04/2003 State Update

Preauthorization on Hold

The Department of Human Services has suspended for 60 days the requirement that claims for certain health services provided to Medicaid beneficiaries be pre-approved by First Health Services of Arkansas, with which the state contracted last April to review claims for children’s mental health services in an effort to control Medicaid spending.

The action comes after several reports First Health is denying 40 to 75 percent of claims for children’s mental health treatment. Some mental health facilities that continued to provide services even though claims were denied have reported losses of $150,000 a month.

The state and First Health have agreed to work with the five mental health centers with the highest denial rates to ensure providers understand the claims process and what services First Health considers medically necessary.

This is the second time the state has suspended the prior-approval system for Medicaid. The first suspension came last October, when mental health providers persuaded the department to suspend the system for 45 days.

Since it was launched, the pre-approval system has slowed the rate of Medicaid spending growth, from between 25 percent and 30 percent a year to just 8 percent.
Arkansas Democrat-Gazette
February 25, 2003

Strange Bedfellows

Attorney General Richard Blumenthal (D) filed suit against Yale-New Haven Hospital for allegedly hoarding about $37 million in donations for the “free bed funds” intended to provide indigent patients free access to hospital care.

According to the lawsuit, the hospital impeded patients’ access to the funds by providing minimal information about the funds and requiring patients to prove they were denied aid through local or state programs, a policy that prevented Medicare beneficiaries from applying for the funds to pay uncovered hospital balances. The lawsuit also alleges Yale-New Haven subjected patients to aggressive debt-collection practices when they were unable to pay their bills.

As a result of the hospital’s failure to provide adequate notice of the funds’ availability, only 55 patients on average apply for the funds annually.

The lawsuit seeks a judicial order requiring the hospital to provide information about the funds to every patient or potential patient who lacks health insurance or is otherwise unable to afford the hospital’s services.

Blumenthal said, “We’re complaining about more than simply accounting here. It’s a fundamental breach of trust and moral as well as legal responsibility.” Yale-New Haven officials said in a prepared statement that they were “shocked and surprised” by the lawsuit, adding the facility is the largest Medicaid provider in the state and gave more than $52 million in free or “under-compensated” care in 2002.

Blumenthal also testified before the state legislature’s public health committee in support of a bill proposed by Senate Majority Leader Martin Looney (D) that would expand reporting requirements for hospitals with free bed funds and require greater patient notification.

Looney said a report-in-progress on the subject by the Federation of Hospital and University Employees, a group representing four Yale employee unions, and commissioned by the Connecticut Center for a New Economy, a local anti-poverty organization, led him to introduce the bill.

The report found Yale-New Haven spent 1.9 percent of its free bed funds in fiscal year 2001, compared with the approximately 5 percent some experts recommend charitable trusts spend from their principal each year. The report’s preliminary findings were shared with Blumenthal’s office several weeks ago, although it remains unclear to what extent the report influenced the attorney general’s investigation.
New York Times
Hartford Courant
February 21, 2003

Burley, Beer, and Burgers

John McMorran of Lakeland, the oldest living American man, died of heart failure at the age of 113 on February 24, 2003 after smoking cigars, drinking beer, and eating greasy food for much of his life, according to his 35-year-old great-granddaughter, Lisa Saxton. McMorran was born on June 19, 1889, in a log cabin in Michigan.

“He was never sick. He lived a great life,” said Saxton. “Obviously, he was well-put-together.” McMorran quit smoking at the age of 97 but continued to enjoy coffee and life. During his last few years, he was a celebrity of sorts, frequently making headlines marking yet another birthday.

In his later years, his eyesight failed, and he was hard of hearing, but he otherwise enjoyed good health until developing complications related to pneumonia.

According to official records, McMorran was the fourth-oldest person in the world. Japan’s Kamato Hongo is the world’s oldest person at 115.
Lakeland Ledger
February 25, 2003

Sounds Like Price Controls

The Senate Health and Human Services Committee unanimously passed SB 3, which creates a state-run prescription drug-buying club made up of seniors, people with disabilities, and possibly Medicaid beneficiaries.

Under the bill, the state would act as a negotiator for club members, who would pay a $25 annual fee. The club could reduce generic drug costs by up to 60 percent and name-brand drug costs by up to 20 percent, according to the bill’s sponsor, Sen. Debbie Halvorson (D). However, Patty Schuh, an aide to Senate Minority Leader Frank Watson (R), asked, “One of the concerns we’ve had [is]: How do you afford it?”

Although she had no estimates on potential enrollment in her buying club, Halvorson said the $25 enrollment fee would cover the projected $27 million cost of the program. The bill leaves open the possibility that Medicaid beneficiaries could also be included in the program, a move drug companies say might violate federal law.

Noting the club could refuse to purchase drugs at unacceptable wholesale prices, Marjorie Powell, assistant general counsel to the Pharmaceutical Research and Manufacturers of America, said, “Federal law says Medicaid patients have to have access to all FDA-approved drugs.” She added, “Our concern is mixing the interests of the Medicaid patients together with those of everybody else.”
Chicago Tribune online
February 27, 2003

What’s Wrong with this Picture?

The Republican-controlled legislature has made some hard choices in order to balance the state budget.

Over the years, the state’s Democratic leadership had expanded eligibility for the State Children’s Health Insurance Plan (SCHIP) significantly above the federally required level. Missouri’s SCHIP plan was established in 1998 to provide health insurance coverage to children of families with incomes 186 to 300 percent above the federal poverty level. This unusually generous eligibility proved unsustainable and encouraged people to drop private and employer-sponsored health insurance.

Representative Chuck Purgason (R-Caulfield), chairman of the Social Services Appropriations Committee, pointed out that at 300 percent of the federal poverty level, families with incomes of $55,200 a year are eligible for government-run health care. The current SCHIP plan, he said, offers state money to families that can afford health insurance on their own. Purgason noted, “I would be eligible for the program six months from now if I dropped my state-employee health insurance plan today.”

Purgason also said caseworkers from the Department of Social Services in his district told him of instances in which families with $191,000 in Certificates of Deposit in the bank were eligible for SCHIP. Mary Fallen, assistant deputy director for income maintenance, said a family’s net worth of all available resources minus debts couldn’t exceed $250,000 for the child to be eligible for benefits.

If Governor Bob Holden (D) signs the proposed budget plan, lowering SCHIP eligibility to the federal standard, thousands of children would lose insurance coverage. He is unlikely to do that. “This makes no budgetary sense, makes no economic sense, and makes no moral sense,” Holden recently told legislators. He added the proposal “would not pass on my watch as Governor.” The governor did not identify alternative cuts and stood by his plan to increase income taxes instead.

Purgason responded to the Governor’s comments saying, “If that’s immoral, I thinks it’s immoral that he gives us a budget that’s not balanced and is only balanced on increasing tax revenues that haven’t passed yet.”

House speaker Catherine Hanaway (R-St. Louis County) explained the state’s budget shortfall makes it necessary to restore SCHIP eligibility to the federal level. “I’m not sure in very tough economic times we can be the insurance company for all those people.”
Press Briefing
February 25, 2003
The Columbia Missourian
February 27, 2003

Telling it Like it Isn’t

About 10,000 people in more than 150 New Hampshire cities and towns have approved a resolution stating voters’ desire for elected officials to work toward more affordable health care.

The nonbinding resolution, circulated as part of a petition drive by New Hampshire for Health Care, states New Hampshire’s health costs are the 12th highest nationally, that health plan premiums have increased 45 percent over three years, and that 77 percent of the 100,000 uninsured state residents are in families where at least one person works full-time.

Media coverage of the petition has failed to note New Hampshire is one of the country’s most heavily mandated and insurance-regulated states.

Steve Bouchard, director of New Hampshire for Health Care, said the measure will not affect the state’s finances. “This is merely a way to make our voices heard, to let people know the current health care system isn’t working,” he said. According to Bouchard, the group hopes the state’s Presidential primary will draw national attention to the petition.

Curiously, the total reported membership of New Hampshire for Health Care is the same as the number of people who signed the petition to approve the resolution.

A statement on the New Hampshire for Health Care Web site notes, “Because of New Hampshire’s unique position as the nation’s first primary state, passing this resolution will also send a clear message to every Presidential candidate that visits our towns and cities over the next year that we want to know what their plan is.”

While the statement carefully avoids any reference to support for single-payer health care–or any other health care plan–the rhetoric is similar to what surrounded last year’s call for single-payer health care in Oregon. Moreover, the money trail leads to organized labor and single-payer advocates.
Portsmouth Herald
February 17 2003
New Hampshire for Health Care
New Hampshire Working Families of SEA
a project of the State Employees Association of New Hampshire, AFL-CIO

Not Eligible in the First Place

Last month, the state’s Medicaid program began eliminating optional benefits for approximately 100,000 residents who didn’t qualify for traditional Medicaid coverage in the first place.

Medicaid beneficiaries who have incomes below the federal poverty level but do not qualify for Medicaid will lose coverage for mental health and dental services, substance abuse treatment, and prescription drugs. Those beneficiaries will also be required to pay higher co-payments and premiums, including a new $250 charge for each hospital admission.

State lawmakers in 2001 approved a bill (HB 2519) to request a federal waiver allowing the state to split Medicaid into two tiers: Medicaid-Plus would cover individuals categorically eligible for traditional Medicaid, and Medicaid-Standard would cover residents who became eligible after the state expanded Medicaid coverage in 1994.

The Portland Oregonian reported five legislative committees will review plans to overhaul current arrangements and will report to the newly formed Oregon Health Plan Work Group. The group includes lawmakers, doctors, and representatives from the office of Governor Ted Kulongoski (D), the state Department of Health Services, hospitals, pharmaceutical companies, and health insurers.
Portland Oregonian
February 17, 2003
Kaiser Daily Health Policy Report
October 16, 2002

Medicaid in the Classroom

The Pittsburgh Post-Gazette has examined Pennsylvania school districts’ increased use of Medicaid funds to pay for school activities. Under federal law, school employees who help Medicaid-eligible students and their parents determine if the family is eligible for Medicaid services, can record the time spent on such activities and then bill Medicaid.

Half of the money received for such claims goes to the state, while the other half can be used by the school districts “for any purpose … for whatever the children need most,” according to a statement by Rick Fellers, chief operations officer of the Pittsburgh school district. The investigative report revealed that last year, Pennsylvania schools billed Medicaid for $26 million in such charges–an $11 million increase over 2001.

Cathy Lynch of the Allegheny Intermediate Unit said while the program has been in effect since 1994, only 14 percent of the state’s 654 districts use it because many school officials believe filling out the paperwork to receive the reimbursements is not “worth their time.”

George Schneider, executive vice president of Leader Services, which administers the program for Pennsylvania and several other states, said the company “has become busier” recently because in the poor economy, “Schools are looking anywhere they can to find money.”
Pittsburgh Post-Gazette
February 24, 2003

Using the Free-market Approach

Governor Gary Locke (D) has proposed eliminating benefits for 60,000 childless adults in an effort to trim about $150 million from a state health program. State lawmakers instead are considering bills that would cut benefits across-the-board in order to keep more people in the program.

The Senate Health Committee held hearings on two bills that would reform the Basic Health Plan, which provides health insurance to about 125,000 low-income residents who are ineligible for Medicaid. To qualify for the program, residents must have incomes less than 200 percent of the federal poverty level, or about $17,720 for an individual, and be ineligible for Medicaid.

About two-thirds of the current program participants, who pay minimal co-pays and premiums, are employed but do not have employer-sponsored health insurance.

SB 5313, sponsored by Sen. Jim Kastama (D), would reform the Basic Health Plan so it is similar to the Regence BlueShield FourFront plan offered in the private sector. The plan covers four physician visits per year, with co-payments of $15 per visit; up to $300 in preventative care costs per year; and up to $500 for laboratory or X-ray services. The plan also caps out-of-pocket costs at $2,500 per year. Under Kastama’s measure, Basic Health would fully cover beneficiaries’ preventative treatment costs, have a $3,000 annual deductible, and reduce income eligibility from 200 percent of the federal poverty level to 150 percent.

Locke said he directed the Health Care Authority to revamp Basic Health to make it similar to the FourFront model. State Rep. Eileen Cody (D) said modeling Basic Health after the FourFront plan could cut program costs by 25 percent and keep 15,000 people from losing benefits.

The second bill, SB 5807, introduced by Sen. Linda Evans Parlette (D), would limit beneficiaries’ eligibility for the program to five years, lower income eligibility, and increase co-pays. Further details were not available as Health Care News went to press.
Associate Press
Seattle Post-Intelligencer
February 18, 2003