Letter to the Governor from the House Republican Task Force

Water Agreement - Good or Bad

Economy: Are we our worst enemy?

Proposals for ‘04 savings on Department of Community Health Budget

Natural Resources: Jeff Brown Earns Environmental Leadership Award

Senior Prescription Drug Costs White Paper

 

 

 

This letter was developed as the report of the House Republican Task Force on budget cuts to the Department of Community Health and the Department of Human Resources that Representative Brown chaired:

 

November 12, 2003

 

Honorable Sonny Perdue

18 Capitol Square

203 CAP

Atlanta, Georgia  30334 

Dear Governor Perdue: 

The Task Force of the House Republican Caucus made up of Representatives Jeff Brown, David Graves, John Lunsford, Chuck Martin, Austin Scott, and Donna Sheldon was asked to look at the departments of Community Health and Human Resources and propose budget cuts such as we did last year.  Last year Jeff Brown, David Graves, and Donna Sheldon did this specifically for the Department of Community Health.  What is interesting is that most of the proposals that we developed appear to still be viable, since little if any of them were implemented in the ’04 budget process.  One of the groups we talked with was the Georgia Hospital Association and interestingly, they are now recommending almost verbatim the same proposals as we made in February of ’03.  We understand that given the RFI process, a new commissioner, etc., there has been hesitancy to piece-mill any of this.  However, the alternative appears to be worse yet. 

We encourage your people to reevaluate the above referenced recommendations that were made February 13, 2003.  OPB evaluated them and a quote from this evaluation is worthy of calling for this reevaluation, “the Department (OPB) submitted a memorandum to the Governor’s Office in February 2003 detailing additional areas that the Department was evaluating to derive further state fund savings.  A number of the proposed interventions presented in the Representative Brown memo correspond to items identified by the Department.” 

Some other recommendations and comments during our current analysis include: 

1. We need to be very careful because of something similar to the Upper Payment Limit that Governor Barnes put into affect and for that matter the switch from accrual to cash resulted in an initial savings, but long-term costs us more money in the next budget year.

2. While there are some good points to the CON, it appears that it is an unregulated monopoly.  Should we not extract savings from those medical facilities that are protected by their CON’s? 

3. If the prescription drug bill that Congress is evaluating includes giving money back to the states for the dual eligible burden then our budget problems are certainly helped.

4. Alan Essig, formally with Governor Barnes and now with Georgia State University’s Andrew Young School, indicated that in all of his research he has never seen an analysis of what it truly costs to deliver a particular health care service.  Given this and his own philosophical bent, he feels that we should be reducing monies to the providers until they prove to us that they can no longer afford to provide the service versus cutting services available to the Medicaid and Peach Care recipients where there is a proven need for such services. 

5. There were the usual anecdotal stories.  One that was particular galling was a husband and wife who make a million dollars per year between them but the husband’s mother from the Philippines is receiving Medicaid. 

6. Compared to State Merit and the Board of Regents Insurance, Peach Care and Medicaid are a Cadillac versus a Chevrolet.  Where is the fairness in that? 

7. It appears that State Merit in awarding a contract to First Medical Network is showing preference to certain hospitals despite some not always being the least expensive.  This could be because their Board of Directors is dominated by major hospital executives.

8. Speaking of CON there was a report of some providers using a particular attorney to get a much faster and higher percentage rate approval of their CON application than do others.

9. We have heard for years, as we debate bills trying to establish levels of care for long-term care, that it is a very simple process to get a person into a nursing home at a monthly rate several times what an assisted living facility would cost, while in reality assisted living is all that they need if Medicaid would pay for such. 

10. We are spending huge sums of money during the last several days of a person’s life when in reality if we had an effective state-wide End of Life Initative as Wisconsin and Oregon have, we could save a lot of money, and more importantly people would be dying as they chose to instead of the doctor being required to sustain life.

11. Why not self insure State Merit and the Regents Employees health benefits plans?

12. Why not incentivise pharmacists for therapeutic substitutions.

13. There was one startling piece of new news supplied to us by Representative Austin Scott who had an analysis done of the thirty-five not-for-profit hospitals who file 9-90 forms with the IRS.  The total amount of the cash and marketable securities for these 35 hospitals according to his analysis is $2,608,149,608!  He has requested of GHA the same information for the other GHA member hospitals.  Further, Rep. Scott makes the point that the state used much of its “rainy day funds” during the recession but that many hospitals did not.

14. One Representative reports that one or more persons within the DCH headquarters is blocking further evaluation of claims of fraud sent in by DCH field personnel.

15. It has been reported, but not verified, that illegal aliens are getting Medicaid benefits beyond the court mandated emergency room care without showing proof of citizenship.

16. Why not replicate what the Community Health Network in Macon is doing?  We received a report of their success.

Some of the above may not be accurate or may over or understate a problem, and much of it you have heard before, but they only scratch the surface of saving lives and saving money.  In summary we believe we have a broken system.  Nonetheless, we have to address the ’04 budget shortfall and then approve a ’05 budget.  We would like to propose a “summit” to address both budgets and suggest the following for your consideration: 

1.      It would be convened by you with a stated purpose of “Saving Lives, Saving Money,” to borrow Newt Gingrich’s book title and specifically focused on the ’04 shortfall and establishing the ’05 budget.

2.      We believe a world class facilitator should be brought in to set up and implement the process.

3.      Publicity would be given to this and an invitation for presentations given to appropriate parties. 

4.      The invitation of presentation would contain very strict ground rules much as you have in a debate.  Perhaps the presentations pertain solely to cuts and not the typical defense of a program that is being threatened as most Appropriations Committee hearings are.

5.      The actual presentation would be sent to the facilitator beforehand to check for timing and consistency with the goal.

6.      The format would then call for an orderly challenge as you do in a debate.

7.      We assume there is good material for creating some of the agenda from the RFI process.

8.      States such as Montana and North Dakota have very successfully used the “consensus method” to resolve some extremely complex issues and certainly healthcare fits into that definition.  Therefore we recommend that this method be considered. 

We believe that the above process would supplement and enhance the decisions that must follow the RFI stage. 

It is obvious for ’04 let alone ’05 there are some very difficult choices to be made.  Without the benefit of this type of input you are going to have to make decisions that are sure to cause very negative reactions from those affected.  We believe this summit could create a much more informed decision making process where indeed we can saves lives and save money. 

Sincerely, 

Jeff Brown                    David Graves               John Lunsford               Chuck Martin              

District 89                    District 106                  District 85 Post 2          District 37

 

Austin Scott                  Donna Sheldon

District 138                  District 71 Post 2 

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PRESS RELEASE

July 28, 2003

Water Agreement - Good or Bad?

          Hopefully the tentative agreement among the Governors of Georgia, Alabama, and Florida on the Tri-State negotiations on the Apalachicola, Chattahoochee, Flint River Basin Compact, (ACF Compact) will be fair to West Point Lake and to the rest of the state.  This has been my goal for the nine years I have been involved in this issue.  However, I have some serious reservations and a proposal that would address them. 

         First to my reservations which are largely taken from the Principles of an Allocation Formula found in the Memorandum of Understanding that will become the basis of the agreement.  4b says flow to Columbia, AL will be maintained at a certain level, provided the pool level of West Point Reservoir is above 621.6. (our full pool where we are now is 635).  The reality is we have no lake for most purposes below 625, let alone 621.6. 

            4d calls for a minimum level on the Apalachicola River at Chattahoochee, FL determined by storage levels in West Point Lake and Lake Walter F. George.  Why not, based on storage levels on all lakes on the Chattahoochee?  Why not also based on the Flint River?  While I understand there are no impoundments on the Flint, nonetheless this river is an important factor in achieving this minimum flow level.

            7 - “the agreement shall consider and include the use of Lake Lanier as feasible and appropriate… to support all the flow requirements  at Chattahoochee, Fl.”  I would like to see a far more definitive set of requirements to insure the participation of Lake Lanier.           

9 calls for “adaptive management” during the term of the Compact.  While most would agree an ongoing process is advisable, since all factors can not be foreseen over the 40 years of the agreement, the plan Dr. Art Holbrook and I presented to Governor Perdue on May 13, 2003 was based on the Delaware River Compact involving the states of New York, New Jersey, Pennsylvania, and Delaware.  It has survived the test of time and appears to be far more definitive than “adaptive management.”           

11 – seems to reopen the issue of barge traffic on the Chattahoochee. Why?  Do any of the key decision makers have any vested interest in renewing barge traffic?  If so, they should remove themselves from influencing this decision.  Otherwise, it would be a clear conflict of interest. 

Other factors beyond the above principles come from general concerns and from three experts with no ties to West Point Lake who have already expressed concerns.  One is why the rush?  With the Governor’s desire to have an agreement in place by August 31 and only 60 days thereafter for public input there is very little time to do the study I propose.  We’ve been at this for twelve years; surely another month or so is not unreasonable.

            It is my understanding that the U.S. Corps of Engineers has already done a modeling on the effects this agreement will have on West Point Lake levels, but it has been suppressed.  Is this true?  If so, why?  Regardless, we should see such and my proposal calls for such.           

There appear to be minimal restrictions on withdrawal permits for metro Atlanta.  Let’s face a fact, the present withdrawals aside from drought are the primary reason we have had low levels on West Point Lake prior to this year.  Further numerous articles claim the Atlanta metro area in reality is already withdrawing more water than they were projected to do so in 2030.  While developers and a few others will howl and use all types of pressure, I contend the growth of metro Atlanta must be slowed by many methods, but primarily by restricting water withdrawals.  Already the area has uncontrolled air pollution and inadequate infrastructure in terms of transportation and sewage treatment.   

The above said a comment made by a world renown expert several years ago still resonates.  He said there is enough water within the ACF basins to satisfy all reasonable needs for decades.  The problem is the system is not managed to maximize utilization.  Does this agreement maximize utilization?           

Are the flow requirements coming into West Point Lake adequate to insure good water quality?  I think not.           

Why is it that three main flow points coincide with plants owned by Mead, Georgia Pacific, and Southern Company, all of which depend on river flows?  From an ecology standpoint do we really need flows at this level or could they be lower were it not for these industries needing the higher flows?  If the industries need the flows given their present processes are there options that don’t jeopardize jobs and long term profitability?            

We would hope that once the Governor signs the agreement and the 60 days for public input passes, the federal review would be objective and exhaustive.  However, I have concerns that such will not take place.  Reportedly the Department of Justice and one official in particular has not been at all cooperative in that regard to date.           

While I have tried to be objective and to present my case without rancor, I am not an expert so there could be errors.  If so, the public needs to hear this as part of an information campaign to factually inform all of us of one of the most consequential decisions the State of Georgia will make in over 100 years.           

Now for my proposal.  I believe we need an independent study prior to this agreement going for federal review.  This modeling should involve all parties but be done by an expert who has not been directly included in the negotiations and use agreed upon software.  I’ve been told objective information could be available within 90 days of the project being approved.  I feel local and county governments and large property owners, who will be effected by this Compact, should underwrite the cost of this.  If you would like to contribute, please contact Dr. Art Holbrook at (706) 884-7905 or email him at kingart@mindspring.com.

     I applaud Governor Perdue for his personal involvement in these negotiations.  Many of the principles within the memorandum of agreement appear sound, and perhaps all are.  However, Governor Perdue until now has primarily relied on information used by the prior administration.  Quite frankly, many of us downstream never felt our concerns were addressed and that a minimum of science was used by this group.  Given the gravity of the Compact we do not need glib generalizations, loyalty and/or insufficient science.  Why would anyone oppose an objective modeling as I and others are requesting? 

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Press Release

July 16, 2003

ARE WE OUR WORST ENEMY?

By Representative Jeffrey W. Brown

LaGrange, GA, USA

 I believe there are things that we as individuals and businesses are doing to prolong the recession.  First I will share some statistics from various sources that will give a historical perspective as well as an overview of the present.  The lack of job growth starting March 2001 has resulted in the longest sustained period without job growth since World War II.  Other factors contributing to the recession such as increased productivity, moving jobs off-shore and the continuation of the L-1Visa will be discussed.  The article will conclude with some suggestions that could help us to come out of the recession sooner without seriously eroding corporate profitability. 

 The following are some statistics that will put the subject of this article into perspective: *

1. Since March 2001, the official start of the recession, more than 2.5 million jobs have disappeared.

2. The unemployment rate for June hit 6.4%, which was the highest level in more than nine years.  However, the last two recessions had 10.8% in 1982 and 7.8% in 1992.

3. The total number of unemployed counting both those seeking work and those who have stopped looking was about 10 million in June 2003 compared with 6.6 million in May 2000, when the unemployment rate was 3.8%

4. 4.6 million people are working part-time because they can’t find full-time work versus 3.3 million when the recession began in March 2001.

5. The average work week for non-exempt employees was 33.7 hours in June which is the lowest level since the government began keeping such numbers in 1964.

6. There are 2 million people who have been out of work for more than 27 weeks versus 690,000 in March 2001.

7. There were 478,000 people as of June 2003 that stopped looking for work versus 349,000 in March 2001.

Obviously the fact that we are in a recession is a significant factor in accounting for some of the above.  However, I believe there are several other factors including:

1. Increased productivity.  Since the fourth quarter of 2001, productivity has increased at an annual rate of 3.7% which is 1% point higher than the growth of the gross national product.

2. Record levels of imports versus exports resulting in a record unfavorable balance of trade.

3. Moving jobs off-shore.

4. L-1Visas have continued to rise and now there are an estimated 325,000 temporary workers who are allowed to stay between 5 and 7 years on such.**

5. We are replacing capital goods at a slower pace.

Some of the above, especially increased productivity, is good, should continue and in the end results in healthier companies and better jobs for those that are left.  However, other factors, particularly increased imports and L-1Visas need to be seriously examined by companies and by the federal government because they appear to be counter-productive and/or the common good can be better served by a change in policy.  Finally the factors of moving jobs off-shore and using equipment longer will be examined in terms of the wisdom of doing such and in light of what I will call the Henry Ford perspectives.

While I am certainly a believer in the global economy and against restrictive tariffs, I think that some of the trade agreements, such as NAFTA, are unnecessarily detrimental to US workers.  How fair is it to ask our companies to sell goods with the production incomes we expect them to provide and all of the regulations we impose (many rightfully for the sake of the environment) whereas much of the global competition comes from countries who pay poverty wages and have no concern for the environment.  I believe that each of us needs to keep these factors in mind when we buy products.  For me Made in America is a key.  Whether it is made by a US or foreign company is secondary.  

The L-1Visa issue to me is even clearer in terms of what we need to do.  While the H-1B Visas are capped, have restrictions and starting next October the limit will go down from 190,000 to 65,000 annually, there is no cap on L-1Visas and very few restrictions.  They were originally intended to allow international companies to bring their top management and experts here to work with their US subsidiaries.  If you agree write to your congressman and senators and also to Senator Saxby Chambliss, Chairman of the Senate Judiciary Sub-committee on Immigration, to voice your concerns about how we are handling L-1’s and the fact that well trained US workers are being replaced by the holders of such Visas. 

Now for the Henry Ford perspectives, as I dub them.  First there is the story of Henry Ford showing Walter Reuther, the president of the United Automobile Workers, new equipment at one of his plants and bragging about how many people would be replaced.  Reuther looked at Ford and said, “tell me Mr. Ford how many cars will these new machines buy?”  The second Ford perspective is less substantiated but supposedly Ford decided he wanted to pay his workers enough so that they could afford to buy a new automobile.  This certainly helped the sale of his automobiles which more than offset the additional cost of the extra compensation.  Using Reuther’s question let me ask you, the managers of American industry, how much of your product is going to be purchased by those foreign employees replacing your US workers?  My answer is very, very little because most of these foreign workers aren’t receiving enough compensation to afford them and/or restrictive trade practices won’t allow them to be available. 

One of the most strident comments about outsourcing to foreign countries comes from syndicated columnist Charley Reese.  In a July 14, 2003 article he said of US companies who close a plant here to open one in a cheaper labor market, “it is, in fact, immoral and socially detrimental . . . they should be shunned by their fellow citizens”.  Yet another response was reported in the July 14, 2003 Wall Street Journal.  “At least five states introduced legislation aimed at keeping jobs in the US, among other things, by blocking companies from using foreign workers on state contracts”.  Remember states purchase billions of dollars of products annually. 

The equipment being kept longer somewhat fits into the “Ford perspective”.  There is also the question of what are the real savings given reduced productivity, increased down time, increased repair cost, etc. These factors can more than exceed the cost of replacing this equipment.  Further the recently enacted tax decrease package gives more incentive to buy new equipment now.  Also, by doing such it helps the economy now. 

As the old Pogo cartoon said, “we found the enemy and it was us”.   Presently, there is a lot of personal hurt out there as people can’t find jobs or have to take part-time positions just to make ends meet.  Meanwhile there are inhibitors to economic recovery some of this is unavoidable as it is part of the normal adjustments of our economy.  However, some of it can be helped by all of us as detailed above is we so chose. 

* Many of these statistics come from a July 6, 2003 article in the Atlanta Journal Constitution written by     Marilyn Geewax.  She in turn gathered her information from numerous sources. 
** Much of the information on the L-1Visas comes from a June 22, 2003 article in the Atlanta Journal Constitution by Julia Mabre.

 Jeff Brown is an elected member of the Georgia House of Representative.  Also he is president of Comprehensive Search, based in LaGrange, GA, a human resources firm with employees in 24 states and Canada.  This article comes from the July issue of the Comprehensive Search eNewsletter.  Archived issues can be found at www.comp-search.com and click on articles.  Contact him at 706-884-3232 ext. 203 or email jeff@comp-search.com or jbrown@legis.state.ga.us.

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Proposals for ‘04 savings on Department of Community Health Budget

February 13, 2003

We are proposing below some broad brush possible savings.  However, most of these are going to require significant changes within the Department of Community Health which includes Medicaid, Peach Care, Indigent Care Trust Fund and State Health Benefit Plan.  Total of approx $2,000,000,000 State Funds and $4,000,000,000 federal.  (Medicaid, by far the largest portion). 

 The federal funds bring with them many requirements.  This is further aggravated by the fact that DCH finally released an RFI last week that requires a response in May.  It will take several months to evaluate those and then DCH will do an REP late in the 1^st quarter of budget year ‘04.  Finally, the award will be in the second quarter of FY04.  This means that any significant savings in budget year ‘04 are unlikely.  Conversations with the administration and with  DCH indicates an  unwillingness to make any of the following substantial changes, ie. managing the sickest of the sick, until the RFI/RFP process has run its course.  As reported in the 2/1/03 NY Times, the feds are going to be more flexible in granting waivers.  Unfortunately, our RFI/RIP process will negate this for the better part of a year. 

 On the House side of this budget cutting task force Rep. David Graves and Donna Sheldon joined me in looking for ways to do this.  One of our best sources of information was Brent Layton formerly  Asst. Insurance Commissioner and successful businessman in health care.  As the recipients are aware, Russ Toal in a “broad side” e-mail attempted to attack his integrity and credibility.  Nonetheless, we feel that some of his recommendations should be considered. 

 MEDICAID:

Listed below are three of many proposals that Brent presented to the House group mentioned above and separately to Sen. Stephens, Sen. Price and Sen. Seabaugh. 

1.  CM “Sickest of Sick”

·          4.5% of the 1,200,000 Medicaid recipients spend over 45% of the Medicaid budget.

·                      Gain share program - vendor is paid from savings

·                      Proposal made in 2002, to DCH for 1.5% of “sickest of sick” showed $18 million annual  savings

·                      Managing 4.5% of the sickest of sick - annual savings $88 million (est)

 NOTE: MS Health Integrated, Inc. mailed a proposal to Hank Huckaby on 1/28/03 saying that these savings are “immediate and significant savings”

2.  ER Access Program

·                      29% of GA Medicaid ER visits are inappropriate

·                      Award contract to a 24/7 call center (can make them set up shop in GA)

·                      Gain Share ER savings and/or pay CM fee

·                      Est. $50,000,000 annual savings

 3.  Low Birth Weight Births

·                      CM program by geographic region for all pregnancies and then screen “high risk” pregnancies

·                      GAIN SHARE savings for “Low Birth Weight babies and/or pay small CM fee.  Estimate $42,000,000  annual savings

 OTHER POSSIBLE MEDICAID SAVINGS                                                         

4.  Case Management:  Well Point  met with Sen. Price, Sen. Seabaugh and myself last Wednesday.  Very tentatively, we are looking at a pilot program for approximately 10,000 medicaid recipients in the long term care area and another 25,000 for the TANF Program.

 5.  We have received reports that there are regular admissions of Medicaid patients to hospice whose life expectancy exceeds the 6 months maximum of hospice.  The cost for hospice is far more expensive than other options.

 6.   We have received reports that it is a regular practice of nursing home, to take dying patients who have no chance of reversal to emergency rooms.  They are then admitted to the hospital.  Were it not for DHR regulations these people could die consistent with their living will/durable Power of Attorney and at far less money than the present practice.

 7.  Speaking of regulations there were repeated testimonies of unnecessary regulations causing health care providers to spend extra monies complying with no benefit to patients. Same for overzealous inspectors.

 8.  One of the most significant cost drivers for health care providers is liability insurance.

7/8.  The legislature could pass tort reform.  If this and/or  departmental procedures being more realistic and inspections more reasonable it would save providers significant monies allowing further fee reductions by the state while in the budget crisis without jeopardizing quality of care nor driving out providers.

9.  American Legislative Executive Council (ALEC) suggests that there are $26,500,000/year of unnecessary optional medicaidcoverages.

MEDICAID PRESCRIPTION DRUG SAVINGS

 10.  Implement a pharmacist based diabetes disease management program for medicaid patients - annual savings $54,000,000.  Source Georgia Pharmacy Assoc 2/03.

 11.  Eliminate monthly drug draws for all nursing home patients where leftover drugs are destroyed  and replace with weekly draws with a leftover credit to Medicaid mechanism (Assume $1/bed/week wasted @ 35,000 NH Beds in Georgia:  $1,820,000)

 12.  Increase Prior Approval tied to a supplemental rebate program (26 state have such) Estimated savings 6% to 8% or approximately $50,000,000.

NOTE Senator Jack Hill has introduced such legislation.

  Other Medicaid pharmacy cost containment ideas:

 13.       Increased Drug Use Review (DUR) Program (Prospective and Retrospective)

 14.       Increased use of Generic Products (every 1% that changes from brand to generic saves             approximately $6,400,000)

 15.       Prescriber Education Programs

 16.       Preferred Drug List (ESI)

 17.       Limitations of coverage i.e. Number of days supply, Step Therapy, Disease Management,          etc.

 STATE HEALTH BENEFIT PLAN

18.  Accept comprehensive consumer driven health care strategy developed by Tom Davis CEO Coventry Health Care of Georgia - Annual Savings - Minimum $74,000,000 while increasing member choices and providing an estimated 90% of state employees an option to pay less out of pocket. NOTE: Senator Mitch Seabaugh has introduced such legislation.

 19.  Curahee Health Benefits Solutions, Inc. working with pilot program in 13 southeast Georgia counties covering 25,000 people in the State Health Benefit Plan shows projected statewide annual  savings of $51,000,000

 20.  Rebid Megellan (behavior health vendor) since they are in chapter 11.  Assumed savings 20% or $1,080,000