HRSA/MCHB 2005 FEDERAL/STATE PARTNERSHIP MEETING

PUBLIC HEALTH ACROSS THE LIFESPAN

The Future of Medicaid: How Will it Continue to Serve Children and Pregnant Women?

CAROL BERKOWITZ: Thank you, Jamie. It's always nice when the audiovisual works and you don't have to figure it out. So I'm going to talk to you this morning about Medicaid and really what the American Academy of Pediatrics has been doing about it and also what's been happening on the Medicaid Advisory Commission.

So there is no doubt in anyone's mind that there is a crisis in Medicaid, and the question is where we're going to go with this crisis. There have been headlines in the papers, we have been hearing about the National Governors Association, lots of things.

So I'm sure everybody knows the full history, but I thought I would just briefly summarize because there were aspects of Medicaid that I didn't know about, and I have been serving a Medicaid population for close to 30 years now.

So it was developed in 1965 and developed to cover children birth to 21 years, but it was initially developed only for children who were on AFDC. The thinking was that the government was giving families money and was sort of like the employer, that is providing families with a salary, and it was incumbent on the government then to provide health insurance, the same way that an employer would provide health insurance. So that's from whence it came. States had the option to cover all low income children, not just those on AFDC, and we know how the program really expanded to then cover the blind, the disabled, and the elderly.

What happened with Vietnam? Anybody know? With Vietnam there was a report called One Third of a Nation, a report on young men unqualified for military service because when the draft was in place, 50 percent of potential inductees were ineligible for military service because of physical, emotional, dental, mental health problems. And it became apparent that these were problems that had developed during childhood that had been unaddressed, and this led really to the formation of the EPSDT program, and it was under President Johnson who said recent studies confirm what we have suspected: In education, in health, and all of human development the early years are the categories cal years. Ignorance, ill health, personality disorder, these are the disabilities contracted in childhood, afflictions which linger to cripple the man and damage the next generation. Our goal must be clear to give every child the chance to fulfill his promise.

So it is with the realization that young men, 50 percent of them didn't qualify for military service, and they had preventable conditions, and that's really what led to the EPSDT program. So again, I know you are aware of the EPSDT program, but let me tell you that program is in grave jeopardy now. That is where there is real concern about cuts being made, so the EPSDT is the early and periodic screening and diagnose and treatment, it allows for periodic and interperiodic, as needed, screening and preventative services, comprehensive health, and developmental history, unclothed physical, immunizations, laboratory tests, blood toxicity, health education, diagnosis, and treatment services.

So a condition that you detect during your physical assessment is then covered, even if it would not otherwise be covered, by virtue of the Medicaid program. So this really expands the services.

There have been some states with an interest in charging the patients for the care of services and some of this was implemented, I think, in Colorado related to adult services with a terrible effect.

So EPSDT allows for medical services, dental, hearing, and any medically necessary health care that falls within the federal definition of medical assistance. And the list goes on, but this was just a summary.

I want to say a word about mental health services. I thought it was interesting when Saralyn was asked about questions related to perimenopausal. I think mental health services there's a tremendous gap across that whole age spectrum. I think many women as they approach the perimenopausal area diagnose with mental health conditions, and the basis is perhaps more related to hormonal changes. But mental health is ‑‑ that is a tremendous gap, not just for individuals on Medicaid but for the middle class.

What has happened in some states, I'm not sure if you are aware of S380? S380 is referred to as the Keeping Families Together Act. I'm from California. We don't have this in California, so I didn't know about in some states have families relinquish custody of their children so their children become wards of the state just to access mental health services. So that's a horrific gap.

So the American Academy of Pediatrics actually has what I call a leave behind, when we go and do hill visits, and it articulates the principles that we feel related to Medicaid. And it's hard to see, but it talks about SCHIP as being critical as a safety net and entitlement should be preserved and so forth. So how have we gone about trying to enforce and preserve and see that these principles are honored?

This past year I have served as President of the American Academy of Pediatrics, and a few the year to build coalitions with other medical associations because we think that's where the strength is. The American Academy of Pediatrics now has about 63,000 members. That's a lot of members. But it's not everyone.

So early in the year, we had a meeting with a group called AMSDC. AMSDC is the Association of Medical School Department Chairs, and also NACHRI, which is the National Association of Children's Hospitals and Related Institutions, because AMSDC felt that medicate should be bifurcated and that children should be separated from adults because, you know, children account for about 50 percent of Medicaid enrollees but only about 20 percent of the cost. The numbers vary. You will hear 48 percent and 19 percent. But that's about what the figures are. And the thinking of AMSDC was that if we separate children out they will be safe. The American Academy of Pediatrics has never subscribed to that notion. We have concerns that if children are separated out, they will, in fact, be more vulnerable, because we will not have the alliances that we have had over the years to protect them.

So we had this meeting to try to reconcile our differences because for sure if you go to the hill as a group, i.e pediatricians, and you have different prescription you're not going to get anywhere. It's confusing enough all the different things that we stand for. But when two groups who seem to have the same background are advocating for different things, nobody wins.

So we met with AMSDC and NACHRI, and though we didn't agree about the notion of bifurcation, did agree to five key principals: That Medicaid should remain as an entitlement program; that SCHIP had to remain intact; that reimbursement or payment for Medicaid should be at least on par with Medicare. It's about two‑thirds and some states it's 50 percent. That is a tremendous barrier to access. That has formed the basis for at least three lawsuits, Westside Mothers in Michigan, the Illinois lawsuit, and the Oklahoma American Academy of Pediatrics versus the State of Oklahoma because it denies access. It's on the federal access principle.

EPSDT should remain intact. And we said that thinking sure, everybody feels that way, and we'll talk about the danger. And with this tremendous interest in tax credit, we didn't want to seem like you people are never willing to change, get over it. We said tax credits are appropriate, but for not all populations. This became our mantra over the year. And it became accepted by some of the other major organizations. At the AMA interim meeting last December, the American College of Physicians for the Internists, American College of Obstetricians and Gynecologists and the American Academy of Family Physicians endorsed these principles. They went to the microphone at the AMA meeting speaking for the preservation of Medicaid.

NAPANP, the National Association of Physician Assistants and Nurse Practitioners, also endorsed it. And then we met with the AMA in March.

Now, I know there's different views of the AMA, I think the organization still has a lot of challenges in its public image, but they are listened to, and they often represent a segment of the population that they are more red states involved in that, I can't say it in any other way. And we met with them, and we met with their peer leadership, and I will tell you that the meeting started out with you pediatricians get over it, you know, there's change in the works, Medicaid has to be reformed and you just got to face it.

And what I said to them is we know there's change in the work, healthcare is going to be reformed, and we are really afraid that children will become the inadvertent casualties as healthcare is being reformed, and we need your help to make sure children aren't hurt because I know that not a single one of you wants to hurt a child, so help us. And it was amazing because they just melted. Because I really believe that. I really believe that people don't want to hurt children, but they get kind of sidetracked by line items and budgets and things like that. And so they signed on to everything but the notion of entitlement. And they say as an AMA their policy does not endorse basically I think any entitlement programs.

And in fact, Jim Rohac, who is the chair of the board of directors, wrote a column, it was the American Academy of Pediatrics turned 75 years this year, so celebrating our 75th, but then he wrote the AMA shares common ground with the academy, believe that physicians should receive appropriate payment, other mutual and key aims include protecting SCHIP, maintaining EPSDT benefit for children in Medicaid and getting more uninsured children covered. And that was incredible. This was in their AMA news. So I think together we will probably hopefully be able to fight hard for this.

Then we had a meeting with Mark McLellan in April, again articulating that need that children don't become the inadvertent casualties, and Dr. McLellan assured us that that's not where the interest is in making cuts, that children are not driving up the cost of Medicaid. So we got his buy‑in on it and then his proposal that we help CMS develop quality measures to assess the quality of care that children are receiving, children who are Medicaid and SCHIP recipients, either on a provider level or a state level or a community level, looking how different states are serving their Medicaid populations.

And then the last thing with this coalition building was my appointment to the Medicaid Advisory Commission. And there were a number of pediatricians the academy supported, and I had the support of ACOG and the AMA also.

So there are four physicians on the commission; we are all nonvoting members. And the way the commission has worked so far is we have as much say as anybody else, and we have often a loud voice and a strong voice, but when the vote comes we just don't get to raise our hand.

But we do have the right to send a letter of a different opinion that then accompanies the report. So I thought I would share with you what the commission has done up to this point in time.

We had our first meeting in July. The commission was appointed the first week of July. That's when I got my notification. We had a one‑day meeting in July and a two‑day meeting in August. And it was kind of interesting because somebody on the commission said, well, just tell them we are not going to give a report by September 1st, that's ridiculous, and it's like, no, you have to understand this is the congressional mandate, this isn't like you guys get to pick the date.

So we had to by September 1st come up with what are called scorable options. I had a strong learning curve. Many of you probably know these terms already. It meant you had to using actuarial data set a number and savings to say, to make Medicaid more like SCHIP and give governors flexibility was nonscorable. Couldn't put a number to it.

The only things we could come up with for scorable and the scorability was determined by either the Congressional Budget Office or the Actuarial Office at HHS. So these were the numbers we came up with.

Changing the reimbursement formula. Currently Medicaid pays for drugs using the AWP, which is the average wholesale price. It's kind of like going in a car dealership and paying the sticker price. Like you want 25,000 for the car, here you are, 25,000. Like whoever heard of that. So we voted to change it to the average market price. There are three things: the average wholesale price the average market price, or the average sales price. The average market price was acceptable, has more basis in reality, and that would figure to 4.3 billion dollars in savings over the next five years.

When we went through the options, we tried to assess the impact on everybody but particularly on the recipients and try to make certain that recipients would not be negatively impacted. This would have its greatest impact on pharmaceutical companies, a small impact on independent druggists, on pharmacists, but they were agreeable to it.

Extend the Medicaid drug rebate to Medicaid manage care organizations. Currently there is if it's a Medicaid patient, the pharmacy gets a rebate that wasn't available to Medicaid manage care, but giving it back it will reduce the cost of care and actually lower the capitation rate, but in the end it balances out.

The two next things have to do with transfer of assets, which I think most people have read about in the newspaper where more well‑to‑do people transfer their assets to their children or other relatives as a means of getting into an income level that makes them eligible for Medicaid. It was interesting because three people involved with this commission were former elder attorneys who actually specialized in helping people learn how to gain the system.

So they were no longer elder attorneys, so they didn't want this to happen anymore. But anyway, it changed the penalty start date and the look‑back period, and you can see what those savings are.

I'll just mention the last one, which is for me little bit complicated, has to do with a provider tax requirement for Medicaid manage care organizations, and that would change the ‑‑ reform the tax structure, and it was 1.2 billion.

The most controversial thing is the tiered co‑pays for prescription drugs. And there were a number of us who spoke against this. What this ‑‑ we got co‑pays for office visits off the table early on. I think if I could go forward, this was Bob Pierce article in the New York Times from that meeting where you can see doctors argue against higher co‑payments for Medicaid because there was a proposal that would have allowed co‑pays for preventative services, for children and pregnant women which are now completely excluded.

The tiered co‑pay for prescription drugs has to do with making it a state decision, giving the states the ability to no longer cap on it, you can charge as much as you want, and you can charge children and pregnant women for non‑preferred drugs.

So we can ‑‑ I don't want to take up a lot of time, but if you have questions about that, we can talk. One member of the voting commission voted against it. But there are about four of us who spoke very much against it but it still passed. It's a recommendation; doesn't mean it's going to happen.

So that was due by September 1st. Most of you realize that congress was supposed to come out with a recommendation by I think about September 15th or not later than the end of September. Then Hurricane Katrina intervened. So the actual decisions of congress won't be until the end of this month.

The commission will exist until December 31st, 2006. And our charge is the commission is to reform Medicaid, and this is what's the agenda for the next meetings: to discuss eligible populations, look at the acute care delivery system, look at long‑term care delivery, look at quality and health the information technology, IT, fraud abuse and financing, and then there will be two presentations on best practices, one with SCHIP and one with Medicaid Disease Management.

We have gotten the agenda for the year, we have gotten the months of the meeting, just not the dates and the locations. And that was ‑‑ I just got that a few days ago.

Before that many I sort of made a slide of some of the things that we had been talking about, which is should it be bifurcated or should it be trifurcated. I heard Newt Gingrich about four weeks ago talking about separating children, the elderly and the disabled into three parts and a lot of interest in decreasing fraud and abuse, and we would all be very much in favor of that, but not in it increases the barriers as a provider have to fill in so many forms that I just decide I don't want to talk care of any Medicaid recipients.

There's interest in making Medicaid look much more like SCHIP, increase flexibility for the state, eliminate entitlement, and as we heard Secretary Levitz say to have fewer Caddy's and more Chevy's; that is change the benefit package. That is a great risk.

I want to share with you just that in Canada there's an agenda for children, it's called a Canada Fit for Children. We would very much like to that in our nation. In Canada, which has this still has great variability. And my point about this is if we leave it up to the states, then there's no guarantee about the quality within the state. So Canada has this and every year they do this status report on how well are they doing and here's a page. This is publicly funded immunizations by different provinces. And there's good, excellent, fair. So to allow states that much variability I think is to me of great concern.

And then who could forget these images on the front pages of the paper a little over a month ago and Katrina and what that will do to the whole Medicaid reform. Some of us thought that this has brought poverty to people's attention, but people live with it every day, and maybe it will take a crisis to get to the reform.

And at first it looked like that was maybe going to go in the right direction, and now we are starting to hear the opposite, that, in fact, the cost of Hurricane Katrina is so great that there's not going to be enough money to sustain an ongoing program and a lot of interest not in the Grassley‑Baucus Bill, which would have allowed 100 percent federal coverage in a simplified form and states which accepted these evacuees not having the burden of caring for them.

But what we are hearing is much more of a waiver process where there are set dollars given to different states and not having any federal oversight.

So the other thing we have heard, and I will finish, is that, well, you know, these people, let them use the emergency departments. Right? If you need healthcare, we're not going to give you the money, go to ‑‑ I work at a county hospital. I have been there for 27 years. We are the safety‑net hospital. 75 percent of the kids I care for are on Medicaid or SCHIP and 15 percent have no insurance.

Okay. And let me tell you, like a plague of locusts, every seven years they are going to close us down because the county runs out of money. So to burden safety‑net hospitals and emergency departments is incredibly naive and incredibly costly and not the way to go.

So I think we have to have a whole different view. And Canada there's this great article called Complicated and Complex Systems, and it says, you know what, there are simple problems, that's like how do you make cookies, you get a recipe; there's complicated problems, how do you send a rocket to the moon, maybe Saralyn could have told us that, but you create these formulas, and then there are complex problems like how do you raise a child? And a cookie recipe or a formula doesn't work, and we should use that same notion, that same paradigm as we try to improve healthcare.

And I think maybe it's time that we think about federalizing children's healthcare with either the Medikids and again if there's time for questions we can talk about the components or the kids first the bill introduced by John Kerry. Maybe this is the time to move certain populations out of the whole uncertainty.

And I will leave with this quote for those of you who ever go to 200 Independence Avenue, the wonderful quote by former Vice President Hubert Humphrey, "The moral test of a government is how that government treats those who are into the dawn of life, the children; the twilight of life, the elderly; and the shadows of life, the sick, the needy, and the handicapped."

And I think it's time that we really looked at what we have been doing as a nation, not only to these elements of the population but to everybody. With that I will stop.