of the categories where state FY 2002 funds were used.  The chart showed the caseloads and associated costs.  Each of the Medicaid caseloads or sub-caseloads within the overall Medicaid caseloads had different cost levels associated with them.  Mr. Willden compared the Qualified Medical Beneficiary (QMB) line, having an average per eligible cost of $56 per month, compared to other disabled caseloads, which ranged from $850 to $6,000 per recipient per month, depending on the category.  The chart also showed where Medicaid funds were spent.  As an example, he noted FY 2002 where Medicaid spent over $643 million in medical payments for such categories as hospital in‑ or out-patient care, physicians, pharmacy, long-term care, mental health, and HMO program recipients.  The chart made it possible to analyze the heaviest users.  He noted that the disabled institutional caseload was one of the largest categories of pharmacy users.

 

Mr. Willden asked for general questions from the Subcommittee before proceeding to the four budget accounts.

 

Chairman Rawson noted that there was a significant increase in TANF caseloads following September 11, 2001.  He asked Mr. Willden to discuss the terms for TANF payments to which the state was obligated.

 

Mr. Willden responded that the TANF cash assistance eligibility program had a 60-month lifetime credit.  He said the Nevada Legislature passed legislation that gave the recipient 60 months’ assistance over a 7-year period, alternating 2 years on assistance and 1 year off, and then 1 final year on assistance.  He added that it was not required to receive cash assistance and many did not.  Families accessed the public assistance system primarily for health or child care assistance.  He said while caseload forecasts showed some decline in cash assistance, medical related assistance continued to grow.

 

Chairman Rawson asked Mr. Willden to explain if there were similar limitations for medical assistance programs.  Mr. Willden responded that the time limitations only pertained to cash assistance programs.

 

Chairman Rawson asked Mr. Willden to discuss Nevada’s poverty guidelines for program eligibility.  Mr. Willden said that in Nevada TANF eligibility was not driven by poverty.  He said he did not have the standards with him but could get the information.  He said it was a very low standard in Nevada.

 

Chairman Rawson said he thought the Subcommittee would need information regarding income level for program eligibility because of the caseload growth.  He noted the budget for the Division of Health Care Planning and Policy was over $2 billion and legislators should be able to explain and discuss the budget with their constituents.  Chairman Rawson asked for questions.

 

Assemblywoman Giunchigliani asked Mr. Willden to discuss the qualifications for Medicaid eligibles, if there was a wait list, and what number of individuals might not be served because of the cap.

 

Mr. Willden responded that with the exception of the Department’s waivers programs, there was no wait list for the Medicaid program or eligibility groups.  He said the Department operated four waivers programs, the physically disabled, Community Home-Based Initiatives Program (CHIP), adult group care waiver, and the mentally retarded.  He added that a wait was based on the length of time it took to process the claim to qualify for the Medicaid programs.

 

Ms. Giunchigliani asked Mr. Willden what the average length of wait time was to process Medicaid eligibility.

 

Mr. Willden said that the wait time corresponded with the program.  He said it could take 30 to 45 days to get on TANF.  He said a federal government Supplemental Security Income (SSI) determination could take up to 2 years although typically it took between 90 to 120 days.  He said Medicaid eligibility was dependent on SSI determination.

 

Ms. Giunchigliani asked Mr. Willden if he planned to talk about the Kinship Care program.  Mr. Willden said the Kinship Care program was not related to the Medicaid programs.  Ms. Giunchigliani asked if the program received TANF dollars.  Mr. Willden responded that Kinship Care got TANF dollars and would be heard at another hearing.

 

Chairman Rawson noted that the Subcommittee should know the areas and programs the state was mandated to cover, and the programs Nevada had elected as optional.  The Subcommittee also needed to know how Nevada’s per capita expenditures ranked compared to the rest of the country.

 

Mr. Willden responded that the Department had two white papers on the state’s mandated versus optional services and their costs.  He noted the papers would involve a lengthy discussion.  Chairman Rawson said that the Subcommittee would like to review the copies.

 

Mr. Willden alerted the Subcommittee that during their review of the mandatory and optional services, the two most expensive optional services provided by the Medicaid program were pharmacy and long-term-care services.  He said, as shown in the handout (Exhibit C), pharmacy was an $80-million-a-year program and long-term care was $120 million a year; eliminating either would be very costly.  Within two weeks to a month after eliminating the pharmacy option, individuals would be forced to utilize hospitals, which would result in increased costs.  Similarly, eliminating the long-term-care option would force individuals to turn to hospitals.  Mr. Willden said those two options carried the most important cost savings.

 

Chairman Rawson noted that education, Medicaid, and prisons constituted 90 percent of The Executive Budget and that the Legislature had not been extravagant in those areas.  He said the lawmakers needed some detail to explain the situation to their constituents.  He added it would be helpful if Mr. Willden had a ranking of Nevada compared to the rest of the country.

 

Mr. Willden said he had the ranking at hand.  Nevada was the lowest state in the nation in Medicaid per capita spending.  He said in the packet handout (Exhibit D), under tab 14, page 2, a chart showed Nevada ranking 51st for Medicaid Expenditures.  Chairman Rawson noted Nevada was not only last in the nation, it was 51st.  Mr. Willden replied that was because the District of Columbia was on the list.  Chairman Rawson said Nevada had slipped from 50th.  Mr. Willden noted that from the chart Nevada ranked less than 50 percent of the national per capita for Medicaid expenditures.  Chairman Rawson said his constituents did not have a good understanding of those statistics.  He noted the state ranking was the same with prisons.  Nevada spent less per prisoner than any other state in the country.  He said it would be valuable to have this information in a table format.

 

Assemblywoman Leslie asked Mr. Willden to discuss the President’s plan to give states more flexibility in Medicaid spending.  She noted that upon returning from the National Governor’s Association, Governor Guinn had not taken a position on the President’s plan.  Governor Guinn said there was not enough detail available to know if such a plan would be beneficial.  Ms. Leslie asked if flexibility with Medicaid would have any value to Nevada if it ranked 51st in the nation.

Mr. Willden said the state had much to be concerned about.  The Governor and the Department supported the idea of flexibility to administer the Medicaid programs.  He added that the “devil was always in the details.”  He said currently the state had to provide mandatory services for mandatory eligibility groups.  Unlike other states, Nevada did not have many optional eligibility groups.  Nevada did not fund programs for the medically needy, children aging out of foster care, or other types of expanded eligibility programs.  Therefore, the state did not have the flexibility to reorganize optional groups to provide services in a different way.  He said the Medicaid program was composed primarily of mandatory populations.  Of the state’s optional services, the pharmacy and long-term-care programs were the most viable.  He said the Department had some ideas for savings in pharmacy, but that the savings would not be significant.  Mr. Willden noted that there were financing concerns under that proposal.  He said that although it was not considered a block grant, it did have capped funding over time.  He said the Department was exploring how that would work.  Mr. Willden concluded that they were supportive of flexibility but concerned over the amount of money available to a fast-growing state that lagged in its health care programs, had low per capita spending, and primarily supported only mandatory programs.

 

Chairman Rawson noted there were a few disabled individuals in the room and they usually had to wait through the Subcommittee’s long hearings.  He suggested they could say something early rather than sit through the meeting.  He asked what their preference was.  He noted from the response that they wanted to “see everything” the Subcommittee was doing.

 

Ms. Giunchigliani asked Mr. Willden to discuss the pharmacy costs and how they were negotiated to maximize the best pharmacy coverage for the number of individuals covered.

 

Mr. Willden said the Department had a number of options in the pharmacy area and Ms. King would discuss that module during her presentation.

 

Debbra King, Administrative Services Officer IV, Department of Human Resources, Division of Health Care Financing and Policy, introduced herself.  She referred the Subcommittee to the “State of Nevada, Department of Human Resources, Division of Health Care Financing and Policy, Budget Presentation” handout (Exhibit D), page 1, and The Executive Budget, page HCF&P 1 ‑ Volume II, Budget Account 3158.  She said Health Care Financing and Policy was the administrative budget and reflected the staff responsible for overall management, supervision, and operation of Medicaid, Check Up, and the cost containment activities required under NRS 439B.  Ms. King said the budget added new performance indicators to evaluate the management and service provisions for which staff was responsible.  The base budget in Budget Account 3158 was derived from actual FY 2002 costs annualized for costs that began mid-year, and with one-time costs eliminated.  She said the major decision unit in that budget was M-501, Health Insurance Portability and Accountability (HIPAA).  The Division requested one new staff position, a Management Analyst IV, to serve as the Division’s HIPAA Privacy Officer.  Ms. King noted she had not included the HIPAA presentation provided by the Director’s office because the Subcommittee had heard several prior HIPAA presentations.

 

Chairman Rawson agreed that the Subcommittee was familiar with HIPAA.

 

Ms. King said that the HIPAA function was divided into two areas.  The existing Administrative Services Officer III position served as the security officer, ensuring staff compliance with the privacy procedures required by HIPAA.  The Division was requesting a new Management Analyst IV that would act as the Privacy Officer and would cover policies, procedures, staff training, and compliance.  She noted that the Division had an existing social welfare program staff that would work on privacy issues at the client level.

 

Chairman Rawson said there were questions as to whether or not there was redundancy in having two positions.

 

Mr. Willden responded that there was no staffing redundancy.  He said the Department of Human Resources’ (DHR) activities were largely Medicaid related and would become a $2.2 billion program over the next couple of years.  All the divisions needed to interface with Medicaid.  Mr. Willden noted that HIPAA was less important in some of the other divisions and that the Department had downsized other HIPAA staff requests from eight to five, but HIPAA was the number one issue in Medicaid Services.  He emphasized that it was critical that Medicaid Services could ensure compliance with security rules, privacy guidelines, and transmittal of data in complaint formats as it moved into the next biennium.

 

Ms. King stated that decision unit E-710 covered equipment replacement.  She said that, in accordance with guidelines from the Department of Information Technology (DoIT), they requested replacement of 10  percent of the computers for the “power users.”  She said that decision unit E-805 requested reclassification of certain positions within the Accounting Unit to reflect the actual workload and responsibilities of the accounting functions.  She noted that in decision units E-900 through E-906 the budget requested the transfer of management and support staff in Budget Accounts 3178 and 3243 to Budget Account 3158 to aid the cost allocation process.

 

Chairman Rawson said that Legislative Counsel Bureau (LCB) staff was working through the details so that the Subcommittee would have the necessary information before the budget closed.  He added that unless Subcommittee members had specific questions Ms. King could go forward with her presentation.

 

Ms. King concluded her remarks on decision unit E-909 and said that the net result of that cost allocation was a savings to the General Fund of $319,000 in FY 2004 and $303,000 in FY 2005.  She asked for questions on Budget Account 3158.

 

Ms. King proceeded to the Medicaid Budget Account 3243.  She said that the performance indicators were constantly reviewed and monitored.  The Medicaid Management Information System (MMIS), slated to be operational in October 2003, would improve data accuracy and reliability.  Ms. King pointed out that Medicaid had several Federal Medical Assistance Percentage (FMAP) rates.  The FMAP rate in Budget Account 3243 was a blended rate of 54.3 percent in FY 2004 and 56.03 percent in FY 2005.  She asked the Subcommittee to turn to page HCF&P-12 in The Executive Budget, Volume II.  In the base budget, FY 2001-2002 actual, under Resources, on the Federal Title XIX line, the funding was $419 million.   In the Gov Rec FY 2003-FY 2004 column, the Federal Title XIX line showed a projection of $453 million and $464 million in FY 2004-FY 2005.  The adjusted base showed the same cost and reflected the funding change.

 

Ms. King noted that in The Executive Budget, Volume II, HCF&P-12, the Transfer From Human Resources line reflected the Intergovernmental Transfer (IGT) of $95 million in FY 2002.  That item had been discussed at the Division’s initial hearing.  The IGT account was reduced so that the reserve was projected at $3 million after FY 2003.  Because the Department could not draw in additional funds, the amount of money the IGT account would generate was $50 million in FY 2004 and $52 million in FY 2005.

 

Assemblyman Goldwater said many of his constituents asked about administrative costs.  He noted the Division budget was more than $700 million and personnel costs were $8 million.  He asked Ms. King how the Division’s administrative costs compared to the nation’s administrative costs.

 

Ms. King said that of the $770 million budget in FY 2004, $731 million was for medical related costs.

 

Assemblyman Goldwater said it was very important to highlight that the Division operated a $700 million program with administrative costs of $38 million.  He noted that he often compared government to private sector costs and had not encountered a private sector with that low a ratio and the Division should be congratulated.

 

Ms. King continued her presentation and said she would not cover the standard decision units M-100 and the M-300 series unless the Subcommittee preferred otherwise.  Chairman Rawson asked the Subcommittee if there were any concerns or questions about those areas.

 

With regard to the caseload increase, Assemblywoman Leslie asked Ms. King to address the question of anticipated supplemental appropriations and when those numbers would be available.

 

Ms. King said she would review decision unit M-200.  She wanted first to mention that decision unit M-101 was for inflationary increases other than those standard to The Executive Budget.  She noted pharmacy and hospice had mandatory rate adjustments.  Using the data obtained from the Center for Medicaid and Medicare Services, the Division projected increases of 12.5 percent in FY2004 and 12 percent in FY2005 for pharmacy, and 3 percent per year for hospice.

 

Ms. King moved to decision unit M-200 that covered caseload increases.  Under M-200 she noted a 25 percent increase in the General Fund for FY 2004 over FY 2002, and an additional 9.8 percent increase for FY2005 over FY2004.  She compared the General Fund increase to the caseload increases and said the caseload projected increase was 30 percent for FY2004 over FY2002 and an additional 10.4 percent for FY2005 over FY2004.  She said that on the positive side the caseload increases were primarily with their lowest cost cases.

 

Chairman Rawson asked Ms. King to discuss when the Division planned to calculate its final projections.  Ms. King said they would use the March caseload packet that had actual trends through February.  They received the data about the third week of March and hoped to have the revised figures about mid-April.  Chairman Rawson asked if that was historically the way it had been done.  Ms. King said yes.  Chairman Rawson added that this decision was one of the few they wanted to watch very closely.

 

Ms. King said decision unit M-200 requested six additional staff.  She said that at the Subcommittee’s request they had prioritized the staff increases.  As Medicaid grew, expenditures and caseloads grew.  Additional staff was necessary to manage the program.  She cited the example of the physician payment category that was once $20 million and was now $80 million.

 

Chairman Rawson said the Subcommittee accepted that there was reasonable justification for the first three positions but that the last three were less specific.  He noted if the position descriptions were not specific and the Legislature was trimming costs, those three positions could be in jeopardy.  He said if the positions were important they needed sufficient justification.

 

Ms. King moved to decision unit M-201, a sister decision unit to the Welfare Division.  She noted that the Welfare Division had moved to a new facility and the M-201 decision unit passed through the related federal funds.

 

Decision unit M-501 covered the Medicaid Management Information System (MMIS) project for HIPAA and reflected the proposed impact of early implementation of MMIS.  The contract with First Health Services Corporation (FHSC) for implementation and operation was signed in September 2002.  The contract required early implementation of MMIS to avoid the need to utilize the “translator” services originally included in M-501.  It was determined that MMIS would be brought online by October 1, 2003, and when it came up MMIS would be HIPAA-compliant.

 

Chairman Rawson asked if the project was on schedule.

 

Mr. Willden responded that they were ahead of schedule but that there were worrisome data points.  He noted a schedule of time frames behind tab 9 of the budget booklet (Exhibit D).  The first major data point was to implement the pharmacy point of sale system by February 1.  That task was completed and was HIPAA-compliant.

 

Chairman Rawson noted they had actually exceeded expectations.

 

Mr. Willden said they had exceeded expectations and were very happy to have passed the February milestone.  He met every week with an independent quality assurance vendor that gave a quality assurance report.  He said they were managing to stay on track.  Staff was required to perform normal administrative duties and to attend all the daily joint application system design meetings presented by First Health Services Corporation.  He said “our nose is above the water.”

 

Mr. Willden continued to say that the next hurdle in the project would be at the end of March when Health Insight, the current quality improvement organization, was turned over to FHSC.  He said they would be carefully monitoring that area over the next months.  Another major milestone involved the transfer system from the state of Virginia.  He said there was critical testing going on with the Virginia system, and that Nevada’s successful implementation was based on Virginia’s successful testing and implementation.  Mr. Willden said they had a good management team and were monitoring the progress weekly.  They were confident that they would meet their implementation deadline.

 

Chairman Rawson noted that Health Insight provided a valuable function.  He asked Mr. Willden if he was confident that the FHSC would be a quality provider.  Mr. Willden said he relied on Mr. Duarte in that matter and would question him further and report back.  Chairman Rawson said the Subcommittee did not want to micromanage the contracts but they did not want to be in the dark in the future and certainly did not want to see quality decline.  The transition was critical to quality control issues.  Mr. Willden said their goal was to have a better information system.  The Medicaid data system had been insufficient for the last 25 years.  Improvement toward better information management could be seen daily.

 

Chairman Rawson asked if there would be an increase in expenditures that would require a supplement while they attempted to reduce the claims files.

 

Ms. King said they were giving that issue close attention.  The goal was to have the claims inventory paid down to 10,000 by October 1, 2003.  Ms. King explained that the supplemental request in The Executive Budget assumed the claims would be paid down to 100,000 and then from 100,000 to 10,000 in the first quarter of FY 2004.  She said the fiscal administrator was exceptionally efficient and had reduced the number of clients’ claims to 87,000.  The fiscal administrator indicated that 87,000 was about as low as they could expect.

 

Chairman Rawson asked if statutory authority for supplementation would be needed.  Ms. King said that statutory authority stated that the Medicaid appropriation had a cap that could not be exceeded.  The Appropriations Act would need to be amended to remove that language.  Chairman Rawson asked what would happen if the Act was not amended.  Ms. King said they would stop paying claims about June 1, 2003.  Chairman Rawson said at the end of the session they needed to ensure that the Division had the necessary spending authority.

 

Assemblywoman Leslie said most of her concerns had been allayed.  She encouraged the Division to reach out to the provider community during the transition phase.  She said she was hearing many concerns about pending claims and who was to pay them.  She noted there was a lot of nervousness that could be alleviated if there were better communication with the provider community.

 

Ms. King noted in decision unit M-501 that the cost for the MMIS project as presented to the 2001 Legislature was projected at $25 million, $21 million of which would be expended during FY2002-2003, and an additional $4 million in FY2004-05.  An additional $400,000 appropriation had been needed to finish the MMIS project.  Ms. King noted that the project would cost approximately $21 million, $4 million less than initially projected, based on current information and the contract with FHSC.  She said that A.B. 516 of the 2001 Legislative Session allocated the General Fund appropriation for MMIS and those funds reverted effective June 30, 2003.  The Division had requested to extend that reversion date to June 30, 2005, the balance to be brought forward to finish the project.

 

Ms. King said that M-501 had two components.  The first component involved the completion of the design, development, and implementation phase that would be completed on October 1, 2003, and a post-completion clean up through December 2003.  The second component was the operational phase.  She directed the Subcommittee to turn to tab 7 of the handout.  Ms. King noted a pending change in their Medicaid accounting system.  Currently, when they completed the budget calculations they took the final number, in this case $674 million, and placed it into object code 7410.  She said the current system could only handle the figure in this manner.  Under the MMIS, they planned to change the accounting system and break out the costs for TANF, CHAP, MAABD, Waiver Cost, County Match, and payments to the sister agencies, and set up separate general ledgers or object codes by type of service.  She said they would bring forward a work program in September to accomplish this.

 

Assemblyman Goldwater said it had been brought to his attention that there were discrepancies in the codes between agencies.  He asked if they would need to do a transitional piece to establish code uniformity.  Ms. King said she was not aware there was a code-discrepancy issue.  Mr. Goldwater asked if the systems would be integrated.

 

Mary Wherry, Deputy Administrator, Nevada Medicaid, introduced herself.  She said they used the standard state of Nevada devise codes, however, some of their sister agencies might have their own codes for providers that were paid directly.  Under HIPAA they were required to use a standardized code set.  She said they were developing their “crosswalk” from what the Centers for Medicare and Medicaid Services (CMS) had approved that would be called local codes.  Many states had been online a long time converting their state devise codes as in, for example, waiver services.  She said waiver services did not have a specific Current Procedural Terminology (CPT) code and that every state had different types of waiver services and each type had a different code.  She said they would be converting everything to local code sets approved by the CMS.

 

Mr. Goldwater commended Ms. Wherry, saying the movement in health care reform was to develop as much uniformity for the payor as possible.  Chairman Rawson asked if there was a requirement for common codes under HIPAA.  He said if there were problems the Subcommittee should be notified.

 

Ms. King said that decision unit M-592 transitioned personal care attendant (PCA) services from a waiver service under the Community Home-Based Initiatives Program (CHIP) administered by the Division for Aging Services, to a state-planned service to comply with the state plan and federal regulations.  Federal regulations stated that services offered in a Medicaid waiver must not duplicate services provided by a state plan.  Ms. King said that because the state offered PCA services, the Division needed to remove PCA services from the waiver cost in the Division of Aging Services budget.  Decision units E-900, E-901, and E-902 removed those costs from their budgets and showed the additional costs incurred in the Medicaid budget.

 

Decision unit E-350 resulted from the strategic plan on rates, as approved in A.B. 513 of the 2001 Legislature.  Ms. King said that the rate study recommended many increases due to the state’s financial shortfall.  She discussed two service area rate increases.  The first service area recommended for a rate increase was for speech, occupational, and physical therapy.  The recommended rate increase was 80 percent of the Medicare reimbursement rate, with the Centers for Medicare and Medicaid Services (CMS) market basket index of about 3.7 percent in FY2005.  The second area recommended for a rate increase was for the developmentally disabled home and community-based services.  Ms. King noted that only the federal funds increase was in the Medicaid budget and that accounted for the minimal impact on the General Fund.  The rate increases in the General Fund for the developmentally disabled were in the Division of Mental Health and Developmental Services budgets.

 

Decision unit E-351 requested a discretionary rate increase for critical providers that provided fewer services to a small recipient population.  To ensure access to those services, the Division requested rate increases for those providers.

 

Ms. King noted that CMS had tasked the Division to increase access to dental services for children to 50 percent.  At the last analysis, the Division was at 21 percent.  She said that the last rate increase for dental services increased access by about 23 percent.

 

Chairman Rawson asked if the rate increase would be the fee-for-service or for all of the dental rates.  Ms. King said the increase was for the fee-for-service.

 

Chairman Rawson said the Division should look at all the rates.  There was a relatively low rate contracted through managed care.  They should avoid a bifurcated system where one was significantly different from the other.  He also asked Ms. King to discuss the significant increase in transportation as shown behind tab 3 in the handout (Exhibit D).

 

Ms. King responded that the 17 percent increase for transportation was for “door-to-door” services for clients that could not take the bus.  A nonprofit agency in Las Vegas provided the service.

 

Chairman Rawson asked if the service was provided through the Economic Opportunity Board.  Ms. King responded that it was.  Chairman Rawson asked if the rates were competitive.  Ms. King responded that they were very competitive compared to the alternatives.

 

Ms. King moved to decision unit E-425, the Health Insurance for Work Advancement (HIWA) program, or Medicaid buy-in program.  She said that was probably of most interest to the audience.  Decision unit E-425 resulted from the federal Ticket to Work Grant and allowed Medicaid buy-in for employed disabled recipients.  Ms. King asked the Subcommittee to turn to tab 12 of the handout (Exhibit D), under the Program Design Issues and Advisory Group Recommendations columns that gave age range, the definition for family, and co-payments.  On page 3 under tab 12 was a HIWA Income Eligibility Test showing how earned and unearned income was calculated, the application of earned income disregards, and examples of the calculation of the premium amounts.  She asked if there were specific questions on this portion of the presentation.

 

Assemblywoman Leslie asked how the eligibility criteria in Nevada’s design compared to other states that had implemented a similar program.

 

Ms. King directed the Subcommittee to tab 11 of the handout (Exhibit D) that showed state-by-state comparisons for states that had implemented a similar Medicaid program.  Ms. Leslie asked Ms. King to interpret the data for the Subcommittee.

 

Ms. Wherry responded to the question by introducing John Alexander, Grant Manager and the Ticket to Work Program Manager, who had done research with the Advisory Group and other states to put together the presentation.

 

Mr. Alexander said that Nevada had benefited from the experiences of the early‑implementing states.  The buy-in program began in Massachusetts in 1987, and was implemented with only state funds.  Some states were experiencing budget restrictions similar to Nevada’s and were contemplating scaling back.  Mr. Alexander said some states had a higher income threshold or handled their cost sharing differently than in Nevada.  He said Nevada’s program and the recommendations from the Advisory Group were comparable to other states.

 

Chairman Rawson said there were concerns that a person with an annual income of $50,000 or $60,000 could buy into the program.  He said the Subcommittee needed assurance that public funds were not being used to pay people with adequate independent financial resources.  He noted that the issue was sensitive.  He said he had been very supportive of the buy-in program and wanted to avoid public misperceptions that would force the state to dissolve the program.  He said they needed further discussion regarding that concern.

 

Assemblywoman Leslie said the Subcommittee was very supportive of the program and wanted it to be successful.  She noted that the premium buyback was another area of interest.  She asked how that program compared to other states.  She said it was important that the money was prudently invested.  Medicaid should be directed toward low-income individuals and there would be a shift in policy if income levels were $50,000 or $60,000.  Ms. Leslie said they must direct their precious resources to individuals most in need.

 

Ms. Wherry said that the goal of the program was to help people return to work who had the mental and functional capacity to perform.  The federal Ticket to Work Program left several unresolved issues.  Individuals, who had been employed and had limited incomes typically relied on public transportation that did not qualify for Medicaid payment.  Medicaid only paid for medically necessary transportation.  Another unresolved problem was with individuals whose income levels were low enough to qualify for Medicaid and housing assistance.  If they returned to work, very quickly the increased income made them ineligible for affordable housing.  She said the Subcommittee needed to keep in mind that the purpose of the Ticket to Work Program was to help people transition from dependency to independence.

 

Chairman Rawson said he appreciated that explanation.

 

Paul Gowins, Office of Community-Based Services, Community Liaison, and member of the Advisory Committee, introduced himself.  He said a salary of $40,000 appeared to be a fairly good income.  He used himself as an example.  He said he had a salary of $46,000.  He paid $20,000 a year in an attendant care program which was subsidized through the state and that subsidy allowed him to maintain his employment.  He said without the state program he would not be employed.  His example was more than common.  He said the program allowed people to return to work using the 50 percent federal supplement to augment the program.  He concluded that $40,000 appeared to be a sizeable income until factoring in the costs associated with handling a severe disability.  He added that typical health insurance was not available to that group.  Without the program his disabled population group would stay at home and remain “on the dole.”

 

Chairman Rawson said that the key to understanding the discussion was that a $46,000 income did not translate into 100 percent discretionary funds.

 

Mr. Gowins agreed with Chairman Rawson.  He said the Advisory Group was very conservative in developing the program.  Mr. Alexander searched other states extensively.  The Advisory Group met monthly and made compromises.  He said they set a limit at 250 percent of poverty whereas some eastern states had gone to 400 percent.  The Advisory Group also set a very low entry unearned income as a control.  Another control mechanism was premium rates.  If the program was attracting too many enrollees, and not meeting its targeted needs, premium rates could be changed.  He assured the Subcommittee that the Advisory Group had looked closely at the population under discussion.

 

Assemblywoman Leslie noted that Mr. Gowins had given some very important information about the premium.  She said the program was new and could be adjusted as it went forward.  Another important point Mr. Gowins made, not to be overlooked, was that many people could not get insurance on the open market.  The Ticket to Work Program was their only option, and was critical to this group of people.

 

Chairman Rawson noted that the Subcommittee was building a record during a legislative session where there was extreme scrutiny.  He said much effort had gone into the program, and it was not a superfluous one that just gave money away.

 

Mr. Gowins said that state Medicaid programs did not have the same criteria.  Several states had special programs.  The Advisory Group modeled its program after the very conservative state of New Mexico that had just implemented their program.  New Mexico had the best data and offered Medicaid services most similar to Nevada.  He said it was difficult to compare states.  Nevada had developed about a 60 percent availability of benefits programs.

 

Ms. King turned to decision unit E-426 that developed a stop loss program for the counties.  She said that as the cost of medical services for institutionalized individuals increased, smaller counties were unable to meet their county match requirements because the tax bases had not kept pace with medical costs.  Decision unit E-426 proposed that counties pay an amount equal to the proceeds of an 8-cent property tax levy.  Once they had paid that amount into the county match program the state would cover the non-federal share of costs over that amount.

 

Chairman Rawson returned to decision unit E-425 and the HIWA program.  He asked Ms. King to discuss why the four positions should be retained if the program was approved and became operational.  He said there was an appearance of redundancy.

 

Ms. Wherry responded that the federal Ticket to Work Grant ran through December 2004.  She said the four positions would be necessary to roll out the program, meet the time lines, and utilize the grant dollars efficiently.  She said it would be difficult to justify all four of those positions after January of 2005, but it was critical to retain a Grade 37 position to oversee the program.  The data communication and data sharing between states’ components of the program were federally required to continue after the grant expired.  The federal government was interested in capturing nationwide data on population types that returned to work and the services they utilized after they had returned.  Other areas that needed oversight were program maintenance, premium monitoring, and issues that ensured program controls.  She surmised they would adjust the administrative assistant to an accounting position to handle premium issues.

 

Ms. King went to decision unit E-426, tab 13, that showed the smaller counties that would benefit from the program.  There were some concerns about Washoe and Clark Counties.  They estimated Washoe County was assessing approximately 5 cents and Clark County approximately 3 cents property tax levies and would not qualify for the county match under the stop loss program.

 

Chairman Rawson asked if there were concerns about the cost if one of those counties reached the level of an 8-cent property tax levy.

 

Mr. Willden said any kind of runaway was a concern.  He noted that there were several criteria to qualify for participation in the county match program, such as income tests and care level requirements.  He said the growth rate was stable and he saw no immediate concerns.  Chairman Rawson asked if there were counties that would not be able to fund the expenditures.  Mr. Willden noted that Bob Hadfield and Mary Walker were best able to answer Chairman Rawson’s question.  Chairman Rawson asked if there were any concerns about this in the smaller counties.  Mr. Willden noted there were none.

 

Ms. King said that decision unit E-432 showed the increase in medical and related expenditures for caseload increases that would occur in Medicaid if the CHAP asset test were eliminated.  That enhancement was approved during the 2001 Legislative Session, but was never implemented because of the state’s financial condition.  The Executive Budget recommended implementation during the upcoming biennium.

 

Ms. King noted that decision unit E-451 was the first of several waiver slot increases.  Decision unit E-451 increased the Medicaid budget to agree with the waiver slots that had been requested and funded in the Division of Aging Services budget.  In decision unit E-452 the Division proposed to provide an additional level of adult day health care that offered more therapeutic services than were currently offered at the existing rate.  The Division expected that there would be a cost savings by funding additional services at adult day health care by diverting a portion of the user population from more expensive institutional care.  Adult day health care cost approximately $40 per day versus $120 per day for institutional care.  She noted that The Executive Budget showed the net impact of the initiative.

 

Chairman Rawson said the Subcommittee understood the need for providing services in the least restrictive way and were very supportive of that.  He asked Ms. King to explain the discrepancy between the 100 requested slots and a wait list of 14 individuals in decision unit E-451.

 

Assemblywoman Leslie said the Chairman raised a good question.  She asked Ms. King to justify the discrepancy.  She also asked Ms. King if, in E-452, the potential savings she had discussed were reflected in the Medicaid budget.

 

Ms. King said they had calculated the additional cost that resulted from adding services to the adult day health care proposal.  They then calculated the savings the proposal would generate by diverting clients from the nursing homes.  The result of that calculation was reflected in an increase of $42,000 to the General Fund shown in The Executive Budget and was the net cost increase.  Ms. Leslie asked if the savings were figured in.  Ms. King said they were.

 

Ms. King returned to decision unit E-451 and explained that the decision unit adjusted the number of available slots in the adult group care facility and CHIP waiver at the Division of Aging Services to what was recommended in their budget.  If, during the Division of Aging Services budget hearings, the requested number of slots was found to be incorrect, then decision unit E-451 would be adjusted accordingly.

Chairman Rawson said a request for 100 slots and only 14 people waiting looked like the request was over budgeted.  He said the Subcommittee might want to adjust the budget.

 

Ms. King said that the Division of Aging Services would support the requested slots.  She said they were “truing up” their budget to match the Division of Aging Services.  The Division of Aging Services developed the wait list and slot numbers.  Mr. Willden noted he was confused by the wait list figure 14.  He said he believed the CHIP waiver had a wait list of hundreds.  Chairman Rawson said they needed an updated wait list to reconcile the question.  Mr. Willden said he would provide that.

 

Chairman Rawson called a 10-minute recess.

 

Chairman Rawson reconvened the meeting at 9:56 a.m.  He said the Subcommittee would spend 30 minutes more with the budget presentation and then take testimony from the audience.

 

Ms. King continued her presentation with decision units E-455 and E-456 that proposed caseload increases for the physically disabled waiver program.  She said that decision unit E-455 complied with the 2001 Legislative Session mandate as spelled out in S.B. 174, that the Medicaid budget provide immediate services to individuals who needed assistance with bathing, feeding, and toileting.  A study conducted during the summer of 2002 determined what percentage of the wait list for physically disabled waiver needed assistance in those three areas.  From the results of that study, they projected the wait list to June of 2003.  Using the percentages derived from that projection, they arrived at the 70 proposed slots in decision unit E-455.  They projected that their overall wait list would be 160 slots by June 2003, and therefore placed the remaining 90 slots in E-456.

 

Ms. King said they were frequently asked whether waivers saved money or just increased the caseload.  She said that behind tab 14 of the handout (Exhibit D) there was a chart that showed the question could not be definitively answered.  The chart illustrated two scenarios.  In the first, Ms. King noted that there were two personal decisions to be made by the individual that made it difficult to build a definitive answer.  The assumption at the top of the chart was that an individual needed and qualified for long-term-care services.  If the individual was currently Medicaid eligible he or she could choose either to enter or not enter an institution.  Even though the individual was Medicaid eligible he or she might not opt to enter an institution.  If there were no waiver, then there would be no cost.  Eventually the individual would have to go into an institution because there were no alternatives.  If the Division provided the waiver and provided those costs there would be additional costs but they would be lower than at the institutional cost.

 

The second scenario was of an individual who opted to enter an institution and was not previously Medicaid eligible.  That individual might become qualified for Medicaid through institutional eligibility because the income levels were higher by that route.  If that happened, the cost to the Division would increase because the individual was placed in the highest cost care area rather than receiving waiver services.

 

Ms. King said the only group that clearly cost the Division money was shown at the bottom left corner of the chart, referred to as the “woodwork effect.”  That group was comprised of individuals who would never have qualified for Medicaid or who would never have chosen to be in an institution.

 

Chairman Rawson asked Ms. King to discuss the effect from the hiring freeze on services for the 65 open slots.

 

Ms. King said the Legislature authorized 30 additional slots every quarter until January of 2003.  During FY2002 the wait list numbers had fluctuated between 50 and 80.  During each quarter the wait list would rise from 50 to 80 until the allotted 30 slots opened.  When those 30 slots were filled, the wait list dropped back to 50.  Because of the hiring freeze they could not hire the needed caseworkers so they were not able to fill the authorized slots.  Ms. King said that currently they had 60 authorized but unfilled slots.  Decision units E-455 and E-456 assumed that those 60 slots would be filled.  Because the hiring freeze curtailed their ability to fill the slots, the wait list had been growing since July.  She said currently the wait list was much higher than 50.

 

Chairman Rawson asked what was a reasonable wait list.  He noted it was currently at 100.

 

Ms. Wherry said the wait list figure depended on supply and demand as well as caseload growth.  The normal flow of new waiver applicants was currently 20 per month and the wait list had 99 individuals.  Ms. Wherry said they had evaluated the ability of case managers to handle a ratio of 1 case manager to 30 clients.  Currently the caseload ratio was 1 to 37.  She said they were observing what effect that would have on the existing wait list.

 

Chairman Rawson asked if the ratio of 1 to 30 was tied to a national average.

 

Ms. Wherry responded that they were in the process of assessing the effects of the increased client to caseworker ratio.  She said the Division was trying to balance several issues.  Recipients needed access to their caseworkers to get services.  The Division was striving to move individuals from the wait list to the waiver program.  The hiring freeze required staff to work as diligently as possible.  Staff was forced to cut corners with the recipients, curtailing some services and social support.  She said it was stressful.

 

Chairman Rawson asked how long an individual would have to wait with a wait list of 99.  Ms. Wherry responded that the wait was probably around eight months.  Chairman Rawson asked how long the wait would be if the wait list number was 50.  Ms. Wherry responded that the wait would probably be around four months.

 

Chairman Rawson asked if that was a realistic wait for the population being served.

 

Ms. Wherry responded that the Division had put their updated physically disabled chapter of the “Medical Services Manual” through a public hearing and changed the regulations so that individuals in a nursing home were automatically placed first on the wait list.  The goal was to move them out more quickly.  She said that doing so placed a serious strain on the individuals waiting in the community, as well as on their support systems.  She concluded that the answer to what was a realistic wait for that population was “a tough question to answer.”  She said they would like to see everybody have access as soon as they became eligible.

 

Chairman Rawson noted that the proposed budget was not extravagant and would not eliminate the wait list.  Ms. Wherry agreed with Chairman Rawson.

 

Ms. King proceeded to decision unit E-457, supported by The Executive Budget, and recommended by the Division, to add three levels of care to the Group Care waiver.  She said that under tab 15 of the handout (Exhibit D) was a description of the proposed levels of service.  The figure in The Executive Budget was the net cost because their projections were developed on the assumption that adding the additional levels of care for the Group Care waiver would reduce placements in the nursing facilities.  She said the cost impact resulted from 50 percent of the clients in nursing homes receiving support from the county match program.  She said that therefore, 50 percent of the savings would go to the county match program since they were released from paying for the nursing facility.  Ms. King added that in accordance with current practice, the state would pay the match since the individual would move into the community at the higher level of care.

 

Chairman Rawson asked if the state had a definitive service model for assisted living.

 

Ms. Wherry responded and said the Division had a definitive service model for this Group Care waiver.  The model was based on S.B. 74 that was passed in 2001 to go into effect July 1, 2003, and defined assisted living and group care as one and the same.  She said that if the new bill had a new definition the Division’s definition would have to be reevaluated.

 

Chairman Rawson asked if the new work group was suggesting a new model.  Ms. Wherry responded that there were several work groups.  She said one work group was suggesting a new model for assisted living and one that supported the current model.  Chairman Rawson asked if there was a bill in session.

 

Ms. Wherry said it was their understanding that Assemblywoman Buckley was going to be submitting a bill this session.

 

Mr. Willden added that they had worked with Assemblywoman Buckley on some new legislation.  He said it was his understanding a bill would come out shortly that would have a definition of assisted living, and that group care would be defined separately and that would result in the three levels of care they were discussing.

 

Chairman Rawson asked if there would be budget implications.  Mr. Willden said he did not know of any significant changes.  Chairman Rawson noted that the Subcommittee should watch this area closely.

 

Ms. King proceeded to decision unit E-500.  She explained that the Division distributed federal funds and grants to other sister agencies within the Department of Human Resources.  This decision unit matched the amount they were budgeted to receive to the amount that the Division was budgeted to spend.

 

Decision unit E-600 covered programmatic changes resulting from the implementation of the Governor’s 3 percent General Fund reduction.  Ms. King said that under tab 16 in the handout (Exhibit D) there was a brief overview of the cost reduction measures.  She noted that the Personal Care Aide Service Limitation initiative had been an overwhelming success.  It was implemented August 1, 2002, and had been projected to save $3.6 million.  She said it was now projected to save $5.5 million.  The elimination of the Unemployment Insurance Benefit (UIB) exemption was implemented on October 1, 2002.  The application of maximum unit value to Ocycontin was implemented, the requirement for the prior authorization for Proton Pump Inhibitors (PPI), Cox II and Viagra were implemented when point of sale came up on February 1, 2003.  She said they did not have data available to show how effective that had been since it had only been implemented for three weeks.  She said the data should be available by the next hearing.  The Director’s office showed that a $2 million reversion from the Anthem Blue Cross Blue Shield had been reserved for reversion.  She said they were currently completing their analysis of the proposed reduction in reimbursement for the highest utilized Current Procedural Terminology (CPT) code and hoped to implement that on April 1, 2003.  She said the reduction for pharmacy reimbursement from Average Wholesale Price (AWP) minus 10 to AWP minus 15 was implemented.  She said that was the only provider type that was not projected to be over budget for that year.

 

Chairman Rawson asked if that was the physician reimbursement.  Ms. King responded that it was the pharmacy reimbursement.  She added that the reduction in the HMO administrative payments was completed.  She asked for questions relating to those changes.

 

Chairman Rawson asked Ms. King to discuss the effect of reduced reimbursement levels on OBGYN services.  Mr. Willden said that OBGYN services were covered in the E-600 and E-601 decision unit modules under the revised CPT codes.  He said from recent conversations with the Governor that at that point they were not planning to change the OBGYN reimbursement rate methodology, but a final decision had not been made.  Mr. Willden noted that in the Request for Proposal (RFP) for managed care related to OBGYN, they had a specific requirement that under managed care reimbursement the rate would be the same as fee-for-service.  He said that condition would be part of the contract evaluation process.

 

Chairman Rawson asked Mr. Willden to confirm that there would be no additional costs or appropriations associated with obstetrical services in The Executive Budget.  Ms. King confirmed that Chairman Rawson was correct.  She said the initial proposal was to pay the OBGYNs at 100 percent of the Medicare cost and that would have resulted in a reduction of fees for obstetrics.  She said that the increase of $2 million in cost savings they had realized from their reduction initiative requiring prior authorization for PPI, COX II, and Viagra, allowed them to meet the savings projected in The Executive Budget.  It was therefore not necessary to reduce the OBGYN fee rate.

 

Chairman Rawson asked if there was a proposal considering the increase of obstetricians’ fees.

 

Mr. Willden responded that there was no proposed fee increase for obstetricians in The Executive Budget.  He noted that the current reimbursement for a typical delivery was $1,930.  By implementing the CPT changes discussed earlier, and reimbursing at 100 percent of Medicare, the fee to obstetricians would decrease to approximately $1,600 per delivery.  The current debate was over if they should or should not do that.  Mr. Willden said there was no proposal to increase reimbursements above $1,930.  He said that was what they currently paid and would continue to pay unless there was a decision to reduce.

 

Chairman Rawson said that if they decided to leave the rate at $1,930 the cost would be absorbed through other savings.  Mr. Willden said Chairman Rawson was correct.

 

Chairman Rawson said staff would review the information to be sure they were comfortable with it.  He added that Nevada was in a true crisis regarding obstetrical coverage.  He did not think there were enough physicians in southern Nevada to cover births for that year.  He said it was critical that they do nothing to make the situation worse.

 

Assemblyman Goldwater commented that of everything they accomplished in the Legislature regarding the physicians and obstetrical gynecological care crisis, increasing reimbursements in this category would accomplish the most.  He said reducing the reimbursement rate would make things worse.  Mr. Goldwater said the real crisis was reimbursement, and that was what they should address.  He asked that they dedicate as many resources as were available to get those reimbursements.

 

Assemblywoman Giunchigliani said she echoed Mr. Goldwater’s thought.  She added that the Subcommittee needed concrete cost figures to understand and determine what reimbursement increases to consider and what the impact might be.  Ms. Giunchigliani added that there was a medical access crisis in southern Nevada and throughout the state.  She noted a report that said, despite advertisement to the contrary, only 6 OBGYNs had actually left southern Nevada, rather than the hundreds that had been reported.  Of the 35 doctors that left, 19 had retired and had been considering retirement.  Ms. Giunchigliani said there was a need to be dealt with, but it was not as bad as the press had reported.

 

Mr. Willden commented that the Division fully understood the OBGYN crisis.  He did not want to leave the impression that the Medicaid program was the “bad boy” of reimbursements.  He said the Division had surveyed the state for obstetrics delivery reimbursement rates.  He said the Division rate of $1,900 was higher than any commercial insurance providers’ rate.  He said he did not bring out that fact to support rate cuts.  The Medicaid program covered a significant percentage of at-risk deliveries.  Mr. Willden said his point was that the public had the misconception that most people paid $2,000 to $3,000 for a typical delivery because the Division paid $1,900 for the same procedure.  He said only private payers paid a rate higher than the Division’s, and commercial payers reimbursed at a rate less than $1,900.

 

Chairman Rawson said that if the Division intended to reduce the rates to the rest of the physicians they had to go through a public hearing process.  He asked if notice had been given.  Mr. Willden said no notice had been given.  He said they were still working through some issues internally and with the Governor’s Office.  He said they should be ready to make a decision of what to notice and what not to notice by the next day.  Chairman Rawson noted that needed to be done before they could close the budgets.

 

Mr. Willden said the key was a 30-day lead time requirement to notice any change and a noticing date was imminent in order to meet an April 1 change date.  He said if they did not have an April 1 change date, it might make sense not to notice until July 1, to see the final legislative session revenue equations and decide whether or not they needed to make additional reductions in the Medicaid program.

 

Chairman Rawson noted that there were 150,000 people on the medical portion of Medicaid.  Mr. Willden raised that figure to 165,000.

 

Chairman Rawson continued and said that that was a “pretty big gorilla.”  If the state lowered rates that would create a noticeable shift in the marketplace.  He said they would not enhance the ability for people to buy insurance by lowering rates.  He said the issues were complex but related.  The state was not isolated in its effect.  The decision was large and they all understood that.

 

Ms. King said the next decision unit in The Executive Budget was E-601.  The Division proposed additional cost control measures for the Personal Care Aide Program.  Behind tab 19 of Exhibit D was a full discussion of the Personal Care Aide Program issues.  She turned to page 5 under tab 19 for an analysis of personal care aide and a comparison to other states of Nevada’s activities of daily living and instrumental activities of daily living definitions.  She noted that the Department of Employment, Training and Rehabilitation and Aging Services Division had a maximum of 28 hours personal care aide hours per week.  Currently the Personal Care Aide Program offered 62.25 hours personal care aide per week.  Ms. King said decision unit E-601 recommended those hours be reduced to 50.50 hours per week.  S.B. 174 of the 2001 Legislative Session recommended 42 hours per week.

 

Ms. King moved to page 6 under tab 19 that showed some state-by-state comparisons.  She noted that only 27 states offered personal care assistance programs under Medicaid.  She also noted that by comparison the hours offered under the Division’s Personal Care Aide Program were very generous.

 

Chairman Rawson said there were concerns about individuals that had received meal preparation or other services under the Personal Care Aide Program.  He asked what effect the proposed changes would have on those concerns.

 

Ms. Wherry said that individuals with severe disabilities or functional limitations would experience no impact from the proposed changes.  She noted as an example that current functional assessment tools allowed individuals who needed standby assistance for showering were allowed assistance with grocery shopping and meal preparation, activities that they were able to do for themselves.  She said that was the population they were targeting with regard to reducing instrumental activities of daily living.

 

Chairman Rawson asked if the program was contracted with Accessible Space Incorporated (ASI).  Ms. Wherry said ASI was one of their contractors.

 

Assemblyman Goldwater asked if there were quality screenings to ensure that contracted providers gave competent service.  He said a few of his constituents utilized the program.  He had received reports that service quality could vary from excellent to terrible.  He said that, as much as possible, the state should be proactive with quality control issues.

 

Ms. Wherry responded that the Division had district office staff that visited the provider service agencies and conducted reviews to ensure that staff met the expected qualifications as required in the “Medical Services Manual.”  She said their standards required more hours of education and training than many other states.

 

Assemblyman Goldwater noted that this was an area where performance indicators were important to assess and monitor quality.

 

Ms. Wherry said performance quality was similar to Certified Nursing Assistance (CAN) in nursing homes.  It was difficult to attract well-qualified individuals when wages were low.  She said when they expanded their Chapter in 2001 they adopted the federal allowance definition of family and that contributed to some of the “woodwork effect” they experienced in Personal Care Aide caseload growth.  A significant factor was the Division’s efforts to reimburse family members who were neither an adult parent nor a spouse to perform personal care tasks.  That ensured consistency with providers who would care for the family member with more love, concern, and compassion.

 

Ms. King continued with decision unit E-601 in which the Division proposed to require prior authorization of life skills to ensure services were appropriately used.  That proposal went into effect January 1 of 2003.  She said they projected additional reductions in physician reimbursement.  Decision unit E-600 realigned the top 100 CPT codes to match what Medicare would pay.  The Division would adjust all of the procedure codes to match what Medicare would pay.  She said they combined those so they were not changing rates twice and hoped to implement that shortly.  The Division proposed implementing a preferred drug list and maximum allowable cost (MAC) pricing.

 

Chairman Rawson noted that Senator Cegavske had a number of questions on the preferred drug list.

 

Senator Cegavske said she had received several letters from doctors, patients, and families expressing concerns over the preferred drug plan.  She asked Ms. King to discuss if the Division would develop and implement the preferred drug plan or contract it out.

 

Ms. King said they would be contracting out the preferred drug plan.

 

Ms. Cegavske noted that the Division had a plan implementation target date of January 2004.  She asked Ms. King to discuss the Division’s bid process, if they had selected a contractor already, or planned to go out for bid.

 

Ms. King said they were currently evaluating their existing contract with First Health Services Corporation to determine if they would need to go out to bid, or could amend the current contract.  The final decision had not been made.

 

Ms. Cegavske asked Ms. King to discuss the Division’s criteria for its implementation process.

 

Ms. Wherry said that the Division had some clear ideas about contract requirements with regard to a grandfathering process for individuals who were on unique and effective medications for such disorders as seizures or mental illness.  She said they planned to incorporate step therapies within the contract that accommodated unique needs and used the prior authorization process to continue drugs that were justified by a physician.

 

Ms. Cegavske noted that First Health Services Corporation was already managing some Medicaid formularies and was consolidating with other states.  She asked for comment on that process and if that was the direction Nevada wanted to take.

 

Ms. Wherry said over the last several years the Division had worked diligently to adhere to a public process.  She said they would be making the preferred drug list discussion a public process.  The Division would work with the industry for preferred drug list recommendations that worked in other states and would be compatible with the state of Nevada.  The Division expected public input.

 

Ms. Cegavske asked for comment on when they expected to finalize their decision, and if they expected to implement the plan in less than a year.

 

Ms. King responded that they needed Mr. Duarte to review their research findings.  Ms. Cegavske said that she understood and she thanked the Chair.

 

Assemblywoman Leslie said that she had some significant concerns   She noted that the Division had $5.5 million in savings anticipating the January 2004 implementation date.  She said that, under the best scenario, she did not believe it possible to meet that date.  She asked for comment.

 

Mr. Willden directed the Subcommittee to the memo on page 1 under tab 20 of the handout (Exhibit D) that discussed their objectives.  He said he deferred to Mr. Duarte and his staff to determine whether or not implementation was feasible within the next nine months.

 

Ms. Leslie suggested that the Division provide the Subcommittee with that information.  Her special concern was to ensure that a procedure was in place to maintain supplies of mental health drugs for that population.  She said she did not oppose the plan, but the Subcommittee needed many details to develop a clear budgetary perspective.  She noted there was a lot of money programmed in the budget as savings.  She said if the implementation was not going to be realized the Subcommittee needed to know as soon as possible.

 

Mr. Willden noted that the “Nevada Preferred Drug List (PDL) Analysis: Estimated Annual Savings” chart followed the memo on page 1 under tab 20.  He said the chart gave the drug description and class and showed where savings might be realized.  He noted that the atypical and typical antipsychotics did not have many dollars associated with them, only $60,000.

 

Ms. Leslie noted that the chart was helpful.

 

Mr. Willden said the big target drugs were at the top of the list, the analgesics and some antidepressants.  He said the chart gave a perspective as to where savings might occur.  He noted the Mental Health Division budgets would raise another discussion about medications issues.

 

Ms. Leslie said the chart was helpful, but the plan could be devastating for a person who was on a targeted drug.

 

Mr. Willden responded that the Department had always been committed to not disturbing critical drug regimens.  He said they intended to grandfather those individuals who had used effective prescribed medications while upholding the concept of a preferred drug list.  The Division’s goal was to work with all the affected groups.  He said they met three or four times with the Retail Pharmacy Association to cover some key issues, and had met with the Pharmaceutical Research and Manufacturers Association (PHARMA), and continued to work out the details.

 

Chairman Rawson noted that the Division of Health Care Financing and Policy still had the Graduate Medical Education budget to cover.  He said the Subcommittee would pick up with that budget, CHIP, and Intergovernmental Transfer at another time.  He added that he had some questions regarding the Graduate Medical Education (GME) payments.  He said there was a bill pending that addressed that whole area so they would have a chance to review it.  He thanked the Division for their presentation and said, to accommodate the many people who had been waiting, he would take public input.

 

Mr. Willden thanked the Chair.

 

Chairman Rawson said he would alternate public testimony between Las Vegas and Carson City.  He asked individuals to keep their remarks brief because there were a number of people who wanted to speak.  He asked for input from Carson City.

 

Robin Renshaw introduced himself and thanked the Subcommittee for inviting him to speak.  He testified that he was a Nevadan, born and raised in Las Vegas and had cerebral palsy.  He was a Transition Specialist for Nevada Parents Encouraging Parents (PEP) and a substitute teacher for the Clark County School District.  Through his work with PEP he had become a strong advocate for disability issues and through his work as a substitute teacher was interested in becoming a regular school district teacher.  He was currently on Social Security Disability Income but could only work two to three days a week.  Mr. Renshaw said that if he worked more he could lose his benefits.  He said he spoke on behalf of the thousands of disabled Nevadans who were in the same circumstances.  Along with other disabled individuals, the dream of working was dependent on the proposed HIWA program.  Many disabled people wanted to work but the desire was overshadowed by fear of losing their benefits.  He concluded by saying that one day, while substituting, a student came up to him and said, “don’t go.”  On behalf of the other members of the disabled community and the Advisory Committee, Mr. Renshaw said he asked all of them not to go.  He thanked the Subcommittee. (Exhibit E)

 

Chairman Rawson thanked Mr. Renshaw and said he appreciated his testimony very much.  He said everyone at the hearing understood what Mr. Renshaw was asking.

 

Senator Cegavske thanked Mr. Renshaw for his presentation.  She said she appreciated his e-mails and correspondence and congratulated him on his efforts at the school district and with PEP.  She said his input and participation in the PEP organization were highly valued.

 

Chairman Rawson invited testimony from Las Vegas.  There was none.

 

Chairman Rawson invited testimony from Carson City.

 

Alyce Thomas introduced herself and thanked the Subcommittee for the opportunity to speak.  She said that for many years she had been called disabled, but noted that she was “differently-abled.”  She said she did things differently and sometimes had to work differently.  Recently Ms. Thomas received a ticket to return to work, along with many of the people with whom she worked and represented as disabled consumers of mental health services.  She said she had chosen to return to work but many people had chosen not to return to work because they did not have a Medicaid buy-in plan.

 

Ms. Thomas testified that she was in her second year of working with the Medicaid infrastructure grant.  She wanted to bring a different perspective of how it was for people on Social Security Disability Insurance (SSDI) who had worked, were then unable to work, and finally able to return to work.  Ms. Thomas said that people on Supplemental Security Income (SSI) had 6019 A and B in place, but people on SSDI had nothing.  Ms. Thomas testified that one of her medications was $500 a month and when she returned to work her Medicaid was cut off and although she had Medicare, it did not cover prescriptions.  She said she had not considered that before returning to work.  For the first three months all her benefits and those for her two disabled children were greatly affected.  She said she was fortunate to have an employer who allowed her medical insurance after three months’ employment.  She said had she realized she would lose her Medicaid benefits she would have thought very hard before returning to work because of the jeopardy to her family as a single parent.

 

Ms. Thomas urged the Subcommittee to see the different faces of disabled and “differently-abled” people to understand how important a Medicaid buy-in plan was.  She said a Medicaid buy-in plan would have allowed her to avoid the $4,000 loss that forced her to leave her home of seven years because she could not afford it and medication for herself and her children.  She said a premium of just $200 a month for the first three months of her employment would have allowed her to remain in her home, and she would not have made her son independent of the family so that he could keep his benefits.  Ms. Thomas said that the Subcommittee should understand that a Medicaid buy-in plan was very important if the Ticket to Work Program was to be effective.

 

Ms. Thomas said that Nevada now had Employment Networks (EN) that accepted the tickets and worked with people.  The program was not in place when she started back to work.  She said in retrospect she was very glad she made the decision to return to work.  She loved her job, her employer, and the opportunity to work and speak on behalf of many consumers.  She said, however, that many times in the first three months she almost quit, and was glad she was able to hold out until she could get insurance and make things a little bit better.  She thanked the Subcommittee and Chairman for the opportunity to speak.

 

Chairman Rawson thanked Ms. Thomas.  He asked if there was anyone in Las Vegas who wanted to speak.

 

Mary Evilsizer said it was wonderful that after many years of working toward it, the Subcommittee was actually talking about implementing the Medicaid buy-in program.  She said that the southern Nevada Center for Independent Living worked with several individuals with severe disabilities who were very interested in returning to work.  What held them back was the fear of losing benefits.  The benefits were critical.  She said the insurance and buy-in programs were a phenomenal break-through in helping many disabled Nevadans move toward employment and more independent living.  She thanked the Subcommittee and the Chair for the opportunity to speak.

 

Chairman Rawson asked for a speaker from Carson City.

 

Jon L. Sasser, Washoe Legal Services, Nevada Legal Services, and the Washoe County Senior Law Project, introduced himself.  He said he had the pleasure of serving on the Governor’s Task Force on Disabilities that developed a ten-year strategic health care plan under A.B. 513 (2001).  Mr. Sasser distributed written testimony (Exhibit F) to the Subcommittee.  He said, “In order to give the real people a chance to talk,” he would not read the testimony or go into great detail, but would highlight certain points.

 

Mr. Sasser said the largest issues facing the 2003 Legislative Session were what were popularly described as “tax versus axe.”  He said there were three primary areas for the budgetary axe in state government: prisons, education, and Medicaid.  He said the advocates for the other two programs would do very well.  He said that the Medicaid budget was not the place for the axe.  Taking the axe to that budget would be unhealthy to our citizens and our economy.

 

Mr. Sasser noted a new study conducted by Families USA that looked at the Medicaid budget.  He said he would be glad to give a copy of the full study to the Subcommittee.  The study showed that it was good for a state’s economy to bring in those federal dollars that were then spent in the state.  For every million dollars cut from the Medicaid budget approximately 20 jobs paying $810,000 in annual wages were lost, in addition to lost services; or the costs were passed to the counties and paid with 100 percent local dollars.

 

Mr. Sasser said the largest increase in the Medicaid budget was in caseload growth, and two factors, economic downturn and population growth, drove that.  He said that he had included a chart in the handout (Exhibit F) showing that between the 1990 and 2000 census, prior to September 11, 2001, the population of people living below the poverty level in Nevada had grown by 72 percent from 120,000 to 205,000, and led the nation for a second decade in a row.  The state second to Nevada had grown by 43 percent.  The poverty rate hovered at about 10 percent but as the state’s population grew, 10 percent of 2 million was considerably more than 10 percent of 1 million.  He did not see that the situation would change greatly in the future.

 

Mr. Sasser urged the Subcommittee to give support for the budget enhancements for community-based services and the waiver programs.  He noted that he had served with Mr. Gowins on the Olmstead Technical Advisory Group (TAG) as part of the A.B. 513 process.  In that process advocates from the community, LCB attorneys, and the Attorney General’s Office studied Nevada’s obligation under the Americans with Disabilities Act/Olmstead Supreme Court decision and evaluated the A.B. 513 plan.  One major component of the Olmstead decision was to transition eligible disabled individuals into community-based services and ensure that wait lists turned over at a reasonable pace.  He said the Washoe Legal Services strongly supported that.

 

Mr. Sasser closed by saying he echoed his support for the Ticket to Work Program.  He said the Subcommittee had heard from people who spoke much more eloquently than he.  He asked the Subcommittee to support the elimination of the Child Health Assurance Program (CHAP) assets test, an initiative started by the Interim Health Committee between the 1997 and 1999 sessions.  The initiative had been recommended every session and he hoped it would finally become a reality.  He thanked the Subcommittee and said he would answer questions or discuss the issues in depth at a later time.

 

Assemblywoman Leslie wanted it noted in the record that if the Governor’s Budget were fully funded, Nevada would still be 51st in the nation in per capita spending on Medicaid.

 

Chairman Rawson said that not only was Nevada 51st but it spent $50 per citizen per year below the 50thranked state in the nation.  He said that significantly boosting the budget would not close the gap.

 

Assemblyman Goldwater commented that they should not put out the wrong message.  He said the Governor and his department heads deserved to be complimented on the budget.  It was a very responsible budget given the resources and the current variables, and he had not seen any budget critics in the mental health or K-12 budget hearings telling them where or what to cut or what direction to take.  Mr. Goldwater said that people who were critical of government spending or government programs under their jurisdiction were disingenuous unless they participated in the budget process.  He wanted to avoid the appearance of “beating up” the Governor and his staff.  He said it was worthwhile to compliment them on a very responsible budget and that the Legislature was doing the best it could with what it had.

 

Chairman Rawson agreed with Assemblyman Goldwater.

 

Paul Gowins testified that he supported the Health Insurance for Work Advancement (HIWA) program.  He said the disabled community was very pleased with the Division’s budget.  He said if he were sitting on the Subcommittee’s side of the table he would naturally have a few “tinkerings” to put in the budget and he was sure everybody would.  He said there had been great effort in trying to meet the needs in the community.  He noted that the disabled community had concerns similar to Ms. Leslie’s apropos the drug actuaries being eliminated for individuals with mental health and other types of disabilities.  He said the disabled community was glad and supportive to see that the Division had considered grandfathering those special needs clients.

 

Mr. Gowins said, as they came to ask for support of those budgets, they knew that the legislators were “under the gun” to balance the revenue side.  He said he brought his niece with him to see how government actually worked.  She did not understand what the “E stuff” was about.  He told her it was like a personal budget, you paid the rent, the power bill, the food, and from then on it was fluff.  He told her there was no fluff in that budget, that they were “into the food, the meat, and the potatoes.”

 

Mr. Gowins said he hoped they would give consideration to what was proposed during the hearing.  He understood there were compromises to be made in different areas, but he said the disabled community as a whole was very pleased with what was put forward and that it had been very important for him to come and give that message to his friends on the “other side of the fence.”

 

Chairman Rawson thanked Mr. Gowins.

 

Chairman Rawson said they would reschedule the meeting to cover the portions of the budget they had not finished and invited the audience back.

 

Senator Cegavske put into the record that she was appointed by the Governor to sit on the Vocational Rehabilitation Council and that would not conflict with any decisions she would make regarding the Medicaid budget.

 

Also included are Exhibit G, Exhibit H, and Exhibit I that were not discussed at the meeting.

Chairman Rawson adjourned the meeting at 10:51 a.m.

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Catherine Caldwell

Committee Secretary

APPROVED BY:

 

 

 

                                                                                         

Senator Raymond D. Rawson, Chairman

 

 

DATE:                                                                             

 

 

 

                                                                                         

Assemblywoman Sheila Leslie, Vice Chairwoman

 

 

 

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