A plan to save the state $1 million a year by “leveling” Medicaid reimbursements to doctors was approved today by members of the Kansas Health Policy Authority Board.
The board also endorsed plans to increase the number of drugs and medical procedures requiring prior authorization by the agency before pharmacists or doctors could provide them to Medicaid beneficiaries, a move that agency officials said would save the state $243,000 yearly.
A third endorsed measure would bring similar tighter control of medications prescribed for mental illnesses and would save the state an estimated $800,000 a year.
The cost cutting plans were devised by the agency’s staff as ways to trim $2 million in agency spending in response to the state’s budget problems.
Documents
Documents from the Sept. 15, 2009 KHPA Board Meeting
The board approved those proposed cuts unanimously after rejecting last month a proposal to cut costs by increasing premiums for families on HealthWave, the state’s insurance program for children in low- and moderate-income homes. That plan would have increased revenue to the agency while also cutting expenses because some families would drop out, officials said.
Last month, the two doctors on the board also spoke out against the plan to equalize Medicaid payments to physicians at 83 percent of Medicare rates but signed off Tuesday on a revised “professional rate leveling” schedule after hearing assurance from agency director Andrew Allison that payments for primary care and obstetric services would not be reduced as part of the changes.
The physicians on the board are Dr. Vernon Mills, a Leavenworth pediatrician, and Dr. William Reed, a heart surgeon at the University of Kansas Medical Center.
“I’ve been reassured core services will be protected,” Mills said.
Allison told board members that Medicaid reimbursements paid to hospitals are reviewed and adjusted annually but that hasn’t been the case with payments made to doctors. As a result, he said, some doctor services are reimbursed at rates as little as 10 percent of what Medicare pays while others are reimbursed at 800 percent of the Medicare fee schedule.
Allison said leveling the reimbursements at 83 percent of Medicare rates would mean a “more equitable and rational payment policy.”
It also would save the state an estimated $1 million.
Medicare is the federal health program for those ages 65 and older. Medicaid is the shared state-federal health program for the poor. In Kansas, Medicaid mostly covers the disabled, those who can’t pay their own way in nursing homes, and poor children. Childless adults are not eligible for the program but parents who earn less than 30 percent of federal poverty guidelines can be enrolled.
Many doctors avoid seeing Medicaid patients because the program generally pays less than Medicare or private insurance for the same services.
According to agency documents, “of the professional services identified for rate leveling, 59 percent were provided to people with disabilities, 20 percent were provided to the General Assistance or MediKan population and 14 percent were provided to families.”
General Assistance and MediKan are state-funded assistance programs for disabled persons awaiting determination on their eligibility for Social Security aid.
The agency’s cost cutting plans will be submitted to the governor for likely inclusion in his overall budget recommendations to the Legislature in January.
In other action, the board:
• Announced that Nicholas Kramer, an internal auditor with the Kansas Department of Revenue since 1983, had been hired as inspector general for the state Medicaid program. Kramer is scheduled to begin the job Oct. 5. The position was vacated when Robin Kempf resigned after claiming improper pressure from board members and agency staff.
• Heard the details of two proposals being developed for taxing nursing homes. The proposals have been developed by a work group led by Kansas Department on Aging officials but will be considered again in November by the health policy authority board, which could include the tax among its recommended policy changes for the Legislature to consider. Either proposal would result in increased federal Medicaid payments to Kansas, which would then be apportioned among most of the state’s nursing homes so that the majority of them would see a net increase in state and federal Medicaid dollars.
In one discussed scenario, the average tax would be $4.26 per nursing home resident, but 76 percent of the state’s nursing homes would see net gains in government dollars.
In a second scenario, the tax would be an average $691.69 per nursing home bed and 91 percent of nursing homes would see gains in government dollars.
Board members indicated they favored the second alternative.
• Heard Kansas Department of Health and Environment Secretary Roderick Bremby give an update on the status of the state’s e-health advisory council, which is working to develop a statewide plan for the use of health information technology. Bremby said the plan should be ready in six to eight months. He also said a team of lawyers led by Jeff Ellis of Lathrop and Gage, A Kansas City firm, is working to develop draft legislation for the 2010 Legislature that would eliminate legal barriers to the digital exchange of health information. A letter of intent to seek $8 million to $10 million in federal grant funding to assist the state planning was mailed last week, he said, and the state’s leading health foundations are being asked to donate $400,000 to meet the grant requirement that there be state matching dollars.
• Heard Insurance Commissioner Sandy Praeger give an update on the status of federal health reform efforts.
-Mike Shields is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at mshields@khi.org or at 785-233-5443, ext. 123.