Physician praises Passport

By Special to The Sun
Tuesday, February 14, 2012 at 2:31 pm

When I started practicing medicine in Bardstown almost 35 years ago, I was optimistic about my opportunity to make sick children well and to watch healthy children grow into strong adults.

Even though I started out with a slightly naïve view, I’m very proud to say I’ve had a hand in caring for thousands of Kentucky’s children. I made a commitment to serve Medicaid patients at the very beginning of my career, but I was not enthusiastic when managed care arrived in 1997.

Both my staff and the staff at Passport Health Plan will attest to my reservations during the start up. On one hand, I was right to be cautious; there were administrative and technology issues that created burdens on my practice.

On the other hand, Passport worked hard to fix what wasn’t working so doctors could focus on providing patient care. But, the gap between where we were with Medicaid managed care then and where we are now is enormous. Several recent articles point out that the state’s attempt to save money by introducing three other Medicaid managed care plans outside the Passport region isn’t going well. Maybe it was too much too soon.

My practice, Physicians to Children and Adolescents, serves over 4,700 patients on Medicaid.  Because of our locations in Bardstown and Springfield, some are covered by Passport, some by the other plans.

I’m not a managed care expert, but my staff and I see and experience the differences daily.
I suspect part of the difference is that Passport is a nonprofit and therefore never has to put the expectations of shareholders before the needs of members.

I’ve been impressed enough with Passport’s commitment to the Commonwealth to accept an offer to join their Board of directors.  From this vantage point, I’ve been able to confirm what I have long suspected: Passport Health Plan has a strong and engaged provider network, and an intense focus on delivering services at a cost that doesn’t diminish quality. In fact, engaging with providers is one of the hallmarks of Passport’s remarkable success.

I feel that Passport’s effectiveness, including their impressive clinical outcomes, are directly due to physicians and other health professionals (from throughout the service area) sitting  at the table making key decisions and sharing sacrifices for the good of the plan and the members.

The National Committee on Quality Assurance recently ranked Passport as the 13th best Medicaid plan in America, which could not have been accomplished without an invested provider network and a top-notch staff. As a member of the board of directors, I want to say Passport stands willing and ready to help the state get Medicaid back on track.

In addition to Jefferson, the plan has been successfully serving 15 rural counties for 14 years and respects and understands their unique needs.  Claims are paid on time, and members have access to the doctors, pharmacies, hospitals and specialists.

Passport is a strong and cost effective Medicaid plan that could be easily replicated throughout the Commonwealth.


Dr. James Hedrick, MD, practices pediatrics in Bardstown and received his medical degree from the University of Chicago, Pritzker School of Medicine in Chicago, Ill.


To view this article by Dr. James Hedrick, MD for The Springfield Sun please visit

Medicare Admin increase – WSJ report

  • February 13, 2012, 5:56 PM ET

What’s Behind the Medicare Increase?

The Obama administration proposed a sharp increase in spending at the agency that runs Medicare and Medicaid – and the reason why might surprise you.

Monday’s budget calls for spending $4.82 billion on administrative costs at the Centers for Medicare and Medicaid Services for fiscal 2013, a 25.9% increase in the previous year’s estimated budget of $3.83 billion. That doesn’t include the much larger sums the agency spends on its actual programs, which provide insurance to seniors, the disabled and the poor.

A chunk of Baby Boomers will turn age 65 this year and become eligible for Medicare, but that only accounts for a sliver of the proposed budget increase, federal officials said Monday. Instead, most stems from something that has nothing to do with an increase in elderly and poor Americans: new health insurance exchanges.

Federal officials said Monday that the administration projects it needs $864 million in fiscal 2013, which begins Oct. 1, to open the federally run health insurance exchange program slated to start in 2014. The 2010 health overhaul law called for each state to open its own exchange where consumers can shop for policies and tap health insurance tax credits. But for states that chose not to or couldn’t get it up-and-running, the law called for the federal government to step in and handle the exchange.

Since both Democrats and Republicans approved of the idea of the marketplaces, most people who followed the legislation expected few states would opt out of setting up their own exchange.  But a number of states with Republican governors have backed away. In Wisconsin, Republican Gov. Scott Walker last month announced he would send back a federal grant the state had taken to set up its own exchange.

In other states, health officials are simply running behind on preparations, raising concerns they won’t be ready by 2014. By the White House’s tally, only 28 states and the District of Columbia have made significant progress in setting up their own insurance exchanges.

Of the $1 billion set aside to implement the 2010 health overhaul, about half has been spent already, and the rest will be spent in the coming year, federal health officials said Monday.

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Higher co-pays proposed for smokers

Utah official proposes higher Medicaid co-pays for smokers

By Alicia Acuna

Published February 15, 2012 |


Lower-income smokers in Utah may soon have to pay more for a doctor’s visit if they continue the unhealthy habit. That is, if a bill currently making its way through the state legislature passes. 

State Representative Paul Ray, R., is the author of the proposal to charge a Medicaid recipient a higher co-pay for doctor visits if he or she smokes cigarettes. 

Currently in Utah, recipients do not pay premiums but have small co-pays for office visits and prescriptions. 

“It’s to offset the costs you’re bringing to the tax payers,” Ray said, “by choosing to smoke and put your health at risk.” 

Ray said the amount would likely range between $2 and $3, although the actual cost to patients has not been pinned down yet.

Remy Earnhart and his friend, Dallas, both smokers who appear to be in their 20s, said that if passed this new requirement would not stop them from smoking. 

“I think it’s freedom of choice, actually. It shouldn’t affect us,” said Earnhart.

Ray said he agrees with the first part of that statement. Even though the low-income health program is largely funded with federal dollars, Ray said smokers still cost Medicaid in Utah $104 million in 2009 for treating tobacco-related illnesses. 

“I’m tired of tax payers footing the bill for people who are making bad health choices and expecting free health care. And then secondly, (the goal) is to get people to quit smoking,” he said.

The American Lung Association, while vehemently anti-smoking, does not think this is the best way to get smokers to kick the habit.

“We think that there’ll be more heart attacks, you know more lung disease problems,” said Christian Stumpf of the American Lung Association. 

Additionally, he said, should the Ray bill pass, it will likely end up costing the state of Utah more in the long run. “People who are poor are less likely to pay out of pocket to go seek the treatment that they need. You know, and with smokers tending to get sick more often than people will be less likely to seek preventative care.”

This is not Ray’s first go-around with smoking tobacco. He pushed to get his state to raise the sales tax on packs and was behind other anti-smoking initiatives in Utah. 

The reason behind his fervor is personal. Ray’s mother is sick, with a diagnosis of emphysema. 

“She was a two-pack-a-day smoker, my father smoked, (and) died because of smoking. I’ve lived around the health effects, I’ve had four open heart surgeries. (My) mother smoked when she was pregnant with me, I was born with a birth defect in the aortic valve because of that. I know firsthand what the effects of smoking are and how it affects peoples’ lives.”

Many private health insurers and companies already place sanctions on smokers. But this is the first known attempt to apply the idea to Medicaid.

Ray says he anticipates a hot debate if his bill makes it to the Utah House floor.

Will Health Care Reform Keep its Cost Reducing Promise?

by Joanne Sammer
Created 02/14/2012 – 18:23

The February issue of Health Affairs journal is full of good articles about the potential impact of health care reform. In a series of posts, we will be focusing in on three specific pieces covering small companies using health insurance exchanges to provide employees with coverage, how large companies may end up using exchanges to provide employee coverage over the long term, and how some of the key provisions of the law might impact overall health care costs.

Today, we will focus on the last topic — health care costs. One of the key goals of health care reform is to “bend the cost curve” downward over time by increasing efficiency in the health care system, shifting the focus toward outcomes and patient health rather than fee for service, and extending coverage to the previously uninsured. We will focus on provisions that provide coverage for the previously uninsured who otherwise may have been categorized as indigent care, the costs of which are built into the system. The higher indigent care costs are, the more those costs are passed along to other payers through higher rates.

By expanding Medicaid coverage, the thinking goes, the previously uninsured will have greater access to ongoing and preventive care, which is much less expensive than emergency room and inpatient care. Of course, this sounds good in theory, but how will it play out in practice?

A new study conducted by researchers at the University of California-Irvine (UCI) starts to answer part of this question by comparing health care costs over time for the newly insured. “In a case study involving low-income people enrolled in a community-based health insurance program, we found that use of primary care increased but use of emergency services fell, and over time total healthcare costs declined,” says David Neumark, a professor of economics and director of UCI‚s Center for Economics & Public Policy study.

The study focused on patients enrolled in a community-based primary care program at Virginia Commonwealth University Medical Center. The study tracked emergency room, inpatient, outpatient, and primary-care service utilization of 26,000 previously uninsured Richmond residents between 2000 and 2007 whose household incomes fell 200% below the federal poverty level. Qualified enrollees were granted health insurance and assigned a primary-care provider for one year. The researchers chose this population because its demographics reflect the population that will be affected by the expansion of Medicaid benefits authorized by health care reform in 2014.

Now, to the results: The study found that these newly insured patients had 1.60 primary care visits per year in year three, up from 1.06 per year in year one. Over the same time, emergency room visits fell from 1.02 per year in year one to 0.74 in year three. Given the excessive cost of emergency room care compared to primary care in a physician‚s office, this is a positive result.

Most importantly, these changes led to declines in cost per inpatient and outpatient visits and length of inpatient stays. Overall, these changes led to these newly insured individuals reducing their total healthcare costs from $8,899 per enrollee per year in year one to $4,569 in year three. This, in turn, had a positive impact on overall costs per enrollee per year for all participants in the plan with at least one year of enrollment. Those overall costs declined from $7,604 to $4,726.

The caveat here, of course, is that these cost reductions require time to take hold. Expanding Medicaid coverage and subsidizing health insurance through the exchanges will not reduce system-wide health care costs right away, but this result does show some promise.
To view this article by Joanne Sammer for Business First Magazine, please visit

Medicaid firms try to explain drug system

Deborah Yetter – Louisville Courier-Journal
9:35 PM, Feb. 13, 2012

— Executives with three companies hired to run Kentucky’s new Medicaid managed care system encountered anger and exasperation Monday as they tried to address a growing number of complaints and explain to legislators how they cover prescription costs.

The complexity of the system appeared to baffle some members of the joint House-Senate Program Review and Investigations Committee, who are investigating complaints from independent pharmacists that lower payments under managed care threaten to put them out of business < <>.

“We’ve got so many layers we don’t know what we’re doing,” said Sen. Vernie McGaha, a Russell Springs Republican.

An exchange between Rep. John Will Stacy, a West Liberty Democrat, and one managed care executive became so heated that the committee chairman, Sen. Jimmy Higdon, a Lebanon Republican, was forced to step in.

“Let’s have a little order,” said Higdon, cracking the gavel.

Stacy, a co-owner of two Eastern Kentucky pharmacies, had complained that the secretive nature of the system is part of the problem — with companies refusing to release pricing information considered proprietary.

“Why is it fair that you can reimburse us below costs?” Stacy demanded of G. William Strein, a vice president with Medco Health Solutions. “How do you think that’s fair, and how is that good for Kentuckians?”

Strein, who works for one of three “pharmacy benefit managers” that are part of the new system, disputed Stacy’s assertion and said managed care attempts to strike a balance between its estimated cost of the drug and the costs of the pharmacy to buy and dispense it.

But that claim was disputed by some of the roughly 30 pharmacists at the hearing who operate independent drugstores. Though the hearing ended before they got a chance to testify, several said afterward that they intended to keep making their case before lawmakers.

“It’s a real burden for Kentucky pharmacists,” said Jason Wallace, owner of Grant County Drugs. “That’s why I’m here.”

Lawmakers have received a growing number of complaints since Kentucky introduced the new managed care system Nov. 1 in an effort to save money in the state’s $6 billion-a-year Medicaid program. Under the plan, three outside companies — CoventryCares of Kentucky, Kentucky Spirit Health Plan and WellCare of Kentucky — manage care for about 560,000 low-income and disabled Kentuckians outside the Jefferson County region.

Those three companies — all affiliated with national health care chains — in turn, contract with three pharmacy benefit companies to handle prescription drug benefits. WellCare uses Catalyst RX, Coventry uses Medco and Kentucky Spirit uses U.S. Script.

Medicaid in Jefferson and 15 surrounding counties is handled by Passport Health Plan, under a separate contract with the state.

Much of Monday’s testimony was devoted to the complex pricing formula known as the maximum allowable cost, or MAC, that managed care companies consider proprietary.

Under the Medicaid plan before managed care, the formula was provided to pharmacists, who said they knew what they would be paid. Now, they said, they don’t find out what a company will pay for a specific drug until they file claims.

And too often, they say, it’s less than they paid to buy the drug.

“How would you like to go to a gas station and fill your car < <> >  up with gas and then be told what the charge is?” asked Breckinridge County pharmacist Jonathan Van Lahr after the hearing.

Two of the three companies also have cut the dispensing fee — a payment meant to cover the pharmacy’s actual costs of filling the prescription. The prior Medicaid program paid $4.50 to $5 per prescription, but only Kentucky Spirit continues that rate, the pharmacists said.

WellCare pays $3, and CoventryCares, $1 to $1.50, they said.

Officials from all three managed care companies and their affiliated pharmacy benefit management companies told lawmakers Monday that they are committed to resolving complaints and working with all health care providers — including pharmacists.

“I just want to acknowledge the important role pharmacists, particularly independent pharmacists, play in Kentucky, especially in rural areas of the state,” said Marty White, vice president of external affairs for Kentucky Spirit. “In many areas, Kentucky’s Spirit’s members’ only access to pharmacy services is through independent pharmacies.”

White said his company has attempted to meet with pharmacists and resolve problems — which apparently has yielded some results.

At one point, McGaha asked for a show of hands among pharmacists in the room about which companies were the most problematic. About 25-30 hands went up for the WellCare and Coventry but dropped when McGaha asked if they had complaints about Kentucky Spirit’s pharmacy program.

Higdon said the program review committee will hold more hearings on the subject. The committee, the only legislative panel with the power to issue subpoenas, may use them if it doesn’t get the information it needs from the managed care companies, he said.

But he said the committee first needs more information.

“Obviously we have a big problem here,” he said. “We’ve just scratched the surface today.”


To view this article by Deborah Yetter for The Louisville Courier-Journal please visit