DF: There were several limits that we had proposed as part of the budget in February that will not get implemented because there were additional surplus funds from tax receipts available. In terms of payments to providers and services to recipients, the original proposal’s projected savings was around $500 million, and somewhere around $200 million was restored. What will not be implemented is any additional limit on prescriptions. We had proposed a six-prescription limit for adult Medicaid – they are unlimited now. We had proposed a three-prescription limit for General Assistance – they currently have a six-prescription limit. There will be no additional limits for either of those two groups.

For visits to the ambulatory surgical center or short procedure unit of a hospital, where we had proposed limiting each of those to one per year, there will be no limits for either group. In addition, there will be no limits on hospitals admissions for the adult Medicaid population. We had proposed two per year. For General Assistance there will be a limit of one admission per year, as proposed.

We had proposed a limit of $5,000 for durable medical equipment for both General Assistance and for adult Medicaid – that will not be implemented. Limits on portable X-ray and non-emergency transportation will not be implemented. Inpatient rehabilitation services will be limited to one admission per year for both General Assistance and for adult Medicaid. For adult Medicaid we will implement a limit of 18 visits per year to outpatient service providers. The General Assistance population already have the limit of 18.

DF: There are three conditions under which we would grant exceptions. One is that the person has to be very sick and need the service in order to avoid rapid deterioration of health, or death. The second is that it is more cost effective for us to approve the admission than not – for example, if we make a judgment that approving the admission will prevent the person from a long-term stay in a nursing home. And the third is to comply with federal law, for example, the Americans with Disabilities Act.

DF: It will work like prior authorization or, if it’s an emergency urgent admission, we’ll look at it after the fact. We have physicians, both full- and part-time, either on staff or through contracts, who now review almost every hospital admission to determine whether the admission was medically necessary – our current standard. If we need additional people, we’ll hire them.

DF: I have to leave that to my medical folks. I assume that’s going to be pretty difficult, but they are in the process of developing ways to implement those criteria.

DF: We are excluding from that limit visits to primary care physicians, because we want to encourage that. We are also excluding from the limit visits to specialists where a procedure is taking place, like a course of treatment for cancer. Included in the limit would be a visit to a specialty physician where treatment isn’t provided, as well as visits to chiropractors, podiatrists and optometrists.

DF: We decided that as we continued to talk about how to implement the proposal over the course of the last four months.

DF: That’s one we’re still looking at. In the final budget, there were no provisions or agreements on copays. As I understand it the General Assembly said that DPW could determine what we wanted to do on copays. We have to make up the savings if we remove any copays, so we are taking a look at that right now, with the governor’s office.

DF: We will implement a preferred drug list as part of the managed care organizations in October. We’ve already placed several drugs on a preferred drug list for our fee-for-service program. We did that by imposing prior authorization on the drugs in a therapeutic class that were not preferred – that started with three drug classes already – and we will probably finish that up between now and October or November. We have established a pharmacy and therapeutics committee that will provide us with recommendations on what the preferred drugs should be. In addition, we’re hiring a contractor to help us negotiate supplemental rebates with manufacturers for those whose drugs are preferred, since we’re moving market share from other drugs to them. That will all take place over the next couple of months.

DF: That’s fine. They have to go through a prior authorization process, and if they convince our reviewers that the non-preferred drug should be prescribed and dispensed, that’s fine. The patient will have an opportunity to appeal if authorization is not granted.

DF: We are doing a lot in fraud and abuse and third party liability areas. The Public Welfare Code that was amended by the General Assembly, in terms of our ability to manage the third party liability issue or coordination of benefits issue, includes a provision that health insurance companies are required to do matching computer runs with us to determine whether any of our patients are eligible for their health insurance policies, in which case they would be responsible for paying the bill, rather than us.

DF: No. That operating margin proposal was removed from the final budget and hospitals will continue to get what they did last year.

DF: The proposed increase was a two percent increase in rates, to be effective January 1^st 2006, and that was what passed in the budget. We had proposed to limit reimbursement to nursing homes to an increase of two percent, and the budget that passed provided funds to increase the reimbursement to nursing homes to three percent.

DF: The proposal in the governor’s original budget was to provide a two percent increase, and no change was made to that proposal. We have to make sure that two percent is actuarially sound, and if the lowest end of the rate range that our actuary allows us to pay managed care organizations is above two percent, then we have to pay the higher amount. I don’t anticipate that will happen, but that is the federal law. Managed care organizations will now be permitted to charge the current copays that the fee-for-service Medical Assistance program charges to patients. They were previously not permitted to charge copays at all.

DF: I think it’s referring primarily to the limit on hospital admissions for General Assistance, and he would like to see if there are ways the hospital community can help us out with those folks. Hospitals don’t have to admit everybody. They may stabilize people and send them to other hospitals, so they don’t have to provide uncompensated care to everybody.

DF: We haven’t yet had the chance to discuss how we might implement what the governor said, so I can’t tell you whether or not we’re going to monitor anything.

DF: It is anticipated that we’re going to face similar kinds of growth in our budget that we faced this past year, but it’s way too early to tell what we’re going to do to deal with that.

DF: What we’re going to try to do is to involve stakeholders in a more public way early on, and talk to them about the ideas they have on how to save money and introduce efficiencies into the program. Last year, in preparation of the budget we just implemented, I spent a lot of time with provider groups, consumer advocates and consumers saying that the budget was going to be a problem, and asking whether they had any ideas to help us in this process. I just didn’t get any takers. As soon as the budget came out, everybody had their own ideas about how things could be done, I assume because they wanted us to save money somewhere else – not related to their constituents. I’d like to try to figure out a way to do that ahead of time, rather than after the fact, so that we can take advantage of ideas in preparation of the budget.

DF: We really have to continue to step back and look at the program as a whole, to make sure we’re managing the program as efficiently as we can, and look at all areas of cost savings as we did in the past. I don’t think we would be bashful about re-proposing things. I think they were all difficult, because when you are proposing to reduce services and reduce what you’re paying for the program, groups do all they can to prevent their constituents from being affected by any cuts.

DF: It’s my view that Pennsylvania, by itself, is not going to significantly change the way the Medicaid program is run because there are too many issues related to the federal government. I think that any big solution for Medicaid has to be done at the federal level, not the state level. I think we run a very efficient program. The growth in our program is less than in private insurance.