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2005 Testimony

Testimony Before The Senate Industry, Business And Labor Committee

Regarding Senate Bill 2282 - External review of the Medicaid Program

January 25, 2005

Chairman Mutch, members of the committee, I am David Zentner, Director of Medical Services for the Department of Human Services. I appear before you to provide information and to express concerns about how this bill will affect the Medicaid program.

The bill requires the Department of Human Services through the Medicaid program to participate in the external review process proposed in this bill. Section 2, paragraph 11, on lines 8 through 10, on page 5 requires our participation.

The Department has numerous concerns regarding this proposed legislation. First, it appears that any decision made by the external review organization would be binding on the Department. Section 4, paragraph 3 indicates that a written decision is provided. It does not indicate what recourse our office would have if the decision were adverse to the Department. Attached is a letter dated May 26, 2004 from the Centers for Medicare and Medicaid Services that indicates the Medicaid agency may not delegate or permit others to substitute their judgment for the agency’s. This proposed law would appear to be in conflict with this federal regulation. The Department would still need to be able to make the final determination even if the external review organization overturned our original decision.

Lines 3 through 8 on page 5, permits either a provider, or in the case of Medicaid, a recipient to use this process to appeal a decision. The Department has an appeal process that permits a recipient to appeal any adverse decision through the administrative appeal process outlined in federal regulations. A second appeal process for Medicaid recipients would be redundant and confusing for recipients.

Much of the language of the bill relates to medical insurance. The Medicaid program is a joint federal and state program that uses taxpayer funds to pay for medical services for low-income households. Language such as insured, insure, and insured’s contract, are not terms associated with the Medicaid program. Eligibility for Medicaid is a means tested process. There is no contract. Recipients receive a package of services from providers who agree to enroll in the Medicaid program. If the Medicaid program is to be included in this bill, it may be necessary to include language that better defines the relationship between the state, the recipients, and participating providers.

The Department is cognizant of concerns that providers do not currently have an appeal mechanism when Medicaid denies payment for services provided. House Bill 1206 also deals with permitting providers to appeal adverse decisions of the Department. We are working with the bill sponsor to create an internal appeal process that would provide an inexpensive process. If providers are not satisfied with the independent decision within the Department, they could appeal directly to the courts. The Department requests that House Bill 1206 be considered before making a decision to include the Medicaid program in this bill.

The Department was not contacted regarding a fiscal note on this bill. We are concerned because Section 3 paragraph 1, item f, requires the Department to reimburse the cost of the review if the appeal by the provider or recipient is successful. We have no funds in our proposed budget to pay for these appeals. In addition, there is no mention of who pays if a recipient appeals. This section does indicate that an insured may not be assessed a fee for an appeal. Who pays the cost of the appeal in this situation to the external review organization? Most Medicaid recipients will not have the wherewithal to pay for such reviews. We are uncertain if the intent is to have the Department pay for those reviews as well. If so, that would increase the cost to the Department’s budget as well.

The Department requests that you consider removing the Medicaid program from this bill. We do understand that providers are frustrated by not having a direct appeal process, and we are trying to remedy that through HB 1206. If that mechanism proves to be unsatisfactory to providers, the Medicaid program could be added to this legislation in 2007.

I would be happy to respond to any questions you may have.


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