Wyoming Legislature

Committee Meeting Summary of Proceedings

Joint Executive/Legislative

Department of Health Review Committee

May 18-19, 2005

Room 302, Capitol Building

Cheyenne, Wyoming

Meeting Attendance (Present)

Committee Members

Senator Charles K. Scott, Co-Chairman

Senator Cale Case

Senator Kathryn Session

Representative Doug Osborn, Co-Chairman

Representative Roy Cohee

John A. Masterson

Michael McVay

Harold H. Gardner

Legislative Service Office

Gerald W. Laska, Staff Attorney

Bill Mai, Senior Legislative Analyst

Others Present

Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.

Meeting Attendance (Absent)

Committee Members

Representative Pete Jorgensen

Stephen H. Pecha

Max Maxfield (represented by Jeff Conley, State Auditor's Office)

Written Meeting Materials and Handouts

All meeting materials and handouts provided to the Committee by the Legislative Service Office (LSO), public officials, lobbyists, and the public are referenced in the Meeting Materials Index, attached to the minutes. These materials are on file at the LSO and are part of the official record of the meeting. 

Wednesday, May 18

Call To Order

Chairman Scott called the meeting to order at 1:00 p.m.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee Meeting Agenda.

Opening Remarks

Representative Osborn reviewed the 2005 bill that created the committee, the charge given to the committee in the legislation, and noted that a final report is due by September 1, 2005.  He stated that the co-chairmen's understanding was that the committee's work should focus primarily on the Medicaid program.

Co-chairman Scott stated his understanding of the committee's main purposes as to present recommendations to the new director of the Department of Health, and to recommend statutory changes, especially the possibility of codifying Medicaid coverage provisions rather than determining coverage in the state plan.

Chris Boswell, Governor Freudenthal's Chief of Staff, then addressed the committee.  He pointed out the shrinking federal benefit match rates, increasing demand for services, increasing program enrollments and aging population, and asked the committee to address the Department of Health budget in the following respects:  are we spending wisely; how should funds be prioritized; how do we ensure that those who need services will receive services.  He asked the committee to focus on Medicaid, in order to develop plans that can be incorporated into the biennial budget to extend state and federal dollars.  Mr. Boswell referenced the October, 2004, Governor's Fact Finding Report and Recommendations on the Department of Health, specifically the finding that there was a lack of prudent financial and accounting practices within the department and culture of advocacy which may not mesh with financial realities.  He noted that recent meetings with the Department of Health personnel have gone much better than 2003 budget meetings, and that the governor is looking for creative and thoughtful solutions, not fault-finding.

Chairman Scott asked if the governor's fiscal concerns were a management issue or created a concern regarding misappropriation.  Mr. Boswell replied that the governor's office had policy concerns that did not rise to a criminal or mismanagement level, and that solutions did not have to be necessarily painful or draconian.

Department of Health – General Overview and Briefing

Organizational Structure

Brent Sherard, Acting Director of the Department of Health, distributed and reviewed a department organizational chart (Appendix 3).  Dr. Sherard stated that he is very impressed with the commitment of department staff to health care and with their respect for the citizens, the governor and the legislature.  He read the department's mission statement and noted the great diversity and breadth of the department's jurisdiction, and that the department has no control over many of the factors affecting it such as the resignations of State Hospital psychiatrists, decrease in federal funds, growing methamphetamine problem and prescription drug price increases.

Dr. Sherard stated that he is impressed with the quality and educational background of department employees, but that retention due to low wages is a problem, especially among psychiatrists, pharmacists and nurses.

Ginny Mahoney, department chief of staff, distributed copies of the curricula vitae for Dr. Sherard, herself, Chief Financial Officer Robert Peck,  Deputy Director of Operations Leland Clabots, Health Care Financing Administrator Greg Gruman, State Pharmacist Roxanne Homar, and State Medicaid Agent Iris Oleske.

Non-Medicaid Divisions

Dr. Sherard continued the review of the department's organization, identifying the Divisions on Aging, Community and Family Health, Developmental Disabilities, Mental Health, Rural Health, Preventive Health and Safety, and Substance Abuse.

Senator Case asked that, in the future, the department's budget be presented programmatically to coincide with the organizational chart.   Dr. Sherard agreed, and said the CFO is already working on that.

John Masterson asked if the department is too big.  Dr. Sherard stated that that is a fair question for the committee to consider, that it is discussed regularly within the department, that he believes in strategic planning for constant evaluation and accountability, but that he believes the department is appropriately structured.

Senator Sessions asked that the organizational chart be further broken down.  Ms. Mahoney agreed to provide that, added that there are 64 programs in six divisions, and stated that each division has provided cost containment ideas.  Dr. Sherard added that the budget and employee positions would be shown at the same level of detail.

Senator Case asked if some of the developmentally disabled persons, who are on home and community based waivers but are very expensive to maintain in the communities, might be better served at the Wyoming State Training School.  Mr. Clabots replied that the DD Division is doing such a review in conjunction with the new director of the training school.  Senator Scott asked that Senator Case examine that issue and report back at the next meeting.

Senator Sessions asked how the department provides accountability for services to court-ordered placements.  Mr. Mikesell replied that there is an initial evaluation team, a feedback/follow-up team and regular evaluation by the Center for Medicaid and Medicare Services liaison.  The committee generally discussed the selection of services by the DFS casework, and that ultimately the appointing judge controls the case.

Chairman Scott asked about jurisdiction over public health issues.  Dr. Sherard replied that there is a problem with overlapping and poorly defined jurisdiction, but that, pursuant to another 2005 bill, the department is conducting a study of public health jurisdiction for the legislature.  Senator Scott asked that Dr. Sherard report further on the lack of participation in the infant home nurse program, which has proven in a 15-year follow-up study to reduce subsequent aggressive behavior by 40% if early home nursing services were provided.

Staffing/recruitment issues

Leland Clabots discussed human resource issues.  He observed that:

- some essential information is being collected for the first time;

- that 2/3s of the department's positions are in the five institutions but are being managed from the department level for the first time;

- most staff are medical professionals and that the department competes with private providers;

- that the biggest problem is with public health nurses and pharmacists; and

- that the department is working with A&I Personnel to improve hiring processes and pay scales.

Senators Scott and Case asked that the department report back on whether the pay scales are sufficient and whether any legislative fix is required.

State Institutions

Mr. Clabots described the state institutions, noting that they were still very independent of the department's management as recently as 2003.  There are over 1,000 full-time and 35 part-time positions, and 571 in-patient beds.

Senator Case asked about out-patient services.  Mr. Clabots said that the State Hospital has 52 out-patients but that the other institutions do not do much in the way of out-patient services.  The department is including in its 5-year plan the increased use of out-patient services.  Senator Case noted that the legislature has commissioned a $100,000 study of the need and possible location of a new veterans' home.

Financial Report

Robert Peck, chief financial officer, reported to the committee.  He has been on the job for five months and reports that he has had the full support of senior management in reforming the budget process.  He stated the following priorities:

1)      Creation of a more centralized fiscal organization;

2)      Creation of a management structure within the fiscal office to support the entire department;

3)      Implementation of monthly financial reporting;

4)      To present the budget in a more understandable way than the budget office's traditional method;

5)      Adoption of a policies and procedures manual for fiscal operations;

6)      Increased fiscal accountability to the director by all divisions and programs;

7)      Improved contract management;

8)      Revamping of RFP and sole sourcing policies and procedures.

In response to questions by Representative Cohee, Mr. Peck added that the new budgeting process would have to be reviewed by the A&I budget office, that the new tracking budget system should avoid reversion of federal funds and that there will be numerous cost-saving ideas in the upcoming budget.

Medicaid 101

Iris Oleske distributed copies of a Powerpoint presentation on "Medicaid 101" (Appendix 5) and distributed "Understanding Medicaid" from EqualityCare (Appendix 6) and a summary "Wyoming Medicaid in 2005" (Appendix 7).  She stated that Wyoming's Medicaid program is generally considered lean and conservative.  She noted the following significant features:

1)      The federal match percentage changes annually and has decreased at the fastest rate in the country (10.37% decrease in five years) due to Wyoming's counter-cyclical economy, increase in per capita income, and inclusion of government salaries in the federal match formula;

2)      Medicaid enrollment increased significantly from 2000 to 2004 (61%), as it did in the rest of the country, but the rate of increase has slowed.  The SCHIP Program brought many new enrollees into the Medicaid program;

3)      Even though Wyoming's average income increased due to high-end income increases, there was still an increase in the number of low-paid workers at the other end of the economic scale.

Meeting Recess

The Committee recessed at 5:00 p.m.  Some of the members met informally at a dinner hosted by the Milbank Memorial Fund/Reforming States Group.

Thursday, May 19

Call to Order

Chairman Osborn called the meeting to order at 8:05 a.m.

Department of Health – Medicaid In-depth Review

Iris Oleske made a Powerpoint presentation on "Medicaid 101" (Appendix 5).

Senator Scott questioned why 47% of the births in Wyoming are paid by Medicaid when the poverty rate is not that high.  Ms. Oleske replied that the poverty rate among the young is much higher and that there are many working poor among young persons who are eligible for Medicaid.  Senator Scott discussed subrogation from unwed fathers, and whether the availability of Medicaid unintentionally created an incentive not to marry; Ms. Oleske acknowledged that may in fact occur and that subrogation recoveries from unwed fathers are not significant.

Senator Scott asked if the department had an estimate of the "clawback" cost under the new Medicare prescription drug program.  Ms. Oleske explained that the "clawback" is the amount the states are responsible for under the drug program and represents the amount the state would have paid for drugs under Medicaid but for the Medicare drug benefit.   The department estimates Wyoming will be responsible for at least $10-11 Million during the first year of the drug program.

Milbank Memorial Fund/Reforming States Group – Observations on Wyoming Medicaid Program

Senator Scott introduced to the committee several guests from other states' health departments   who participate in an informal group of states addressing Medicaid reforms:  Kurt Knickrehm, Director of the Arkansas Department of Human Services; Carmen Odom, Secretary of the North Carolina Department of Health and Human Services; and Karl Kurtz, Director of the Idaho Department of Health and Welfare.

Kurt Knickrehm made a Powerpoint presentation (Appendix 8), during which he noted that:

·        10% of all eligibles account for 70% of Medicaid costs;

·        the 50 most expensive cases are neonatal intensive care patients;

·        Arkansas has had significant success with provider taxes, evidence-based utilization management, consumer-directed service selection and healthy lifestyle programs.

Carmen Odom distributed a summary of cost containment measures in North Carolina (Appendix 9), and a description of the Community Care health network system (Appendix 10) with a map of the approved provider networks (Appendix 11).  She stated that North Carolina's Medicaid program is similar to Wyoming's but provides more optional services.  North Carolina has limited Medicaid cost increases by such methods as decreasing provider payments, controlling pharmacy costs, eliminating some optional coverage items, increasing case management activities, and improving fraud and abuse deterrence and detection efforts.

Karl Kurtz distributed an organizational chart of the Idaho Department of Health and Welfare (Appendix 12), an Overview of the Idaho Medicaid Program (Appendix 13), and a budget summary of actual and projected Medicaid expenditures for FY2005 (Appendix 14).  He stated that there has been a significant cost savings realized by the implementation of managed care through primary care physicians for Medicaid recipients.

Public Comments

Loren Richards, Wyoming Protection and Advocacy, Inc., addressed the committee and presented a copy of his comments (Appendix 15).  He referenced the Olmstead decision from the United States Supreme Court in 1999 mandating community placement of persons with disabilities, when medically appropriate.  He stated his opposition to any retreat from the goal of  providing the choice of community placement for such persons.

Wendy Curran, Wyoming Medical Society, stated that the committee should not limit its focus to Medicaid, and that there are other significant cost savings possible in the Department of Health.  She encouraged the committee to keep its collective eye on the goal of providing quality medical services, not just the cost of those services.  She noted that provider reimbursements are decreasing, especially when adjusted for inflation, and that the levels are approaching a critical point that would cause the loss of health care providers in Wyoming.

Lou Thompson of Pine Bluffs identified herself as a member of the board of Protection and Advocacy and the mother of a son with severe developmental disabilities.  She stated that her son used to be in the Wyoming State Training School but is now thriving in a group home in Cheyenne, and that she fears he could not handle a forced return to Lander.

Sarah Gorin, Equality State Policy Center, advised the committee that it needs to focus on people and services, and not take a "meat ax approach" to the budget at a time when enrollment is increasing.   She noted that a Center study showed the "economic security level" is 200% of the federal poverty level, and that 20% of Wyoming's population is above the poverty level but below the economic security level.  She recommended tracking employer information on Medicaid applications so poor-paying employers could be identified, and that health care coverage should be required of all government employers and state contractors.

Dan Perdue, Wyoming Hospital Association, advised the committee that Medicaid patients represent 31% of hospital patients, but due to under-compensation are responsible for 69% of write-offs.  He noted that there was an in-depth review of Medicaid by another task force in 1993, which recommended no benefit or cost cuts but rather an increase in provider reimbursements.

Meeting Adjournment

Senator Scott stated that he hoped there would be more public comment at the next committee meeting; that Dr. Harold Gardner would address the committee regarding benefit program design; that the department should present updated information on the 'clawback' provision; that the committee would consider the role of the State Training School in providing services to persons with development disabilities; and that the members should review the 2003 Medicaid reform bill distributed to the committee members.

There being no further business, Chairman Scott adjourned the meeting at 11:45 a.m.

Respectfully submitted,

Senator Charles K. Scott, Co-Chairman                       Representative Doug Osborn, Co-Chairman