Date: 07/09/2009

Updates from Dept. of Hlth Care Policy & Financing


Votes: View--> Action Taken:

09:23 AM -- Updates from Department of Health Care Policy and Financing

Joan Henneberry, Executive Director of the Department of Health Care Policy, introduced herself and members of her staff, Dr. Sandeep Wadhwa, Chief Medical Officer for the department, and John Bartholomew, Chief Financial Officer for the department. A copy of her presentation was distributed to the committee (Attachment C). She provided an update regarding a number of goals that were set at the beginning of Governor Ritter's administration, including increasing the number of insured Coloradans, improving health outcomes, increasing access to health care, containing health care costs, and improving the long-term care service delivery system.

090709 AttachC.pdf

09:29 AM

Ms. Henneberry explained that 67,000 children and 23,000 adults gained coverage through the public health care system in the past two years. In addition, provider rates for primary care providers have been increased. She noted that the department is exploring opportunities to seek additional funding outside of the state's General Fund, and that department has applied for a $42 million grant from the federal government. She gave an update of the implementation of House Bill 09-1293, which assesses a fee against hospitals to draw down a federal match to expand health care programs in Colorado.

09:33 AM

Dr. Wadhwa began his presentation regarding quality improvements in the Medicaid program, and provided a handout of his presentation to the committee (Attachment D). Dr. Wadhwa discussed the Medicare rates of rehospitalization within 30 days of hospital discharge, as compared with Medicaid readmissions in Colorado. Dr. Wadhwa responded to questions from the committee regarding Medicaid hospital admissions across the state. He described data regarding Medicaid clients' maternal health in Colorado. He discussed measurements of maternal and child health, and how Colorado's Medicaid clients' health outcomes compare to those of other Coloradans who are not enrolled in Medicaid. Mr. Bartholomew responded to questions from Representative Kerr regarding prenatal care for undocumented residents.

090709 AttachD.pdf

09:53 AM

Dr. Wadhwa described efforts of the department to reintroduced managed care in the Medicaid program. Dr. Wadhwa responded to questions from Representative Massey regarding cuts to reimbursement rates for rural health care providers. Dr. Wadhwa further clarified information regarding the provider rate cuts in the Medicaid program that were implemented in the past budget year. Dr. Wadhwa discussed the department's involvement with the Colorado Regional Health Information Organization (CORHIO), noting that there is federal money that could be accessed for the implementation of electronic medical records and health information technology.

10:05 AM

Ms. Henneberry described the department's plan for modernizing the eligibility determination system for the state's health programs. She noted that the department is moving forward on a number of items, including implementing a web-based application. She responded to questions from Representative Massey regarding presumptive eligibility in Medicaid.

10:13 AM

Mr. Bartholomew discussed the department's budget. He explained that the Joint Budget Committee was able to balance the FY 2008-09 budget largely due to federal stimulus money. In FY 2009-10, the department's budget was cut by about 5 percent. He noted that Governor Ritter has asked state agencies to take an additional 10 percent cut, which would equal an additional $360 million, including the federal match received by the state. Mr. Bartholomew further noted that the Medicaid caseload has increased by 10 percent over the FY 2008-09 caseload. He stated that federal stimulus money allowed the department to implement a two percent, rather than four percent, provider cut. Executive Director Henneberry responded to questions from Representative Kerr regarding how an anticipated increase in caseload will affect the department's budgetary situation. Representative Massey asked how provider rate cuts may affect the availability of providers for the program and possibly increase emergency room utilization. Executive Director Henneberry said that it is a difficult balance and that the department is examining closely the assumptions that it makes in setting rates.

10:24 AM

Representative Frangas asked what benefits are under consideration for cuts. Executive Director Henneberry said that under the federal stimulus act, eligibility for Medicaid cannot be reduced, but benefits could be. She stated that the cuts have not yet been determined, but that everything is on the table in order to come up with the required $300 million in cuts for the current fiscal year.

Representative McCann asked if provider rate levels are mandated by federal law. Ms. Henneberry said there are some requirements that managed care rates be actuarially sound, but levels for fee-for-service rates are not mandated. She noted that some states pay significantly less than the Medicare or private sector rates. Representative McCann asked about last year's two percent provider rate cut, and if there are things that can be done this year to minimize rate cuts. Executive Director Henneberry clarified that rate cuts are in effect for this year and that there may be some ways to minimize rate cuts, but that there are not many creative option left for generating the required savings to offset the cuts.

Dr. Wadhwa said that the two percent cut was a good preparation for preparing for additional cuts in the future. He stated that the process helped identify inefficiencies and to show ways in which client services can be improved.

Senator Foster asked about provider reimbursements and how long it takes to receive the payment. Dr. Wadhwa answered that it is seven days, and that Colorado is one of the fastest payers in the country. He also said that many providers benefit from being Medicaid providers since the program pays fast and helps with cash flow. Senator Foster asked if providers are required to accept Medicaid. Dr. Wadhwa said that it is option, but that emergency treatments must be available. Senator Foster asked how many providers are in the state and what percent accept Medicaid, and how many Medicaid providers are located in rural and urban areas. Dr. Wadhwa said that over 80 percent of primary care physicians accept Medicaid, but that not all of them accept new patients. He stated that if provider rates are held steady, there is more pressure to cut optional benefits.

10:36 AM

Rep Frangas asked if it is possible to obtain a list of budget cuts being considered by the department, a list of optional Medicaid services, information on the impact of cutting optional services on clients, and information on whether certain cuts could increase costs in other areas of the program. Executive Director Henneberry noted that the Governor's office is still assessing potential cuts. Representative Massey asked if extending provider payment time frames would save money. Mr. Bartholomew said that there are some requirements for Medicaid and the federal stimulus act for payment deadlines, but that within those constraints, everything is on the table.

Representative Kerr asked about the effect of matching funds on budget deficits. Executive Director Henneberry affirmed that cutting any state funds from the Medicaid program also results in a loss of federal matching funds. Representative Kerr said that there is less money coming in, but more services being demanded by clients, and that this creates a conundrum. He says that the stimulus funds are only temporary and that these issues will have to be addressed. Ms. Henneberry said that Colorado is not alone in dealing with these issues and that cuts are being made while thinking about the impact on the budget after the stimulus funding ends in the middle of FY 2010-11.

Senator Boyd asked about the technical issues for implementing Senate Bill 07-196, which concerns health information technology. Dr. Wadhwa said that the department is determining if the federal stimulus funding allows for greater access to telemedicine, but stated that the Centers for Medicare and Medicaid Services won't let some visits be replaced by electronic visits. Senator Boyd then asked about the Behavioral Health Cabinet, which was recommended by the task force on mental health that met pursuant to House Joint Resolution 07-1050. Executive Director Henneberry noted that she is a member of the cabinet and described the cabinet's efforts over the last year. She said that Department of Human Services is the lead agency for the cabinet and that it applied for and received a federal grant to facilitate the process of identifying activities that can be done to coordinate and improve mental health services.

10:47 AM

Senator Schwartz asked about the distribution of services throughout the state, where emergency room visits are the highest, and what role investment in technology can play. Executive Director Henneberry described the relationship between the CORHIO, state government, and the private sector and coordination in the behavioral health area. Executive Henneberry said that new tools aren't the only way to produce savings; creating efficiencies also requires looking at services and how business is done.

Representative Frangas asked if department had address recent cuts in available psychiatric treatment beds. Executive Director Henneberry said that when University Hospital closed its in-patient psychiatric unit, the Governor's Office and the department asked the Colorado Health Foundation to facilitate conversations about how to bring together organizations, hospitals, and consumer groups to look at the needs of the state for psychiatric treatment and how the community-based system can provide services.

Senator Schwartz asked for data on psychiatric beds and for additional background information. Executive Director Henneberry said that the Department of Human Services has taken the lead on these issues.

10:56 AM

Executive Director Henneberry updated the committee on federal health care reform efforts. She described three bills that are pending at the federal level. She described resources that are available to compare the provisions of the three bills, and polls of the public regarding support for health care reform. She described the major provisions that all three bill share, including establishing a standard income eligibility level for public health care programs and eliminating categorical eligibility for Medicaid. She noted that there is a debate about at what level the income eligibility threshold should be set, and various proposals have set the level at anywhere between 100 and 150 percent of the federal poverty level (FPL). She noted that the bills have not yet been voted on, but committee votes are expected shortly. Ms. Henneberry responded to questions from Representative Massey regarding matching funds for the Medicaid expansions. Ms. Henneberry explained that in two of the bills, the federal government is responsible for the entire cost of the expansions in the first five years, and in years six through ten, the states gradually must share a portion of the cost of the expansion. She noted that the National Governor's Association is advocating for reform of the federal/state matching methodology.

11:07 AM

Executive Director Henneberry continued her discussion of federal expansion of the Medicaid program, noting that there is consensus that large expansions should not occur in a fee-for-service environment, but that managed care models should be implemented. She further discussed the portions of the legislation relating to private insurance. She noted that a common element between the bills is an individual mandate, with government-funded subsidies for those who cannot afford private insurance policies. She emphasized that none of the proposals eliminate private employer-based coverage. She responded to questions from Senator Boyd regarding proposals that would eliminate employer-sponsored coverage. Ms. Henneberry responded to questions from Senator Schwartz regarding satisfaction with employer-sponsored health insurance. In response to a question from Representative Massey, Ms. Henneberry explained that coverage for individuals who do not have employer-sponsored health insurance would obtain their coverage through a connector or similar entity that would allow people to access comparable information on insurance, and determine their eligibility for subsidies. Ms. Henneberry further responded to questions from the committee regarding health insurance exchanges and the feasibility of implementing an exchange in Colorado. The committee further discussed how the affordability of insurance policies is determined.

11:28 AM

Representative Kerr discussed the proposals' requirements regarding an individual mandate. Ms. Henneberry discussed the individual mandate requirement in Massachusetts, and exemptions from the requirement if there are no affordable products available in the market. Representative Massey asked if any of the plans being considered in Congress include incentives for healthy behavior. Ms. Henneberry noted that Congress is exploring why there are wide variations in regional prices for health care, and how to standardize costs across the country.

11:38 AM

Executive Director Henneberry continued her explanation of health care reform by describing proposals to create a public health insurance plan. She stated that there hasn't been a decision about whether a public plan should be developed, and clarified that none of the three bills under discussion currently include a public health plan. She further discussed proposals for financing health care reform, including through savings proposed by providers and by taxing health insurance benefits. Senator Foster commented on health care reform and a single-payer system.

11:51 AM

Executive Director Henneberry noted that states may have flexibility with implementation of federal health care reform, but it is too early to know exactly how the state will be involved.

11:54 AM

The committee recessed.