COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES
APPROPRIATIONS COMMITTEE HEARING
STATE CAPITOL MAJORITY CAUCUS ROOM ROOM 140 HARRISBURG, PENNSYLVANIA
MONDAY, FEBRUARY 23, 2009 11:30 A.M.
VOLUME II OF V
PRESENTATION BY PENNSYLVANIA DEPARTMENT OF AGING
BEFORE: HONORABLE DWIGHT EVANS, MAJORITY CHAIRMAN HONORABLE MATTHEW D. BRADFORD HONORABLE TIM BRIGGS HONORABLE H. SCOTT CONKLIN HONORABLE EUGENE DePASQUALE HONORABLE DAN FRANKEL HONORABLE JOHN T. GALLOWAY HONORABLE WILLIAM F. KELLER HONORABLE WILLIAM C. KORTZ II HONORABLE DEBERAH KULA HONORABLE TIM MAHONEY HONORABLE KATHY MANDERINO HONORABLE CHERELLE L. PARKER HONORABLE JOSH SHAPIRO HONORABLE JOHN J. SIPTROTH HONORABLE MATTHEW SMITH HONORABLE JAKE WHEATLEY HONORABLE JEWELL WILLIAMS
————————— JEAN DAVIS REPORTING 7786 Hanoverdale Drive • Harrisburg, PA 17112 Phone (717)503-6568 • Fax (717)566-7760 2
1 BEFORE (cont.'d): HONORABLE MARIO J. CIVERA, JR., MINORITY CHAIRMAN 2 HONORABLE GORDON DENLINGER HONORABLE BRIAN L. ELLIS 3 HONORABLE JOHN R. EVANS HONORABLE MAUREE GINGRICH 4 HONORABLE THOMAS H. KILLION HONORABLE DAVID R. MILLARD 5 HONORABLE RON MILLER HONORABLE SCOTT A. PETRI 6 HONORABLE DAVE REED HONORABLE DOUGLAS G. REICHLEY 7 HONORABLE MARIO M. SCAVELLO HONORABLE RICHARD R. STEVENSON 8 HONORABLE KATIE TRUE
9 ALSO IN ATTENDANCE: 10 HONORABLE PHYLLIS MUNDY HONORABLE TIM HENNESSEY 11
12 ALSO PRESENT: MIRIAM A. FOX 13 MAJORITY EXECUTIVE DIRECTOR EDWARD J. NOLAN 14 MINORITY EXECUTIVE DIRECTOR
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1 I N D E X
2 TESTIFIERS
3 NAME PAGE 4 JOHN MICHAEL HALL 5 ACTING SECRETARY, PA DEPARTMENT OF AGING...... 4
6 ESTELLE B. RICHMAN SECRETARY, PA DEPARTMENT OF PUBLIC WELFARE.....58 7
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1 P R O C E E D I N G S
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3 MAJORITY CHAIRMAN EVANS: I would like to
4 reconvene the House Appropriations Committee
5 meeting.
6 We now have the Department of Aging that is
7 before us with the Acting Secretary, Acting Secretary
8 Hall.
9 Can you introduce yourself for the purpose
10 of the record, as well as your guests who are with
11 you? And then, you know, we're going to get right to
12 the questions.
13 ACTING SECRETARY HALL: Thank you,
14 Mr. Chairman.
15 My name is John Michael Hall, and I'm the
16 Acting Secretary at the Department of Aging.
17 And with me today I have Deputy Secretary
18 Ray Prushnok, on my left, who works with the
19 Department of Aging as well, particularly in the area
20 of Administration, working with operations and
21 finance.
22 And on my right I have Dennis Hopkins, who
23 is the Director of our budget division. He's the
24 Bureau Director in charge of our finance and
25 budgeting group. 5
1 MAJORITY CHAIRMAN EVANS: Thank you very
2 much.
3 The first question I would like to start off
4 with from the Federal stimulus bill that was signed
5 last Monday, I think it was, and the question I've
6 been asking every Cabinet officer, in a very specific
7 way, Aging, are any of those dollars coming through
8 the Aging Department?
9 ACTING SECRETARY HALL: Yes, Mr. Chairman.
10 The budget that you have in front of you
11 brings together expenditures for the Department of
12 Aging and also for the Office of Long Term Living
13 programs.
14 This encompasses a wide-ranging set of
15 Medicaid expenditures, including the expenditures we
16 make to support nursing facilities as well as our
17 Home- and Community-Based Waiver programs, the
18 Aging Waiver, and the seven waivers that support
19 individuals who are under the age of 60.
20 So the enhanced FMAP rates will definitely
21 have an effect on our expenditures, because we'll be
22 able to draw down match at the higher rate under the
23 stimulus bill.
24 In addition, the stimulus bill contains
25 two other additions or appropriations that would 6
1 affect the programs at the Department of Aging.
2 Roughly $2 million is included in the stimulus
3 package to increase support for senior nutrition
4 programs.
5 We anticipate that those -- we have not yet
6 gotten instructions from the Administration on Aging
7 with respect to exactly how the Administration
8 anticipates distributing those funds, but
9 we anticipate---
10 MAJORITY CHAIRMAN EVANS: Excuse me.
11 When you say -- sir, are you talking about
12 the National Government or are you talking about
13 the Governor's Office? Which one are you talking
14 about?
15 ACTING SECRETARY HALL: No. The bill that
16 was passed last week---
17 MAJORITY CHAIRMAN EVANS: Right.
18 ACTING SECRETARY HALL: ---in addition to
19 the enhanced FMAP, also contains a couple of other
20 line items that will affect our department.
21 MAJORITY CHAIRMAN EVANS: Okay.
22 ACTING SECRETARY HALL: About $2 million
23 will come from the Federal Government to increase
24 funding for senior nutrition, and about $5.5 to
25 $6 million will come in the form of increased support 7
1 for senior employment programs.
2 MAJORITY CHAIRMAN EVANS: Okay.
3 ACTING SECRETARY HALL: About $1 1/2 million
4 of that will flow through the Area Agencies on Aging,
5 and then $5 million will flow directly to the
6 contractors that provide senior employment
7 services.
8 MAJORITY CHAIRMAN EVANS: A question that
9 I've been asking every Cabinet officer, and
10 understand that when the Governor proposed his
11 budget, at the time he did, obviously the stimulus
12 bill had not been passed or the President hadn't
13 signed it.
14 I raised the question about capacity of your
15 department's ability to implement as a result of this
16 new additional money, understanding that we're making
17 reductions, you know, from the perspective of
18 government.
19 Can you tell me if your department is in the
20 position to fully implement dollars that are coming
21 in in terms of capacity from a staff standpoint?
22 ACTING SECRETARY HALL: Yes, Mr. Chairman.
23 I don't have much doubt that we have the
24 capacity to utilize the funds that are flowing from
25 the Federal Government. 8
1 As we just discussed a few moments ago, the
2 vast majority of those funds come in the form of
3 enhanced Federal match for our Medicaid programs.
4 Between our nursing-home expenditures and our Home-
5 and Community-Based Waivers, we spend about
6 $4 billion in Medicaid programs.
7 Majority CHAIRMAN EVANS: Right.
8 ACTING SECRETARY HALL: And the infusion of
9 these enhanced dollars have allowed us in this budget
10 basically to hold the line and avoid reductions in
11 services and reductions in reimbursement for those
12 programs.
13 At the same time, I don't have much doubt
14 that the Area Agencies on Aging will be able to put
15 to good use the funding that will flow for the
16 nutrition programs and for senior employment.
17 MAJORITY CHAIRMAN EVANS: So in other words,
18 you will be able, through your department, to be able
19 to get the money out to the services, because always,
20 the concern has always been, you know, with this
21 new and additional money -- obviously you weren't
22 expecting it -- to be able to deliver the services.
23 ACTING SECRETARY HALL: Yes. And in the
24 case of our department, I don't think that we will be
25 challenged in that area. 9
1 MAJORITY CHAIRMAN EVANS: Okay.
2 The Republican Chairman of the House
3 Appropriations Committee, Representative
4 Mario Civera.
5 MINORITY CHAIRMAN CIVERA: Thank you,
6 Mr. Chairman.
7 Welcome.
8 ACTING SECRETARY HALL: Thank you, Chairman.
9 MINORITY CHAIRMAN CIVERA: The first
10 question is, before we get into the actual as far as
11 the stimulus is concerned, based on the Governor's
12 address to us in the General Assembly and his request
13 of a cut across all departments, how did that leave
14 your department before we started to see what
15 Washington had passed?
16 Specifically on the attendant-care services,
17 where would that, if Washington did not come through
18 and we don't know directly what type of dollars are
19 going to be funneled to you, where would that have
20 left us at that point in time?
21 ACTING SECRETARY HALL: Well, we had
22 developed several scenarios throughout the fall on
23 how to address the shortfall in General Fund revenue
24 that the State was facing, and those scenarios
25 included across-the-board reductions for providers 10
1 and services that we work with, including nursing
2 facility programs as well as home- and
3 community-based providers and the homecare agencies
4 and the other folks who are key in developing those
5 services.
6 I will say that when it became increasingly
7 likely that Congress was going to do something in the
8 area of stimulus and we had versions of those numbers
9 to look at, including, as you will remember, the
10 House number that came out, we tried to figure out
11 how we could avoid those kinds of reductions, and
12 here's why.
13 The individuals whom we serve in our
14 programs -- the people who come to us who need
15 nursing-home care; the people who are 85 and 88 and
16 90 years of age who need home- and community-based
17 care, often very intensive; the individuals who
18 participate in our LIFE programs; the people who need
19 PACE services -- they're coming this year and next
20 year whether there's a recession or not. Those
21 medical needs won't go away.
22 MINORITY CHAIRMAN CIVERA: Right.
23 ACTING SECRETARY HALL: And the calculation
24 that we made was that assuming that they will come,
25 how can we serve them in the most cost-effective way 11
1 possible and how can we avoid turning them away?
2 MINORITY CHAIRMAN CIVERA: What I noticed in
3 the budget -- okay? -- and what we've seen, we've
4 seen different programs that were attached in last
5 year's budget under the Lottery and now we see them
6 being taken over into the Department of Aging in the
7 General Fund.
8 ACTING SECRETARY HALL: Right.
9 MINORITY CHAIRMAN CIVERA: So that was part
10 of my question: Was that the reason that was shifted
11 that way before this money, the Federal money,
12 started to arrive on the scene? We haven't received
13 anything, but, you know, what's going to be coming to
14 Pennsylvania.
15 So before Washington had made that
16 commitment, was this the reason that some of this
17 came out of the Lottery and then went back to the
18 General Fund?
19 ACTING SECRETARY HALL: No. In fact, one of
20 the things -- in fact, I think that the budget
21 details show that we reduced the Lottery's commitment
22 to the long-term-care account by about $125 million,
23 Representative Civera.
24 And one of the key reasons for that, as you
25 may recall from past years and hearings that the 12
1 committee has had, questions have come to the
2 Administration about the growing commitment that the
3 Lottery dollars had and the fund transfer over to
4 support long-term-care programs going into the
5 Medicaid long-term-care account, the concern that
6 Lottery funds were being used to support our nursing
7 facility expenditures and Home- and Community-Based
8 Waiver programs.
9 As we were developing this budget throughout
10 the summer and fall, we made as an Administration a
11 serious effort to try and reduce the amount of that
12 fund transfer and to move those obligations back to
13 the General Fund. And in fact some of our earlier
14 efforts to do that were more aggressive than what you
15 see in this budget.
16 As the General Fund situation, pressure in
17 the General Fund deteriorated, we had to scale back
18 our aspirations for this year.
19 MINORITY CHAIRMAN CIVERA: Okay.
20 ACTING SECRETARY HALL: But you will see in
21 contrast to the upward trend that has characterized
22 the budget for the last few years, this budget shows
23 a $125 million reduction in the amount of Lottery
24 funds that are supporting those programs.
25 MINORITY CHAIRMAN CIVERA: Okay. One more 13
1 final point.
2 ACTING SECRETARY HALL: Sure.
3 MINORITY CHAIRMAN CIVERA: To go back to the
4 first question on the 4.5-percent cut that was asked
5 by the Governor for all departments.
6 So your answer to me is that you had
7 different proposals that were set into place prior to
8 the Federal Government coming through with the
9 stimulus plan. Directly, dollar-wise, what would
10 that have cost you in your department? Do you have
11 any idea before that Federal money would
12 have arrived?
13 ACTING SECRETARY HALL: If we---
14 MAJORITY CHAIRMAN EVANS: Could you speak
15 right into the mike, please?
16 ACTING SECRETARY HALL: I'm sorry.
17 MAJORITY CHAIRMAN EVANS: Thank you.
18 ACTING SECRETARY HALL: If we had taken the
19 4.5-percent across-the-board reduction?
20 MINORITY CHAIRMAN CIVERA: Yes.
21 ACTING SECRETARY HALL: I don't know that
22 I have that number off the top of my head,
23 Representative Civera, but we can get that to you.
24 MINORITY CHAIRMAN CIVERA: Okay. Thank you
25 very much. 14
1 Thank you, Mr. Chairman.
2 MAJORITY CHAIRMAN EVANS: Siptroth.
3 REPRESENTATIVE SIPTROTH: Thank you,
4 Mr. Chairman.
5 Mr. Hall, Secretary Hall, thank you very
6 much for joining us.
7 I have a couple of questions.
8 ACTING SECRETARY HALL: Sure.
9 REPRESENTATIVE SIPTROTH: Number one, on the
10 shift from individuals to the new Department of Aging
11 and Long-Term Living from DPW, can you assure me
12 today that absolutely no one will have any cuts to
13 their individual programs that they are currently
14 entitled to under the current form with the
15 Department of Public Welfare?
16 ACTING SECRETARY HALL: Just so I'm clear
17 about your question, the programs we administer?
18 REPRESENTATIVE SIPTROTH: Yeah. Will there
19 be any seniors that will lose any benefits?
20 ACTING SECRETARY HALL: No. The purpose --
21 what we've tried to portray in the budget, and I want
22 to be clear with the committee, is that we have
23 lifted up the programs in their entirety intact, the
24 administrative dollars and the staff, all of the
25 services that have historically been administered at 15
1 the Department of Public Welfare, and more recently
2 within the Office of Long Term Living, and brought
3 them into this department that we're proposing -- the
4 Department of Aging and Long-Term Living.
5 It does not call for reductions in services.
6 It doesn't call for reductions in programs or the
7 people served, nor does it have the effect of
8 changing what the staff will be doing or the kinds of
9 work that they're involved in.
10 REPRESENTATIVE SIPTROTH: Okay.
11 Regarding staff and physical co-location,
12 are we prepared for that?
13 ACTING SECRETARY HALL: Yes. Over the
14 course of the last couple of years, we've already
15 started the process of co-locating.
16 Staff under the Office of Long Term Living,
17 as you'll recall, has existed by an Executive order
18 as a joint deputate under the Department of
19 Public Welfare and the Department of Aging.
20 And before I was appointed Acting Secretary,
21 I served as the Deputy Secretary for that office.
22 And within that office, I had individuals who were
23 both DPW employees and other individuals who were
24 Aging employees working side by side, intermingled in
25 our bureaus. 16
1 A number of them have already changed their
2 physical location in order to be more logically
3 organized. So that all the folks, for instance, who
4 work on the budget are in one place; all the folks
5 who do quality assurance are in one place; all the
6 folks who administer the waivers are all in one
7 place.
8 Today, we have about 100 staff who reside at
9 the Forum Place Building, and then the remainder of
10 the staff -- historically, the folks who have been
11 the Office of Long Term Living work on the second and
12 sixth floors over at the Bertolino Building.
13 We're in the process, though, of
14 consolidating those staff into one location, all of
15 the staff in one location at Forum Place, so that
16 there is better coordination among the staff.
17 REPRESENTATIVE SIPTROTH: Have you heard any
18 concerns out in the field of the Area Agency branches
19 that administer the programs and do the assessments?
20 Have you heard any concerns at all from those
21 individuals?
22 ACTING SECRETARY HALL: Well, one of the
23 things that we've tried to do from the very early
24 stages when we were thinking about proposing to do
25 this, well before the Governor actually made the 17
1 decision and included it in his Budget Address, was
2 to start reaching out to the Area Agencies on Aging
3 and to other constituencies and stakeholders that we
4 work with, including the provider community, home
5 health, Centers for Independent Living.
6 But focusing specifically on your question
7 for Area Agencies on Aging, I think that Area
8 Agencies on Aging want to be assured that the role
9 that they have as the key partner in assuring that
10 services for senior citizens are delivered out in our
11 neighborhoods and communities is not diluted, that
12 the emphasize and the role that they play isn't
13 diminished, and that the strong relationship they
14 have with this department will continue going
15 forward.
16 At the same time, I think that Area Agencies
17 on Aging increasingly recognize that the
18 long-term-care landscape is changing and that the
19 interest of folks with disabilities and senior
20 citizens increasingly overlap.
21 REPRESENTATIVE SIPTROTH: Okay. Considering
22 all their concerns being addressed, do you see a
23 willingness on their part to fall into this new
24 purview?
25 ACTING SECRETARY HALL: Well, I think the 18
1 Area Agencies -- my understanding from recent
2 conversations I had with the statewide association
3 P4A, as well as with a number of other constituencies
4 that we work with, is that they want to see the
5 actual legislation and see what's in there and make
6 sure that there are no surprises or things that they
7 would find distressing.
8 I don't think that they're going to do that.
9 I'm confident that they won't. In fact, with respect
10 to Area Agencies on Aging, as we were doing the
11 drafting on that legislation, we picked up Act 70
12 intact and brought it into the new authorizing
13 legislation.
14 So I think prudently they want to wait and
15 see what the bill looks like when it comes out of the
16 LRB before they render final judgment. But my sense
17 is that they will see this and that they will be
18 consistent with the conversations we've had.
19 And I've also made clear that if they sense
20 that something has been lost in translation, that we
21 will fix that and correct it.
22 REPRESENTATIVE SIPTROTH: Okay.
23 I would just like to pick up real quickly on
24 Chairman Evans's opening statement in regard to your
25 response to the Federal stimulus dollars coming back, 19
1 about $296 million, I think. Is that correct?
2 ACTING SECRETARY HALL: Yes.
3 REPRESENTATIVE SIPTROTH: Okay. And we at
4 the State level have prolonged payments to various
5 organizations and that type of thing, and part of
6 this, again, from the Federal Government is assurance
7 that those payments will be made promptly. Are we
8 prepared to do that?
9 ACTING SECRETARY HALL: Now, I think you are
10 referring, Representative, to the prudent-pay
11 requirements?
12 REPRESENTATIVE SIPTROTH: Yes.
13 ACTING SECRETARY HALL: Yes, we are -- as
14 you note, as a condition of receiving the funds, you
15 have to assure that payment is rendered to providers
16 within a certain number of days.
17 The schedule that the stimulus bill requires
18 is more aggressive than the protocol that's in place
19 right now under the prudent-pay guidelines. It
20 represents primarily a cash-flow issue. It doesn't
21 increase our expenditures.
22 REPRESENTATIVE SIPTROTH: Okay.
23 ACTING SECRETARY HALL: We're in the process
24 of working with GBO in the Treasurer's Office trying
25 to understand exactly what that's going to require 20
1 and how we'll manage the cash flow, but we anticipate
2 what it will require us to do is to render payment
3 about a week earlier than we normally do.
4 REPRESENTATIVE SIPTROTH: Just one week?
5 ACTING SECRETARY HALL: At this point, it's
6 about seven to ten days.
7 REPRESENTATIVE SIPTROTH: Okay.
8 ACTING SECRETARY HALL: That's the impact.
9 REPRESENTATIVE SIPTROTH: That's not too
10 awful demanding.
11 ACTING SECRETARY HALL: No.
12 REPRESENTATIVE SIPTROTH: Let's shift gears
13 and talk about our pharmaceutical issues.
14 ACTING SECRETARY HALL: Sure.
15 REPRESENTATIVE SIPTROTH: It seems to me
16 that every time there's an issue with prescription
17 drug coverage, we ask our community pharmacists to
18 take a hit, and it doesn't make sense to me that they
19 don't control the prices of the drugs, that the
20 pharmaceuticals actually do.
21 So where do most PACE expenditures come
22 from, drug product costs or pharmacy provider
23 costs?
24 ACTING SECRETARY HALL: Well, I think that
25 the expenditures that we currently -- we currently 21
1 pay for drugs according to a formula, as you may
2 know, that's average wholesale price minus a
3 percentage deduction.
4 REPRESENTATIVE SIPTROTH: I think it's
5 12 percent now.
6 ACTING SECRETARY HALL: That's right, AWP
7 minus 12.
8 REPRESENTATIVE SIPTROTH: Right.
9 ACTING SECRETARY HALL: In this budget, as
10 you know, we've proposed to move to a different way
11 of purchasing those drugs, which focuses on the
12 actual acquisition cost, the true price of the drugs
13 or the invoice pricing, because we think that it's a
14 more accurate description of what the drugs actually
15 cost. It's not hidden behind the AWP formula that
16 the pharmaceutical manufacturers established that
17 don't really give you a good indication of what true
18 cost is. And we also think that the taxpayers of the
19 Commonwealth ought not to pay more for drugs than
20 commercial buyers can pay for those drugs.
21 At the same time, getting to the point that
22 you expressed concern about, we understand that
23 retail pharmacies, both the chains but also the
24 Main Street drugstores and the independents, are
25 key partners in making sure that the PACE program 22
1 succeeds.
2 They are in the delivery chain. They're not
3 only the folks from whom people get their drugs, but
4 they also provide counseling and advice. They check
5 for drug interactions. We understand that they are a
6 key piece here.
7 And so in this budget, recognizing that
8 moving to invoice pricing would have an economic
9 impact on the retail pharmacies, we have proposed
10 simultaneously to substantially increase the
11 dispensing fee that we pay to the retail pharmacies.
12 REPRESENTATIVE SIPTROTH: Okay.
13 ACTING SECRETARY HALL: It would infuse
14 about $25 million back to retail pharmacies.
15 And we have also begun discussions with the
16 retail pharmacies, both representatives from the
17 chains as well as from the independents, so that we
18 can look at their numbers; we're showing them our
19 numbers.
20 And we understand that there are some other
21 issues that they'd like to see addressed at the same
22 time. I think the first meeting we had with them was
23 very constructive, and we have more meetings coming
24 up so that at the end of the day, we come up with a
25 proposal that ensures that the taxpayers of the 23
1 Commonwealth are getting pharmaceutical, are paying
2 for the drugs and the PACE program at the best price
3 that we can possibly get, but at the same time
4 that we are cognizant and fair to the retail
5 pharmacies.
6 REPRESENTATIVE SIPTROTH: Okay. But isn't
7 this going to affect the local smaller pharmacies and
8 approximately $40 million that's going to be saved in
9 the Lottery by reducing the reimbursement to
10 community pharmacies?
11 ACTING SECRETARY HALL: Well, it will reduce
12 our overall outlay for pharmaceutical drugs. We have
13 calculated what the overall reduction would be, and
14 then we have netted back against that the increased
15 payments that we would make to pharmacies as a result
16 of the higher dispensing fees. And that's a key part
17 of the discussion that we've opened with the
18 pharmacies in connection with this proposal.
19 REPRESENTATIVE SIPTROTH: Okay. Let's talk
20 about Part D for the time being.
21 ACTING SECRETARY HALL: Okay.
22 REPRESENTATIVE SIPTROTH: How much less is
23 PACE getting from the drug manufacturers in rebates
24 now that the Part D plans began picking up the
25 majority of Pennsylvania senior citizens' drug 24
1 costs?
2 ACTING SECRETARY HALL: Since the
3 implementation of Part D and the successful approach
4 that we've taken to---
5 REPRESENTATIVE SIPTROTH: Close the hole?
6 ACTING SECRETARY HALL: ---enrolling people
7 in Part D, we have reduced the expenditures to the
8 Commonwealth by about $20 million per month.
9 Our overall expenditures have gone down
10 from, what is it, 800? The benefit that's provided
11 to all of the consumers we have on the program totals
12 up to about $800 million.
13 REPRESENTATIVE SIPTROTH: Okay.
14 ACTING SECRETARY HALL: But our outlay,
15 largely as a result of including, I guess, what we
16 are able to shift back to the Federal Government,
17 winds up being only -- I think the number we have on
18 the budget is about $252 million.
19 REPRESENTATIVE SIPTROTH: $252 million?
20 ACTING SECRETARY HALL: That's correct.
21 REPRESENTATIVE SIPTROTH: Okay.
22 In 2007, the PACE report showed that in the
23 2006-07 year, they got $118 million and it was down
24 about $40 to $60 million in 2008. Does that
25 corollate with the numbers you just gave me? I think 25
1 it's a little different than that.
2 ACTING SECRETARY HALL: Just a moment,
3 Representative.
4 REPRESENTATIVE SIPTROTH: That's fine.
5 ACTING SECRETARY HALL: Representative, one
6 of the things that we have done over the course,
7 particularly over the course of the last 12 to
8 18 months is to try and be as aggressive as we can in
9 looking for opportunities to shift these costs back
10 to Medicare and away from the Commonwealth whenever
11 possible. That has resulted in a significant
12 reduction of about $70 million.
13 The flip side of that is that we are able to
14 claim less in pharmaceutical manufacturer rebates as
15 a consequence of that, but overall, we wind up the
16 winners in that equation.
17 On this issue, though, we'd be happy after
18 the hearing to work with you and your staff to make
19 sure that we're correlating the numbers that we have
20 with what you have.
21 REPRESENTATIVE SIPTROTH: Okay. Thank you
22 very much.
23 ACTING SECRETARY HALL: Thank you,
24 Representative.
25 REPRESENTATIVE SIPTROTH: Thank you, 26
1 Mr. Chairman.
2 MAJORITY CHAIRMAN EVANS: This committee
3 we're doing jointly with the Aging and Youth
4 Committee, and I have the Chairs. They want to get
5 some questions in.
6 The Chairperson is Phyllis Mundy, and the
7 Republican Chairperson is Tim Hennessey. So
8 Chairperson Phyllis Mundy, and then I'll go to the
9 other Chair, Tim Hennessey, on this side.
10 REPRESENTATIVE MUNDY: Thank you,
11 Mr. Chairman, and thank you for allowing us as
12 members and people concerned with aging to be here
13 today and to ask questions.
14 Mr. Hall, I appreciate your answers to
15 questions that were just asked, but I'd like to go
16 back to the overall concept of creating this new
17 department and ask you to explain your rationale,
18 what the fiscal implications might be, how you will
19 coordinate between DPW who receives the Medicaid
20 funding and Aging who will now be responsible for
21 these waiver programs and other programs, and then
22 I'll have a couple of follow-up questions.
23 ACTING SECRETARY HALL: Okay.
24 Let me start first, Representative Mundy,
25 with the rationale. 27
1 REPRESENTATIVE MUNDY: Sure.
2 ACTING SECRETARY HALL: As the members of
3 the committee know, we have worked with quite a bit
4 of energy in the last two years to try and do a
5 better job of coordinating and delivering the
6 services that we provide both to older Pennsylvanians
7 and to adults with physical disabilities who depend
8 upon the Commonwealth for long-term care or for
9 long-term-living services.
10 Historically, the Commonwealth has been
11 challenged in terms of the relative amount of
12 resources that it was able to invest in those
13 services. But even today as we are starting to show
14 significant progress, there are too many parts of the
15 State where individuals and families who require
16 these services do not have real choice or do not have
17 adequate choice in trying to find a solution that
18 meets the personal idiosyncratic needs that each
19 family brings to these situations.
20 One of the things that we have understood --
21 and this, I think, was a significant part of the
22 thinking behind the Governor's Executive order to
23 create the Office of Long Term Living -- was that in
24 trying to administer these programs in a fragmented
25 fashion in two departments across four bureaus, 28
1 having the eight waivers largely administered in
2 complete isolation from each other, did not result in
3 a structure that was likely to benefit the citizens
4 or the taxpayers of the Commonwealth.
5 And further, that it resulted in confusing,
6 frustrating, sometimes even nightmarish experiences
7 for our providers and for our consumers who were
8 trying to navigate a system where you always felt as
9 though the right answer to the question was somewhere
10 else.
11 So what we have started to do in the last
12 two years -- and I think what we've proven has worked
13 well -- is to bring these programs into one place and
14 to recognize that the services that we provide, both
15 under Medicaid as well as our State-funded services
16 like Act 150 and the programs we fund with OPTIONS
17 through the Lottery dollars and the Older Americans
18 Act dollars, are part of a larger solution, really
19 a holistic package of services that we in the
20 Area Agencies on Aging and the Centers for
21 Independent Living and our homecare agencies knit
22 together to try and make sure that we have a solution
23 that works for families who are trying to remain
24 independent, who are trying to remain integrated in
25 their communities for as long as possible, who are 29
1 trying to exercise choice and live with dignity in
2 their communities and neighborhoods.
3 We think that the structure that we've
4 proposed here is the next logical step for the work
5 that we're doing, and it also cements in place the
6 approaches that we have worked on for the last
7 two years.
8 We think that it's important for the
9 Commonwealth to do this, because the risk of going
10 back to the fractured and disorganized way that we
11 did it in the past is not only -- I think it's
12 something that few in either our provider communities
13 or in the consumer world would wish. I don't think
14 that they think it would be a good thing for us to
15 turn back, but I also think that there's still work
16 that needs to be done.
17 I think that this is the best hope that
18 we have for developing a system that provides
19 rationality for the providers that we work with, that
20 assures that consumers have uniform equitable access
21 to services no matter which county they live in or
22 what part of the State or what office they walk
23 into.
24 In terms of the fiscal impact, we have
25 purposely structured this in a way so that it doesn't 30
1 represent a budget up or a budget increase.
2 In fact, in the budget you'll notice that we
3 are planning to make a significant reduction in
4 staff. I think approximately 32 staff would be
5 eliminated as a result of the combination of the
6 two organizations.
7 One of the things that you do when you take
8 the next step forward in this consolidation is you
9 have opportunities to eliminate overlapping positions
10 or things that duplicate. And so there are vacancies
11 that we will not be filling as a result of this.
12 But the longer term fiscal impact is that
13 it, I think, is the best hope that the Commonwealth
14 has for maintaining the momentum that we have and for
15 assuring that in the coming years, Pennsylvania makes
16 the kind of progress that it needs to make to invest
17 in home- and community-based services, to ensure that
18 we have a balanced system and that we have true
19 choice, whether a family chooses nursing-home care or
20 whether they want to choose a solution that works for
21 them out in the community.
22 When we started this work, Pennsylvania
23 ranked 48th in the nation, and some statistics have
24 indicated as poorly as 49th in the nation out of
25 50 States in terms of the investments that we had for 31
1 home- and community-based services.
2 Just in the course of the last several
3 months, since the Office of Long Term Living was
4 created and started to build up steam, we have moved
5 our ranking nationally up to 43rd in the nation, and
6 we're now at a place where the balance of individuals
7 who receive services in the community versus nursing
8 facilities is at roughly 3,466.
9 And finally, in terms of our relationship
10 and coordination with the Department of
11 Public Welfare, as members of this committee know,
12 the Federal Government requires States to designate a
13 single State agency to be the contact point with the
14 Federal Government regarding administration of
15 Medicaid funds.
16 The Department of Public Welfare and the
17 Secretary of that department will continue to act as
18 Pennsylvania's single State agency. However,
19 following the example in numerous other States, the
20 Administration intends that the Department of
21 Public Welfare would execute a memorandum of
22 agreement with this department, the Department of
23 Aging and Long-Term Living, to administer the full
24 scope of long-term care, Medicaid long-term-care
25 spending. 32
1 So building -- building the budget,
2 administering the dollars, developing policy, working
3 with CMS around State Plan amendments and waivers,
4 engaging in quality assurance -- those activities
5 would be delegated through the MOA from the
6 Department of Public Welfare to this new
7 department.
8 And in fact we have reached out to CMS and
9 asked them for examples of what they regard as model
10 memorandums of agreement that they have seen executed
11 in other States, so that as we're developing the
12 agreement between these two departments, we borrow
13 the best ideas that have already been out there.
14 REPRESENTATIVE MUNDY: So in terms of
15 reporting to CMS and amendments to the State Plan,
16 the memorandum of understanding will delegate those
17 responsibilities to either DPW or the new
18 department?
19 ACTING SECRETARY HALL: I think -- and
20 Secretary Richman is here, and if I misspeak here,
21 I'm happy to be corrected or contradicted by her.
22 But I think that what we're anticipating is that we
23 would work with the department -- for instance, the
24 State files periodic fiscal reports back to CMS about
25 our expenditures and our drawdown. 33
1 One of the reports that you may have heard
2 about is known as the CMS-64. We would work with DPW
3 around that in that we would prepare the CMS-64 for
4 our programs and then work with DPW around those
5 submissions.
6 As far as State Plan amendments and waivers,
7 we already work directly with -- my staff and I
8 already work directly with CMS on State Plan
9 amendments and waivers.
10 Currently, Secretary Richman signs the final
11 documents that go off. I think under the MOA, we're
12 anticipating that the Secretary of this department
13 would sign those.
14 REPRESENTATIVE MUNDY: Let's talk for a
15 second about experience in other States. And I know
16 that we're not the first State to undertake this new
17 idea of incorporating long-term living with aging,
18 and I know how well connected you are nationwide to
19 other State organizations who perform these
20 functions.
21 Could you just speak for a minute about what
22 the experience has been in other States? There seems
23 to be some allegation that this idea of merging these
24 two departments or the functions of these two
25 departments has cost additional money, and yet you 34
1 said that you've eliminated 32 positions.
2 So could you just speak for a minute about,
3 again, the experience in other States and the fiscal
4 impact in other States?
5 ACTING SECRETARY HALL: Well, the number of
6 States that have already brought these programs
7 together is about -- it's about 15 or so. In fact, I
8 have a sheet in front of me that shows that we would
9 be the 16th State.
10 A couple of things that I would point out
11 about that. I think that the reason States have done
12 that is because they have understood that bringing
13 these programs together and treating this budget in
14 one place and having one strategic vision for how you
15 manage the full spectrum and array of long-term-care
16 services is not only the most sensible way of
17 managing those dollars but also the one that is most
18 likely to lead to an approach that results in
19 balanced expenditures of those dollars over time that
20 maximize consumer choice.
21 If you look at the top five States in the
22 nation that are identified as the national leaders by
23 CMS in terms of their investment in home- and
24 community-based services, four of the top five are
25 States that have brought these programs together in 35
1 one place.
2 But beyond that, AARP has issued a national
3 position paper that has indicated that based on their
4 studies, they believe that this is the approach that
5 States should take in order to achieve balanced
6 systems, and they've recommended that States move in
7 this direction.
8 A national study just came out by some of
9 the foremost researchers in aging in the country,
10 some of the best-known ones, that also made the
11 observation that the States that had brought these
12 programs together were also the States that had the
13 most balanced, best administered programs in the
14 country.
15 REPRESENTATIVE MUNDY: And my last question
16 has to do with the balancing of home- and
17 community-based care with facility care. And I'd
18 like you to just give me an idea of how far we've
19 come in the last several years, maybe two, three
20 years, in terms of creating that balance.
21 I know that my constituents tell me that the
22 place that they want to age is at home, to the extent
23 possible.
24 ACTING SECRETARY HALL: Right.
25 REPRESENTATIVE MUNDY: Family members tell 36
1 me that they want appropriate support so that they
2 can help their older loved ones stay at home as long
3 as humanly possible, cared for in their communities,
4 in their homes.
5 ACTING SECRETARY HALL: Right.
6 REPRESENTATIVE MUNDY: What initiatives have
7 you undertaken in this year's budget that would
8 enable people to do what they want to do, which is
9 age in the community?
10 ACTING SECRETARY HALL: Well, I think what
11 we have tried to do in this budget is to make sure
12 that we maintain and sustain the programs that we
13 already have underway and have in place for providing
14 consumers and families with choice and also trying to
15 strengthen the infrastructure that we have.
16 And this is not a year when you can start
17 new programs or propose new initiatives, but it is a
18 year when we think it's important not to -- as I said
19 earlier in my remarks to Representative Civera --
20 it's not a year to lose ground either, because the
21 consequences of losing ground will be terribly
22 expensive for the Commonwealth.
23 So in this budget we have assumed that we
24 will have normal caseload growth based upon the
25 predictable trend of the last several years in our 37
1 nursing facilities and in our pharmacy programs but
2 also in our Home- and Community-Based Waivers and in
3 the Aging Waiver.
4 At the same time, we continue our work in
5 this budget with the Nursing Home Transition Program
6 that helps people who are in nursing homes, who want
7 to return home, to put together the support plans and
8 to help them succeed when they go home so that they
9 don't just bounce back to a hospital or a nursing
10 home.
11 Since the beginning of that program, more
12 than 4,000 Pennsylvanians have returned home from
13 nursing homes.
14 We continue the work we're doing at the
15 Federal Government in the Money Follows the Person
16 Program that is also designed to help people succeed
17 with enhanced match, recognizing that the early
18 months after somebody comes out of a nursing home are
19 often the ones where they are most at risk and most
20 frail. And the Federal Government gives us extra
21 dollars to help make sure that we stabilize people in
22 that situation.
23 We continue to work to invest in our adult
24 day programs, and in the past I think this committee
25 has heard me talk about the challenges and your 38
1 committee has heard me talk about the challenges
2 that Pennsylvania faces when you have large swaths of
3 the State that don't have any adult day programs at
4 all.
5 So even while we've worked with the adult
6 day associations and with providers to try and figure
7 out how we strength their capacity, how we help them
8 develop stronger business plans, we're working, based
9 upon money we have in the current year's budget, to
10 increase the reimbursement rates for adult day
11 programs so that they are not $30 a day below the
12 national average, so that a businessman can afford to
13 open an adult day program without losing money on the
14 first day of business, and also so that those
15 programs can really get a foothold in parts of the
16 State where it's not even an option for many families
17 today.
18 Chairman Mundy, I could probably go on for
19 another half hour, but I hope I gave your answer a
20 fair shake.
21 REPRESENTATIVE MUNDY: Thank you.
22 You'll have another opportunity on
23 March 12th. The Aging and Older Adult Services
24 Committee will be holding a hearing on budget issues
25 related to aging and older adult services. 39
1 And that will include you, Mr. Secretary,
2 along with the Secretary of DPW, PACE Director
3 Tom Snedden, the Department of Health, the Department
4 of Revenue. All of the Cabinet Secretaries have
5 graciously agreed to meet with our committee and
6 explore these issues in more depth.
7 So I thank you very much and look forward to
8 working with you on this new restructuring.
9 ACTING SECRETARY HALL: Thank you.
10 REPRESENTATIVE MUNDY: Thank you,
11 Mr. Chairman.
12 MAJORITY CHAIRMAN EVANS: Thank you,
13 Madam Chairman -- Chairperson.
14 Chairman Tim Hennessey.
15 REPRESENTATIVE HENNESSEY: Thank you,
16 Mr. Chairman.
17 Good morning, Mike.
18 ACTING SECRETARY HALL: Good morning.
19 REPRESENTATIVE HENNESSEY: Mike, over the
20 course of the last 30 years, the Department of Aging
21 has been exclusively dedicated toward serving the
22 needs of seniors in our population.
23 I saw in the newspapers today that the
24 predictions are that currently, we're at 15 percent
25 of our population being 65 and older. By 2020, 40
1 11 years from now, we're expecting that population to
2 increase by 50 percent, up to 22 percent of our
3 population.
4 If our population of seniors is growing that
5 prodigiously, why is now a good time to abandon the
6 concept of a Department of Aging dedicated solely to
7 senior issues? And in a sense, how can we assure the
8 seniors of the Commonwealth that their voices will
9 not be diluted somehow as we seek to use an agency,
10 expand an agency, to cover other voices than
11 theirs?
12 ACTING SECRETARY HALL: Well, thank you for
13 the question, Chairman Hennessey.
14 I think the first thing that I'd say is that
15 we're not abandoning and I want to assure you that
16 we're not abandoning the principle of focusing or
17 meeting the needs of individuals who are older
18 Pennsylvanians.
19 And you're exactly right; the number of
20 people whom we are going to serve in these programs
21 in the coming years is going to explode, partly as a
22 result of the influx of the baby boomers, partly as a
23 result of the fact that life expectancy, every year
24 that goes by, people are able to live longer and live
25 more independently in the community than we ever 41
1 expected before.
2 And you also know, I think, from some of the
3 conversations we've had in the past that the people
4 we serve in these programs, in nursing homes but also
5 in the Aging Waiver and a number of our other
6 programs, tend to be folks who are really at the
7 upper age ranges, people who are 85 and above.
8 In fact, the average age of the people we
9 serve in both nursing homes and the Aging Waiver
10 today is actually 88, and I expect that number to
11 grow higher in the next few years.
12 All that having been said, I think that one
13 of the things that this proposal does is actually
14 strengthens the approach that we have to how you
15 develop a coordinated, coherent program that serves
16 older Pennsylvanians.
17 And that's not something that they've had
18 in the past. In the past, the division of
19 responsibility between the Department of
20 Public Welfare and the Department of Aging, the
21 fact that policy was made in one department but the
22 purse strings were in another department, the fact
23 that the organizations sent conflicting messages both
24 to the Area Agencies on Aging but also to providers
25 and to consumers, did not serve our senior citizens 42
1 well. And we think that bringing these programs
2 together in one place where there is one focal place
3 for the interests of these individuals is likely to
4 serve them much better in the coming years.
5 The other thing that I would mention is that
6 the providers that serve our constituents often serve
7 more than -- you know, they're not hermetically
8 sealed where there's a group of providers who only
9 serve senior citizens and a different group of
10 providers who serve people under the age of 60.
11 In fact, many of our homecare agencies serve
12 people across the waivers, across age groups. And
13 one of the things that we focus on as well is that in
14 unprecedented numbers, individuals whom we have
15 served historically in our under-60 waivers become
16 senior citizens today.
17 In fact, we have a fairly significant budget
18 number here for the anticipated cost of individuals
19 who are aging into our Aging Waiver and the support
20 programs we have for people who use attendant care
21 and Act 150 services in the coming year just by
22 virtue of the fact that their 60th birthday is coming
23 up this year.
24 Not only is it a reality that those
25 individuals cross the boundary and in fact blur the 43
1 boundary between these populations, but increasingly
2 I think that we are all focused, not only our
3 department but our Area Agencies on Aging and our
4 providers are focused on how do we make sure that
5 when individuals cross that boundary, that we provide
6 those services in a seamless way, in a way that
7 doesn't result in a sudden reduction in the hours of
8 service they get or suddenly being told that they're
9 not eligible just because they had their 60th
10 birthday.
11 So the last thing that I'd mention is that
12 today, I think one of the things that Pennsylvania
13 can be proud of is that our Area Agencies on Aging
14 and P4A, their statewide association, works with the
15 Centers for Independent Living and disability
16 communities closer and in a more coordinated way than
17 they ever have in the past, and I think that they
18 understand that their fates are also bound together
19 in the coming years.
20 REPRESENTATIVE HENNESSEY: If the figures in
21 the newspaper were correct, we are probably going to
22 have somewhere around 2.8 million people over 65
23 among our citizens.
24 ACTING SECRETARY HALL: Roughly 22 percent,
25 as you said. 44
1 REPRESENTATIVE HENNESSEY: And there was a
2 figure quoted in the paper saying that the people
3 with disabilities that we serve -- adults 18 or
4 older, I think -- that's 162,000 statewide?
5 ACTING SECRETARY HALL: Currently, yes.
6 REPRESENTATIVE HENNESSEY: Okay. I guess I
7 think back to the old "how can you serve two masters"
8 cliche and ask, if there are 2.8 or 3 million seniors
9 asking for attention and 160,000 or maybe 200,000
10 people with disabilities under the age of 65, it just
11 seems to me that somebody is not going to be well
12 served by having -- it would seem to me that somebody
13 is not going to be well served in that dichotomy by
14 having one spokesman for both groups.
15 It seems to me that there's a certain check
16 and balance that occurs when you have different
17 voices speaking for the different communities, and
18 that's why I'm concerned that the seniors will feel
19 that they're going to be diluted in their voice.
20 ACTING SECRETARY HALL: Well, let me say,
21 Chairman Hennessey, that the numbers that you cited
22 that show our population of over 60 rising to about
23 22 percent, I think it's by the year 2030, so that is
24 about 21 years hence.
25 REPRESENTATIVE HENNESSEY: Actually, it was 45
1 2020 according to the article, but I don't know where
2 the writer got his information.
3 ACTING SECRETARY HALL: Well, we'll compare
4 notes on that after.
5 REPRESENTATIVE HENNESSEY: Okay.
6 ACTING SECRETARY HALL: But whether it's
7 2020 or 2030, whether it's 11 or 20 years down the
8 road, it assumes, as you indicated, that a
9 significant -- that there will be a tremendous amount
10 of growth, from 15 percent to 22 percent in the
11 coming years. So the current number of seniors that
12 we have will inflate significantly over that period
13 of time.
14 Similarly, the 162,000 individuals whom we
15 serve today in our programs for adults with
16 disabilities under 60 will likewise inflate
17 significantly over the next 11 to 21 years. It's not
18 going to be 162,000 by the time we get to 2020 or
19 2030.
20 Both of these populations are going to be
21 significantly larger than they are today. And I
22 think that even today as there are individuals in the
23 aging community whose act is strong and fervent
24 advocates for the interests of older Pennsylvanians,
25 there are also advocates who speak out for the 46
1 interests of adults with disabilities.
2 I anticipate that this department and any
3 future Administration will hear the voices of both of
4 those groups in the coming years. The question is,
5 though, how do you harmonize those interests? How do
6 you develop an approach that makes sure that you are
7 advancing the interests of both? And how do you make
8 sure that they're not in a situation where they are
9 contending with each other for scarce resources and
10 that policies that you adopt for one don't actually
11 have the effect of disadvantaging the other?
12 Those are some of the best reasons for
13 creating a department that is a single focal point
14 for long-term-living services.
15 But the last thing I'll leave you with is I
16 think the experience of other States that have done
17 this would be -- I think that they would tell you,
18 and not only the States but the constituencies in
19 those States and the senior citizens and the senior
20 citizen organizations in those States would tell you
21 with one voice that this has not been a move that has
22 diluted or reduced or harmed but in fact has
23 strengthened the interests and the agenda for senior
24 citizens in those States.
25 REPRESENTATIVE HENNESSEY: Okay. 47
1 In our previous conversations -- excuse my
2 voice -- over the course of the last couple of weeks
3 or months, month and a half, one of the concerns that
4 I've raised to you is the Lottery Fund and the
5 promise that the Lottery was based upon, which is,
6 you know, to benefit senior citizens.
7 I heard you tell Representative Siptroth
8 that Act 70 is incorporated intact into the proposed
9 legislation. I'm wondering if you could share with
10 us what the language will be protecting the Lottery
11 for seniors in that draft.
12 Have you settled on language yet as far as
13 that goes, because you and I, I think, are on the
14 same wavelength with regard to that.
15 ACTING SECRETARY HALL: Yeah, we are.
16 And as you know, both Secretary Richman and
17 I have been unequivocal in the conversations we've
18 had with you and with staff, but also with every
19 group that we've talked with, that this bill does not
20 nor do we intend for it to make any change to the
21 status quo with respect to the dedication of Lottery
22 funds for senior services.
23 And we have tried to be proactive in
24 assuring folks that the dollars that the Lottery Fund
25 generates for supporting our older Pennsylvanians 48
1 will remain unadulterated as a result of the proposal
2 to create this department.
3 REPRESENTATIVE HENNESSEY: When will we see
4 the language? When will the bill be introduced? Do
5 you know?
6 ACTING SECRETARY HALL: The bill is -- my
7 understanding from our leg staff is that the bill is
8 in LRB right now, and as soon as it comes out from
9 LRB, it will be in the hands of Legislators.
10 REPRESENTATIVE HENNESSEY: So we're talking
11 a matter of days perhaps?
12 ACTING SECRETARY HALL: I tend to be an
13 optimistic person, so I'd like to say in a matter of
14 days, but it could be a week or two.
15 I haven't talked to LRB personally, but
16 frankly, Chairman Hennessey, it couldn't come out too
17 soon for me.
18 REPRESENTATIVE HENNESSEY: Okay.
19 Just one other quick question, if I could.
20 ACTING SECRETARY HALL: Sure.
21 REPRESENTATIVE HENNESSEY: The AAAs, the
22 Area Agencies on Aging, will they be asked, in
23 addition to their assessment function, will they be
24 asked to oversee the distribution of services to the
25 disabled as well as to the senior population, or is 49
1 that going to be handled by the existing groups in
2 the service network?
3 ACTING SECRETARY HALL: Well, getting back
4 to the question that I asked before, as you alluded
5 to, the assumption is that the existing programs and
6 service networks in dollars and staff would move into
7 this department much as they exist today.
8 So for individuals who receive services --
9 for an individual who is under the age of 60, for
10 instance, who is a quadriplegic who may receive
11 services under the Attendant Care Waiver and has a
12 personal-care attendant who helps them with dressing
13 and bathing and feeding, those services would
14 continue in the new department as they have
15 today.
16 The providers that deliver those services
17 would remain as they are today. The decisions around
18 eligibility and oversight of those providers would be
19 the same as they are today.
20 But Area Agencies on Aging, you may be
21 aware, already serve as a gateway to the entire
22 long-term-living system. So when an individual
23 applies for long-term-living services, whether in the
24 end they wind up residing in a nursing home or in the
25 Aging Waiver or in the Attendant Care Waiver or one 50
1 of our other waivers for people under 60, they all
2 have an assessment that is done by Area Agencies on
3 Aging today, and that's part of the reimbursement
4 that we do with Area Agencies on Aging to conduct
5 that function so that we have one gateway under the
6 system.
7 REPRESENTATIVE HENNESSEY: Okay.
8 ACTING SECRETARY HALL: That would remain
9 unchanged.
10 REPRESENTATIVE HENNESSEY: It will remain
11 unchanged?
12 ACTING SECRETARY HALL: Yes.
13 REPRESENTATIVE HENNESSEY: Thank you.
14 ACTING SECRETARY HALL: You're welcome.
15 REPRESENTATIVE HENNESSEY: Thank you,
16 Mr. Chairman.
17 MAJORITY CHAIRMAN EVANS: Mario Scavello.
18 REPRESENTATIVE SCAVELLO: Thank you,
19 Mr. Chairman.
20 Good morning, Mr. Secretary. Or it's good
21 afternoon. Time flies when you're having fun.
22 ACTING SECRETARY HALL: Good afternoon.
23 REPRESENTATIVE SCAVELLO: My question: In
24 regard to the Area Agencies on Aging and the waiting
25 list, how many do we know are on the waiting list 51
1 across the Commonwealth?
2 ACTING SECRETARY HALL: Overall, we have
3 about 2,700 people on the waiting list statewide.
4 REPRESENTATIVE SCAVELLO: Statewide.
5 ACTING SECRETARY HALL: Yeah; statewide.
6 REPRESENTATIVE SCAVELLO: I noticed an
7 appropriation for PennCare that includes 4.1 million
8 in new dollars. Wouldn't we be better served if we
9 could take care of the seniors that are on the
10 waiting list?
11 In Monroe, for example, there are
12 103 seniors on the waiting list total. Seventy-seven
13 have no services at all; 26 are getting some service.
14 Rather than use that $4.1 million -- and I
15 guess then the follow-up question would be, if we
16 saved $20 million a month, or I see there's a
17 $61 million overestimate in the current fiscal year
18 from using the Part D program, why do we have seniors
19 on the waiting list if those dollars were saved?
20 Like why are we not taking care of our seniors?
21 ACTING SECRETARY HALL: Well, let me say,
22 Representative, that this is an area that I care a
23 lot about, and one of the things that you may know
24 from talking with the Area Agency on Aging in your
25 area is that I have begun a discussion. 52
1 I really intended to try and get out of the
2 -- I don't want to use too negative a word, but to
3 get out of the rut that we've been in for the last
4 20 years as a result of the hold-harmless
5 provisions.
6 REPRESENTATIVE SCAVELLO: 18 years.
7 ACTING SECRETARY HALL: 18 years.
8 REPRESENTATIVE SCAVELLO: I live it every
9 day.
10 ACTING SECRETARY HALL: And I kind of knew
11 you and I were going to be talking about this
12 today.
13 This is an issue that I think deserves a
14 conversation that is designed to get somewhere rather
15 than just covering the same ground that it has in the
16 past. But I don't think that that's simply a
17 question -- and I've said this to my colleagues at
18 the Area Agencies on Aging -- I don't think that's
19 simply a question of putting more money into a
20 line item appropriation to reduce a waiting list in a
21 particular county.
22 One of the -- if you sort of unwind how
23 we've gotten to where we are, partly as a result of
24 the hold-harmless language freezing in place a
25 funding formula that existed 18 years ago, we have a 53
1 system today where the way in which we distribute our
2 OPTIONS dollars no longer bears a particularly good
3 relationship to where the people in greatest need
4 reside.
5 And it doesn't pay a lot of attention to --
6 as you would expect, because it's a historical
7 artifact now -- doesn't take good account of the
8 significant, significant changes in demographics that
9 have occurred in counties like yours, that 18 years
10 ago I suspect were far more rural and agricultural
11 than they are today. And there are lots of places in
12 the Commonwealth that have experienced those same
13 kinds of changes.
14 Now, in the past, the conversation has often
15 revolved around how big is the waiting list and who's
16 a winner and loser on a spreadsheet. But
17 unfortunately, I think those discussions have always
18 revolved back to the question of, well, there's a
19 statutory provision, and is there political way or
20 the votes to repeal that provision and to open up the
21 funding formula?
22 So what I've proposed to the Area Agencies
23 on Aging is that it's time for us to stop waving the
24 spreadsheets at each other and to have an honest
25 discussion about where the people in greatest social 54
1 and economic need, who need our services, reside
2 today and to agree on who those folks are.
3 I mean, the formula that we work with today
4 places, some would say, a heavier emphasize than is
5 appropriate on how many people you have over the age
6 of 60 residing in your county.
7 But any director at any Area Agency on Aging
8 will tell you that the people who they serve, the
9 people who are in greatest need, the people who are
10 most frail, the people who are most at risk, are
11 80 and 85 and 88 and 90, and yet the formula gives
12 relatively little weight to those individuals. The
13 formula hasn't taken account of the fact that the
14 earning power and the retirement security of women is
15 significantly more compromised than it is for men.
16 And so I think what we've proposed to do and
17 the process that we've started with the Area Agencies
18 on Aging in the last couple of months is to begin the
19 process of discussing from a clean sheet of paper,
20 how do we identify the people who are in greatest
21 need and where do they reside, and then trying to
22 build a funding formula that has broad based enough
23 support among the Area Agencies on Aging that we can
24 create the possibility for this Legislature moving
25 beyond that 18-year-old legislation. 55
1 REPRESENTATIVE SCAVELLO: Would you be
2 looking also at, for example, what a senior -- what
3 is spent on a senior in one county versus another?
4 Like you'll see in some numbers, there's $100 more
5 spent, you know---
6 ACTING SECRETARY HALL: Sure.
7 REPRESENTATIVE SCAVELLO: ---and those
8 numbers need to be looked at. And it's a result of
9 that 1991 legislation where some areas are losing
10 senior population and the others are growing.
11 And to be honest with you, and I know I made
12 this comment last year and I'm going to say it again,
13 the Area Agencies on Aging Directors -- Patty Fretz
14 in mine, and before her it was Dot Kaufman -- in the
15 growing areas of this Commonwealth should be our
16 magicians on how they try to get dollars out and
17 split dollars to try to help some seniors in
18 desperate need of services because of that 1991
19 law.
20 ACTING SECRETARY HALL: Let me say two more
21 things about this, Representative Scavello.
22 The first one is that as a condition of
23 renewing the Aging Waiver in Pennsylvania, we were
24 required by the Federal Government to demonstrate
25 that we could assure that individuals have uniform 56
1 and equal access to services no matter where in the
2 Commonwealth they reside.
3 Today, too often we have situations where
4 somebody walks into one Area Agency on Aging and gets
5 one answer and then maybe walks into a different
6 Area Agency on Aging, maybe to move to be closer to a
7 daughter, and may get a different answer around
8 eligibility or a different answer with respect to the
9 number of services that are available. Or, frankly,
10 because of the challenges that Area Agencies on
11 Aging experience, a different answer with respect to
12 how many hours we can afford to give you, how much we
13 can pay for, or whether or not we have a waiting
14 list.
15 I think that, as I mentioned a few moments
16 ago, Pennsylvanians don't understand why it matters
17 where you live in the Commonwealth whether or not
18 you're eligible for these vital services. And in
19 many situations where an elder may move to be closer
20 to a daughter or a son, they don't know why all of a
21 sudden that results in losing access to services.
22 But the reality is that how we pay for the rates that
23 we set for our OPTIONS program has been historically
24 linked or yoked to what we pay in the waiver
25 program. 57
1 So in a very real sense, we won't be able to
2 solve the problem that the Federal Government has
3 told us must be fixed in the waiver unless we fix the
4 problem in the Lottery and the OPTIONS as well. I
5 think that you have to get to that place. The
6 Area Agencies on Aging understand that.
7 And they understand that you need to get to
8 a place where, if you have somebody who has a
9 comparable clinical need and a comparable social
10 situation, and whether they're in Pike or Monroe or
11 Washington or Fayette or Erie, two people with the
12 same situation ought to be assured they're going to
13 get the same access to service.
14 REPRESENTATIVE SCAVELLO: That's all I ask
15 for.
16 One last question, and this is in regard to
17 people with disabilities. But I have to tell you, it
18 involves, in my county, it involves everyone under
19 MA.
20 Does anyone know what a doctor visit, what
21 that fee to the doctor is under the ACCESS card, what
22 the cost is?
23 ACTING SECRETARY HALL: I don't know.
24 REPRESENTATIVE SCAVELLO: I know the
25 department -- if Secretary Richman will, what is the 58
1 amount that goes to a doctor on a doctor's visit on
2 the ACCESS card?
3 MAJORITY CHAIRMAN EVANS: Could you come to
4 the mike, Madam Secretary?
5 SECRETARY RICHMAN: Yes.
6 MAJORITY CHAIRMAN EVANS: I was trying not
7 to put you on the spot. I know you have your day in
8 the sun.
9 REPRESENTATIVE SCAVELLO: I'm sorry.
10 MAJORITY CHAIRMAN EVANS: But it takes
11 Mr. Scavello to mess things up.
12 SECRETARY RICHMAN: No, no. My purpose of
13 being here was to be able to answer these kinds of
14 questions.
15 MAJORITY CHAIRMAN EVANS: Okay. Introduce
16 yourself for the record, please.
17 SECRETARY RICHMAN: My name is
18 Estelle Richman. I'm the Secretary of the Department
19 of Public Welfare.
20 An outpatient rate on the ACCESS card has a
21 little variation, but probably it's in the vicinity
22 of about $35.
23 REPRESENTATIVE SCAVELLO: And I was
24 assuming it was in that area, but I just wanted to
25 be certain. 59
1 And I brought this up last year, and now the
2 people with disabilities are going to be coming into
3 your -- if it happens. I still haven't settled my
4 mind on this.
5 But my question is, I have a county like
6 Monroe County that not one dentist accepts it, okay?
7 And that means we have to drive folks to other
8 counties, and very few doctors are accepting the
9 card.
10 Again, we have to do the same situation.
11 That $35 visit is costing the taxpayers $125 to $150
12 in transportation for the disabled or for a senior or
13 for someone on medical assistance.
14 My question is, why don't we look at -- and
15 I brought this up last year -- trying to raise that
16 number to attract some dentists, attract some
17 doctors, so that we can save $100 per client, per
18 trip, to another county?
19 We're spending taxpayer dollars and we're
20 not looking at this, and it's a huge number in the
21 rural areas.
22 SECRETARY RICHMAN: Do you want me to take
23 this?
24 We are looking at those numbers. We're
25 working with the Department of Transportation. 60
1 Acting Secretary Hall is on that group, too. But
2 we're analyzing the cost of transportation versus the
3 ability to increase rates both on the physician side
4 and on the dentist side.
5 Any increase in rate, though, has to be
6 statewide. And we're trying to figure out -- in
7 other words, we can't just say that we're going to
8 raise rates in one county or in one section of the
9 State. It literally has to be statewide.
10 So what we're looking at is, what are some
11 of our other options? We're working with our
12 ACCESS Plus provider, because one of the concerns
13 I've had statewide is the interaction between our
14 Medical Assistance Transportation Program, the cost
15 of what we pay -- and we know we are not a good payer
16 for our docs and our dentists -- but also how to
17 control the Medicaid budget.
18 So all of those are interactive, but we are
19 looking at it and it is a major concern.
20 REPRESENTATIVE SCAVELLO: If we were able to
21 get some of those transportation dollars that are
22 being spent in the rural counties -- and I want to
23 bring up Monroe again---
24 SECRETARY RICHMAN: Right.
25 REPRESENTATIVE SCAVELLO: ---in the rural 61
1 counties and taking those dollars and cut it in half
2 and use those dollars to keep our -- because, just
3 think about it, we're sending somebody 60 miles to a
4 doctor or a dentist and bringing them back. It's not
5 fair to the individual and it's not fair to the
6 taxpayers---
7 SECRETARY RICHMAN: Right.
8 REPRESENTATIVE SCAVELLO: ---when we could
9 try to service them closer to their home, within
10 their county, with medical needs and save a
11 tremendous amount of money in transportation.
12 SECRETARY RICHMAN: Right.
13 The issue with a county, for example, like
14 Monroe County is your MATP costs are also supporting
15 your county transportation.
16 So one of the things we began to look at was
17 how to take that medical assistance and operate it
18 separately. And the counties all bounced because
19 they felt that they needed it also more integrated in
20 the county.
21 So part of what we're looking at with the
22 Department of Transportation is, do we keep the
23 integrity of a county and let them have some
24 flexibility in using that, or do we literally pull
25 some of those dollars in MATP out of the county and 62
1 be able to put it into the doctor costs?
2 That's what makes this a little bit
3 complicated, because we did do a Request for
4 Information last year looking at what if we just used
5 medical assistance transportation dollars very
6 narrowly so that we could save those dollars and not
7 have it attached in any way to the transportation
8 dollars for the counties.
9 REPRESENTATIVE SCAVELLO: Yeah.
10 SECRETARY RICHMAN: That created a different
11 level of problem, so we're trying to look at it in a
12 comprehensive way to make sure we aren't paying Peter
13 by taking away from Paul and creating a larger
14 county-based problem.
15 But all of those things are under
16 discussion. The report, as requested by the General
17 Assembly, I believe is coming back to the General
18 Assembly, in May? I think it has a May date on it,
19 and we're on schedule for making sure we have that
20 analysis done.
21 REPRESENTATIVE SCAVELLO: Please solve this
22 issue, because it's something that I will bring up
23 every year until we solve it, because I think it's
24 wrong to continually send someone 60 miles to a
25 doctor or a dentist. 63
1 SECRETARY RICHMAN: I would hope we have it
2 solved before this Administration leaves.
3 REPRESENTATIVE SCAVELLO: Thank you.
4 And thank you, Mr. Chairman.
5 MAJORITY CHAIRMAN EVANS: Thank you.
6 Manderino.
7 REPRESENTATIVE MANDERINO: Thank you,
8 Mr. Chairman.
9 And welcome, Mr. Secretary.
10 ACTING SECRETARY HALL: Thank you.
11 REPRESENTATIVE MANDERINO: Most of my
12 questions with regard to creating the new Department
13 of Aging and Long-Term Care have been answered in
14 response to prior questions.
15 I do just want to make the comment, though,
16 that I support this idea. I think it is long
17 overdue. I think that getting better coordination
18 and delivery of services needs to be the number one
19 thing.
20 And this is no criticism of DPW. I think
21 they do a yeoman's job, but they have a yeoman's job
22 to do on so many issues that sometimes even when you
23 decide you want to turn the elephant around, it takes
24 way too long to get the trunk moving in the right
25 direction, because the agency is just so big. 64
1 Quite frankly, I want programs that are at
2 DPW that should probably be rightsized over to Health
3 to be next on the list of the Administration before
4 they leave, and I think rightsizing those three
5 agencies will mean better service delivery to the
6 people who get those services, and that's the bottom
7 line.
8 I do want to make one other comment. That
9 is, I'm not so concerned or I don't think that we
10 have to be concerned that there is some sort of
11 unusual pairing or pitting of the seniors and the
12 disabled community against each other.
13 Now, that revenue -- that money is over at
14 Revenue, but it all comes from the Lottery, and the
15 disabled and the seniors have all shared in that
16 program.
17 Our Shared Ride Program is similar. The
18 money might come from somewhere else, but they are
19 two populations with similar kinds of needs, and
20 they are both being well served by the Commonwealth
21 with the programmatic funds to which they're
22 dedicated. So I trust that you can do it here with
23 the long-term living as well.
24 On the issue of the revised PACE pharmacy
25 reimbursement, most of my questions there have been 65
1 asked, except I do have one, and that is to just ask
2 you to further explain, I understand the changing in
3 how you're going to pay out. Explain why there is,
4 under the new payout procedure and the change in the
5 pharmacy reimbursements, there's such a big
6 difference between the generic drug and the
7 brand-name drug reimbursement to the pharmacy.
8 And my question is, I just don't want there
9 to be anything that would put the pharmacist, based
10 on how they're reimbursed, in conflict with the
11 patient in terms of what their needs are for
12 prescription drugs.
13 ACTING SECRETARY HALL: Sure.
14 Just very briefly before I answer that
15 question, I also wanted to observe that in many parts
16 of the State today -- your area is one of them, and
17 actually, I was recently in Representative Civera's
18 district meeting with the Delaware County Area Agency
19 on Aging.
20 There is already a tremendous and admirable
21 amount of cooperation and interaction in those
22 programs between the disability communities and the
23 senior citizen communities. And a number of the
24 Area Agencies on Aging have already recognized the
25 need to move in this direction and are showing us the 66
1 way.
2 On the question of the difference in the
3 dispensing fee for generics, we proposed the higher
4 dispensing fee, the $10 rate for generics, for a
5 couple of reasons.
6 One is, you anticipate to create an
7 incentive for generic substitution. We currently
8 have a generic utilization rate that I think is
9 around 66 percent. We believe as a result of this
10 policy initiative that the PACE program, PACE and
11 PACENET programs, can move generic utilization above
12 70 percent.
13 I think that that's achievable, and I think
14 that the retail pharmacies would say that that's
15 achievable as well.
16 Your concern is not putting retail
17 pharmacies in between physicians and doctors. Is
18 that the concern?
19 The way this works is that if a pharmacist
20 at the retail level identifies an opportunity for a
21 generic substitution, retail pharmacists typically
22 will call the doctor, ask the doctor if they think it
23 is clinically appropriate to make the substitution.
24 If the doctor agrees, then they go ahead and do it.
25 If the doctor prefers to keep the individual on 67
1 the brand, then the pharmacy keeps them on the
2 brand.
3 The question is just making sure the
4 question gets asked and the conversation occurs
5 whenever it can. This creates a financial incentive
6 for the question to occur.
7 REPRESENTATIVE MANDERINO: Does the question
8 need to be asked? And here's why I'm asking that.
9 I mean, I know that on the bottom of a
10 prescription form there's a place where a physician
11 can sign whether substitution is permissible or brand
12 name is required.
13 But I also have run into specific instances,
14 and whether it's because it's a longstanding refill
15 or because of some other reason, sometime somebody
16 went to the drugstore for an emergency prescription
17 because a mail-order didn't come in time, or for some
18 other reasons it might not be so clear as what's
19 filled out on the bottom of the form.
20 And I know I've had a couple of situations
21 where the patient was being prescribed a brand that
22 was considered necessary. The pharmacist
23 unilaterally made a substitution without calling the
24 physician. I question whether or not they had the
25 authority to do that. They said they did. 68
1 So I'm just wondering, again getting to the
2 question, do they or are you comfortable -- and there
3 could have been one or two errors, but are you
4 comfortable that the law requires them to go back to
5 the physician and get the physician's approval?
6 ACTING SECRETARY HALL: I believe -- and
7 I'll check to make sure what the rules are around
8 chemically equivalent substitutions -- but I believe
9 that the law requires that those changes can only be
10 made with the authorization of the prescriber.
11 I don't think that there's evidence that
12 that happens on a widespread basis. But I think to
13 your point, there are lots of reasons; for instance,
14 a prescription that has been routinely refilled for a
15 long time and the prescriber hasn't really thought
16 about whether a generic would work, or a drug that
17 was brand has gone generic in the meantime.
18 I had a personal experience with a doctor, a
19 family physician and close friend who I trusted
20 intimately who, upon diagnosing me with acid reflux,
21 recommended a prescription drug. And when I got to
22 the pharmacy they said, well, you know, this drug has
23 gone generic; would you like to try that? and they
24 called the doctor's office. I don't think that my
25 doctor was feeling as though I needed to be on that 69
1 prescription drug. I think it just didn't occur to
2 him.
3 REPRESENTATIVE MANDERINO: Okay.
4 One other follow-up on a point that
5 Representative Scavello started with regard to the
6 Area Agencies on Aging and the delivery of the
7 services statewide and not -- or at least statewide
8 standards and not different county standards. And
9 you talked about the access to services being the
10 same across the counties.
11 My question goes also to not just the access
12 to the services but the payment for the services. If
13 you could talk a little bit about that.
14 I represent both Philadelphia and Montgomery
15 Counties. The exact same service providers provide
16 the exact same services to constituents in both of
17 those counties and the reimbursement rates are vastly
18 different, and I want to know how that's going to be
19 addressed.
20 ACTING SECRETARY HALL: Well, I think,
21 again, you anticipated my point here, which is that
22 you can't assure statewide access to service until
23 you address the question of the resources that are
24 available and the reimbursement that's made.
25 And in fact one of the issues that brought 70
1 CMS into the discussion when the Aging Waiver was up
2 for renewal was the significant difference in
3 reimbursement between Philadelphia County and
4 Montgomery County. Not the only example; we could
5 cite a number of them, but the significant difference
6 and the impact that that was having on a provider's
7 willingness to serve consumers in those counties,
8 relatively speaking.
9 And as soon as providers start making
10 decisions to not serve individuals because they
11 perceive that the reimbursement rate is not adequate,
12 it implicates the amount, duration, and scope
13 requirements in the Federal Medicaid Act and all the
14 antennae start going up at CMS.
15 So they made it very clear to us that we
16 were going to have to assure an administration of the
17 Medicaid Waiver, that we had reimbursement formulas
18 in place that assured that providers would get paid
19 essentially the same no matter where they were.
20 They will allow us some regional variation
21 or differences between urban and rural areas. But
22 right now we have 52 different systems, and I think
23 that CMS would like for us to have something like
24 three or four or five different systems given the
25 size of the State. 71
1 In the OPTIONS program, because OPTIONS
2 rates have always matched the waiver rates, when you
3 have inequity and lack of uniformity in the waiver
4 program, you have it in OPTIONS as well, and that's
5 in fact the difference that you're talking about
6 there.
7 So I think you're going to have to solve
8 these problems in tandem.
9 REPRESENTATIVE MANDERINO: Thank you.
10 And my last question goes to the issue of
11 senior centers and not their operating --
12 availability of operating dollars that run through
13 the AAAs.
14 But I believe in the past -- and I hope I'm
15 remembering this correctly -- that we had a grant
16 program that helped with capital needs. And I'm
17 asking this particularly in the context again of, you
18 know, we're doing a lot to improve kind of continuum
19 of care, from stepping down from the high-intensity
20 facilities to more home- and community-based.
21 In my community, I know very well, for
22 example, how important things like adult day care are
23 to even getting to the next step of needing the
24 in-home provided services, and yet there's not a lot
25 of ability to expand facilities for adult day care 72
1 because either this line item isn't there or isn't
2 adequate.
3 Could you just talk a little bit about where
4 we are with kind of the capital needs for senior
5 services?
6 ACTING SECRETARY HALL: Well, let me try.
7 I'll touch on both senior centers and adult day, two
8 different parts of our system.
9 For adult day programs -- and I know that
10 Chairman Hennessey will remember me talking about
11 this last year -- one of the challenges that we have
12 there that we have to solve -- and this is why it has
13 been such a big priority for us -- is not just the
14 point that I made earlier about parts of the State
15 that have no adult day program at all but the fact
16 that the vast majority of the adult day programs that
17 we do have can't really provide a full range of
18 services to meet the needs of the families who rely
19 on them.
20 Why does adult day exist? It exists so that
21 families that have an elder who needs assistance
22 during the course of a day can feel comfortable that
23 their parent or their aunt is in a safe place, that
24 they are going to receive good care and oversight and
25 nutrition, and at the same time that the children can 73
1 still keep a job, they can still earn a living, they
2 can still pay their bills, that they won't be at risk
3 of losing their retirement.
4 Anybody who has had the experience of having
5 a child who needed day care knows that the system
6 doesn't work unless it is in sync with the work life
7 of the individuals who are the customers.
8 Ideally -- not ideally, the way that adult
9 day needs must work is to have hours that allow a
10 family to bring their parent in the morning on the
11 way to work without making themselves late to work
12 every day and putting themselves at risk, and then be
13 able to pick the individual up at the end of the day
14 on their way home without having to leave work early
15 or without having to truncate their work hours.
16 And yet across this State, the vast majority
17 of our adult day programs aren't open five days a
18 week. The vast majority of our adult day programs
19 are not opened up early enough in the morning to
20 receive their clients when their children are on
21 their way to work.
22 The vast majority of programs close before
23 the end of the workday. Many of them are linked into
24 -- and this gets back to Representative Scavello's
25 question -- are linked into some of the challenges we 74
1 have with our transportation systems and with the
2 Shared Ride Program, where the bus comes to pick you
3 up at 2 o'clock in the afternoon and then you ride
4 on it for an hour, and then you get home and the
5 children aren't home from work yet.
6 So I think one of the things that we are
7 working on, when I talked about the investment we
8 have in this current year's budget, is how do we make
9 sure that adult day programs can afford to be open
10 five days a week, can afford to be open from 7 in the
11 morning until 6 at night?
12 And unless we do that, these programs are
13 not going to -- this is a classic example of a
14 program that can't meet the basic needs of its
15 customers right now, and as a Commonwealth, we need
16 to solve that problem.
17 On senior centers. Senior centers have been
18 challenged in past years because their census has
19 been declining statewide. And many of you in your
20 districts know that Area Agencies have struggled as
21 they build their annual budgets as they see fewer
22 people coming to the senior centers.
23 And yet, senior centers can be and I think
24 should be an important part of this continuum of
25 service that we have and that we have in the future 75
1 for helping to support people in their communities
2 and neighborhoods.
3 So in keeping with that, we began a
4 discussion with our network last fall to start
5 talking about what the senior centers in the coming
6 years should look like. How do we re-conceptualize
7 and imagine what role they would play, what services
8 they should offer, what their connection to other
9 senior programs should be?
10 And in fact we have a statewide summit, and
11 I don't know if this is a historically accurate thing
12 to say, but what could be the first of its kind, at
13 least here in Pennsylvania; a statewide summit where
14 we're bringing Area Agencies and senior center
15 operators and consumers together to start talking
16 about -- let me just take a very quick tangent on
17 this.
18 I've been working in this area for almost
19 30 years. When you walk into a senior center today,
20 in 2009, it looks an awful lot like the senior
21 centers in 1979 when I first started. And that's one
22 of the reasons that those programs have become
23 increasingly less relevant and are losing census.
24 Ten years from now, we cannot afford for
25 senior centers to look like 1979. So today is when 76
1 we start the discussion on how we get them ready for
2 the coming decade.
3 REPRESENTATIVE MANDERINO: Thank you.
4 Thank you, Mr. Chairman.
5 MAJORITY CHAIRMAN EVANS: Representative
6 Brian Ellis.
7 REPRESENTATIVE ELLIS: Thank you,
8 Mr. Chairman.
9 Kind of to follow up on the methodology for
10 the reimbursement to the pharmacies. Representatives
11 Manderino and Siptroth came close to asking the
12 questions and you came close to answering them.
13 What I want to understand is this actual
14 acquisition cost methodology.
15 ACTING SECRETARY HALL: Okay.
16 REPRESENTATIVE ELLIS: Anybody else in the
17 country using this yet?
18 ACTING SECRETARY HALL: If you go back a
19 couple of decades, it was more widely used. In fact,
20 Medicaid programs used a version of it about 20 years
21 ago before they went to AWP.
22 There are some -- I believe that it's
23 correct that there are some companies or insurers
24 who are using it, but there's no question that we
25 would be innovating by proposing to go to invoice 77
1 pricing.
2 REPRESENTATIVE ELLIS: Okay.
3 ACTING SECRETARY HALL: And the reason we're
4 doing that is because we think that in purchasing
5 these drugs for taxpayers, we have a responsibility
6 to get the best price we can.
7 REPRESENTATIVE ELLIS: And I applaud that
8 thought.
9 And one of the things you said was that you
10 had hoped the generic utilization would go up from
11 65 percent upwards of 70, maybe even eclipse in
12 that.
13 But what I'm trying to understand is, and
14 based on the way I'm reading it, you're going to
15 reimburse the lesser of the Federal upper limit, the
16 usual customary costs, or AWP minus 18 percent for
17 the brand names or AWP minus 80 percent for the
18 generics.
19 Okay; wouldn't that almost always be on the
20 generics? I mean, wouldn't that always be the lowest
21 one?
22 ACTING SECRETARY HALL: Well, that's not
23 necessarily the case. Because of the way that drugs
24 are priced today and the discounting that
25 pharmaceutical manufacturers do on brands, it's a 78
1 surprising but fairly common phenomenon that it
2 sometimes costs more to buy a generic drug today than
3 it does to buy the discounted brand name.
4 REPRESENTATIVE ELLIS: Okay.
5 ACTING SECRETARY HALL: And the reason we
6 put those different approaches in here is that
7 pending the work that we will do with the Legislature
8 and the retail pharmacy industry on AAC, we were
9 trying to build into the legislation other measures
10 or proxies that would basically get you to the same
11 place.
12 REPRESENTATIVE ELLIS: Which is the lowest
13 cost.
14 ACTING SECRETARY HALL: That's right.
15 REPRESENTATIVE ELLIS: Okay.
16 And just so I'm really understanding this
17 correctly, we're going to essentially take -- let's
18 use the generic as an example.
19 Now they're getting AWP minus 12, and then
20 it will be AWP minus 80, so a 68-percent reduction
21 essentially.
22 And at that point you say we're going to
23 increase the dispensing fees.
24 ACTING SECRETARY HALL: Yes.
25 REPRESENTATIVE ELLIS: And you stated in 79
1 your testimony that that's going to be an
2 approximately $25 million additional cost, and yet
3 you say we're going to save $41 million.
4 So of that $41 million, where is the bulk of
5 that money being saved from?
6 ACTING SECRETARY HALL: Well, I think the
7 way that we calculated this is that we were showing
8 that the overall savings, without netting out the
9 increased price of the dispensing fee, was -- one
10 minute. I want to make sure I give you the right
11 number.
12 REPRESENTATIVE ELLIS: Sure.
13 ACTING SECRETARY HALL: We calculated the
14 overall savings at being about $66 million, and then
15 we netted -- I believe that's correct. If I misspeak
16 here, we'll correct it with the staff after the
17 testimony. I'm not rifling through my papers right
18 now.
19 REPRESENTATIVE ELLIS: I understand.
20 ACTING SECRETARY HALL: And then we netted
21 against that the anticipated cost of increasing the
22 dispensing fee. Right now we pay a flat dispensing
23 fee, whether it's brand or generic, of $4 per script.
24 We're proposing to take that to $5 on brand and
25 $10 on generic. 80
1 And at the end of that, and as I said in my
2 previous testimony, we estimated that we would wind
3 up spending about $25 million in increased dispensing
4 fee payments to the retail pharmacies.
5 After you net that against the overall
6 savings, you get the net that we are showing in the
7 budget, the net reduction in the budget.
8 REPRESENTATIVE ELLIS: And you're calling
9 that $41 1/2 million, and I guess my question is,
10 what percentage of the $41 million savings is still
11 falling on the backs of the pharmacies?
12 ACTING SECRETARY HALL: It depends from
13 company to company. It's different for the various
14 chains as well. It depends on what they are
15 currently paying for drugs and what kinds of
16 discounts they're getting from the wholesalers or the
17 distributors for those drugs.
18 So at a company level, it varies. But
19 overall, the result would be that from the taxpayers'
20 perspective, we would be saving about $41 million.
21 Of that $41 million, about $36 million of it is what
22 we actually anticipate saving in our reduced
23 acquisition cost. About $5 million is what we
24 anticipate we'll save with increased generic
25 substitution. Five million is the value of 81
1 increasing, going from 66 to about 70 percent of
2 generic utilization.
3 Did that answer your question?
4 REPRESENTATIVE ELLIS: Yes, that did.
5 Basically when you said that, you know,
6 you're taking into consideration not just to change
7 the Main Streets and everybody like that, the reality
8 is, even though more of these PACE claims are being
9 handled by Part D, you're going to realize more
10 savings by cutting into their ability to exist and
11 generate profit.
12 ACTING SECRETARY HALL: Well, I think what I
13 would say -- I want to come back to the point I made
14 before, and I'm not trying to be repetitive about
15 this. But we do think that there's an important and
16 legitimate interest in trying to purchase these drugs
17 at the truest, most accurate, least expensive cost
18 for the taxpayers and consumers of the Commonwealth.
19 At the same time, we believe and understand
20 that the retail pharmacies have legitimate business
21 interests and they need to be our partners in the
22 PACE program. And I think historically they have
23 seen the PACE and PACENET programs as being good
24 partners who they like dealing with.
25 We understand that they have overhead costs, 82
1 they have administrative costs, and it is precisely
2 for that reason that we have proposed significantly
3 increasing the dispensing fees here, to take account
4 of that, and we need open conversations with them
5 about trying to make sure that this proposal makes
6 good business sense for the taxpayers of the
7 Commonwealth.
8 REPRESENTATIVE ELLIS: Well, I do applaud
9 that concept, and if I could just make one final
10 comment, Mr. Chairman.
11 Certainly the beneficiaries from PACE are
12 the ones that require, you know, the most attention
13 from the pharmacies.
14 And although I think it is also important to
15 do what's best for the taxpaying public, a lot of
16 times for us it's an easy target to go after the
17 pharmacies.
18 And I just hope that, you know, when we tell
19 somebody that we're going to be taking 60-some
20 million dollars, we're taking $60 million from a
21 subset, a group, and then we're going to give you
22 $25 million back, I think that's a little
23 disingenuous at times.
24 I just hope that as you continue the
25 conversations going forward, I hope you're mindful of 83
1 that.
2 Thank you, Mr. Chairman.
3 MAJORITY CHAIRMAN EVANS: Representative
4 Scott Conklin.
5 REPRESENTATIVE CONKLIN: Thank you,
6 Mr. Chairman.
7 Secretary Hall, when we look at the nursing
8 homes across Pennsylvania -- I just want to let you
9 know, in my old job I used to be a county
10 commissioner and I sat on the executive board.
11 We had some talks several years ago about
12 backfilling in the county on those homes that only
13 take Medicare and Medicaid.
14 For instance, in Centre County where I'm
15 from, Centre Crest is the county home, and it will
16 accept Medicaid and Medicare patients.
17 Over the years, as you know, privately run
18 companies can't afford to pay the folks the Medicare
19 reimbursement rates. The county homes are losing
20 anywhere from hundreds of thousands a year, which
21 directly goes back to the taxpayers.
22 Have there been any further talks within the
23 State to the county homes, especially those ones that
24 are running at about 95 percent Medicare/Medicaid
25 patients, to be able to help those folks out and make 84
1 ends meet?
2 ACTING SECRETARY HALL: Let me mention a
3 couple of things that we are working on. One of the
4 things that we tried to do in developing
5 reimbursement for county homes over the course of the
6 last few years, as you're aware from your past work
7 as county commissioner, is creating incentives that
8 reward them for serving Medicaid recipients.
9 So in fact we have a pay-for-performance
10 incentive that is only available to county homes -- I
11 believe it's called the Medicaid Day One Incentive --
12 so the more individuals that they accept and because
13 county homes in many cases are the place of last
14 resort for individuals who are not capable of private
15 paying their nursing home stay, so if a county
16 nursing home really emphasizes that they want to make
17 sure that they provide a place for people who don't
18 have private assets and are getting Medicaid from day
19 one, then we have a payment that we make to the
20 county nursing homes that helps reward them for
21 that.
22 At the same time, increasingly counties, I
23 think -- and I don't want to generalize this to every
24 county, you know -- there are fewer county nursing
25 homes than ten years ago, and even today many of the 85
1 counties that have nursing homes struggle with the
2 cost of maintaining the nursing home, the labor cost
3 there, and the drain that it represents on the county
4 budget.
5 We did a program a few years ago with the
6 help of the intergovernmental transfer funds to help
7 counties modernize some of their older facilities and
8 to repurpose some of those buildings so that they
9 could offer adult day programs or hospice.
10 And in fact even though those dollars have
11 now gone away, that's one of the things that we have
12 to do in this budget, is to replace the loss of IGT
13 dollars and work with county nursing homes who have
14 accelerated over the course of the last couple of
15 years.
16 What we are doing, we have active
17 discussions with several of the councils right now
18 trying to figure out how to either move out of the
19 nursing-home business into other types of long-term
20 care, or in the one example that I'm thinking about
21 is a county plan of affordable housing, one that has
22 good, strong homecare and home-health resources and
23 feels, through a combination of adult day and
24 home-health services, that they could help people who
25 historically have been in the nursing home not worry 86
1 about where they will live.
2 So one of the projects we're working on as
3 that county home downsizes, the county commissioners
4 are actually interested in having that facility go
5 away and replace it with a strong investment in
6 affordable housing that we'd be making in that county
7 with the savings that both the county and the State
8 realized.
9 Those proposals vary from county to county
10 in what the commissioners are interested in doing.
11 But basically when a county calls up and says they'd
12 like to talk with you about what the opportunities
13 are, we meet with them as quickly as we can.
14 REPRESENTATIVE CONKLIN: I know that one
15 size doesn't fit all. Some counties, as you know,
16 are at 97 percent occupancy, others are 97 percent
17 Medicaid, and when they sell those homes, the vendor
18 may only go 40 to 60 percent.
19 That's a subject we can keep going on about.
20 ACTING SECRETARY HALL: I will say,
21 Representative, that when we are working on a
22 proposal, one of the things that we're making sure
23 of, a key part of our financial modeling,
24 conversations we have with the counties and with
25 other providers, is making sure that at the end of 87
1 the day, the people who need those services have a
2 place to go and that they don't wind up getting the
3 short end of the stick when that kind of change takes
4 place.
5 REPRESENTATIVE CONKLIN: On another scale,
6 as you look at taking care of the people with
7 disabilities, one of the problems we always had is
8 the amount of funds that these folks make.
9 They are very low-paid jobs for folks that
10 go out and assist individual needs. Has there been
11 any talk about helping out by giving them a
12 cost-of-living increase or any type of help in
13 benefits to be able to attract more folks in that
14 field?
15 ACTING SECRETARY HALL: Well, one of the
16 challenges, of course, continues to be the question
17 of, are they able to earn a livable wage? Do they
18 have health-care benefits or other financial support
19 that makes it possible for them to pay their bills
20 after they get done doing some of the work that
21 society asks anybody to do?
22 One of the things that we did in last year's
23 budget, as you recall, is we tried to work to make
24 sure that in doing a cost-of-living adjustment, that
25 we did it for our community-based program and 88
1 agencies that fund those services, that that be a
2 comparable across the board.
3 In this budget, because of the austerity
4 that we have been forced to observe because of the
5 challenges in the economy, we've level funded
6 programs and do not have rate increases.
7 Again, I guess what I would say is that our
8 continuing commitment is that the needs that those
9 direct-care workers have and the agencies who employ
10 them are just as important as the needs of the other
11 parts of our continuum.
12 REPRESENTATIVE CONKLIN: Thank you very
13 much.
14 Thank you, Mr. Chairman.
15 VICE CHAIRMAN KELLER: Mr. Secretary, we've
16 gone over 2 hours, but we're going to try to get back
17 on schedule. You're very knowledgeable and doing a
18 great job. Could you just shorten them up a little
19 bit so we can try to get back on schedule?
20 Representative Reichley, please. And that
21 goes for the members, too.
22 REPRESENTATIVE REICHLEY: That is very true,
23 Mr. Chairman. Thank you.
24 Mr. Secretary, actually a couple of these
25 I'll ask you to submit in written response to try to 89
1 expedite this, okay?
2 First is, in looking through the information
3 you provided to the committee, we would like to see a
4 breakdown of all the MA long-term-care appropriations
5 so we can see what portion of each appropriation --
6 either General Fund dollars, Lottery Fund dollars, or
7 tobacco settlement dollars -- are being used to fund
8 home- and community-based services and what portion
9 from those three sources are being used to reimburse
10 nursing-home care. Okay; that's number one.
11 Number two, within the new proposal that you
12 have for long-term living, some of our members are
13 curious that there seems to be this estimation of an
14 overall reduction of personnel positions by 32 slots,
15 but there is not anything which is indicated in the
16 budget document to describe what are authorized and
17 fill positions, especially with this new sort of
18 entity, the Office of Long Term Living. So we're
19 curious about what the anticipated authorization
20 level is and what the fill level is.
21 And lastly in that particular area, you are
22 requesting $392,000 in State funds and an additional
23 $609,000 in Federal funds for personnel specifically.
24 Would you give us a written response as to what part
25 of this increase is for benefits and salaries for the 90
1 personnel associated with that endeavor. Okay;
2 that's number two.
3 Last part. Within your budget documents you
4 indicated a proposal to decrease PACE and PACENET by
5 $103 million. And a large part of that reduced
6 expenditure -- and I see Mr. Snedden sitting here --
7 is a $61.4 million excess appropriation authority in
8 this current year's budget. How do you account for
9 that?
10 ACTING SECRETARY HALL: Just a moment,
11 Representative Reichley.
12 REPRESENTATIVE REICHLEY: Sure.
13 ACTING SECRETARY HALL: In looking at Part D
14 over the last couple of years, the cash balance that
15 we've had in the Lottery account, in the
16 pharmaceutical account, has actually been growing.
17 So we're proposing to use a significant portion of
18 that balance to help fund this year's operations for
19 the program.
20 REPRESENTATIVE REICHLEY: Okay. So it's
21 really through greater participation in Medicare
22 Part D that you've seen increased savings from your
23 own PACE and PACENET expenditures?
24 ACTING SECRETARY HALL: Yes, particularly
25 over the course of the last year or so. We could 91
1 provide you with some more information on that.
2 REPRESENTATIVE REICHLEY: So it's a one-time
3 savings then?
4 ACTING SECRETARY HALL: Well, no. I think
5 that our anticipation is that the work that we have
6 done to shift those costs is sustainable in the
7 future years. But it has resulted -- we've improved
8 our performance, so we've had more money in the
9 balance to work with.
10 REPRESENTATIVE REICHLEY: But was this a
11 one-year accumulation of $61 million---
12 ACTING SECRETARY HALL: That's right.
13 REPRESENTATIVE REICHLEY: ---or over a
14 course of two or three years since Medicare Part D
15 went into effect?
16 ACTING SECRETARY HALL: In answer to your
17 question, we accumulated over about two years. But
18 you're right, we will draw it down, so it will be a
19 one-time infusion.
20 And we did that, we had the ability to do
21 that, because of the balance and because it helped
22 us to relieve pressure on the other parts of the
23 budget.
24 REPRESENTATIVE REICHLEY: And so by reducing
25 the appropriated expenditure for PACE and PACENET, we 92
1 do not anticipate having further surpluses developed.
2 Is that correct?
3 ACTING SECRETARY HALL: I think a key point
4 here is one of the ways in which we -- and I
5 apologize for not having been clear about this in my
6 last couple of sentences.
7 A key way in which we accumulated the
8 balance was to reduce our expenditures and shift more
9 to Part D. We anticipate that we will be able to
10 sustain that lower level of expenditures into the
11 coming years.
12 REPRESENTATIVE REICHLEY: Other than the
13 elimination of the $61 million surplus, is it
14 articulated within your materials as to what you
15 anticipate the savings to be within that line item
16 because of Medicare Part D?
17 ACTING SECRETARY HALL: I think so.
18 Representative Reichley, what we'll do is
19 we'll work with you and your staff to articulate
20 that.
21 REPRESENTATIVE REICHLEY: Just if you can
22 submit that with the other two questions in written
23 fashion to the committee Chairman so that all the
24 members have the benefit of that.
25 ACTING SECRETARY HALL: We think it's pretty 93
1 straightforward. And if we didn't portray it clearly
2 enough, we certainly will correct that.
3 REPRESENTATIVE REICHLEY: Thank you.
4 Oh, I thought I had a question on that area.
5 Do you have an understanding yet -- I know
6 that you met with Representative Manderino and
7 personnel from Representative Grove's staff and I
8 think Senator Boscola's and Senator Waugh's staff and
9 Senator Browne's staff. You developed a matrix and a
10 peer group on 13 special rehabilitative facilities.
11 Do we have any timetable yet? I know you said it was
12 going to be a few weeks.
13 ACTING SECRETARY HALL: Well, actually if I
14 weren't here sitting with you folks now, I would have
15 been sitting in a meeting---
16 REPRESENTATIVE REICHLEY: Well, we'll let
17 you leave. Go ahead.
18 ACTING SECRETARY HALL: I have some
19 preliminary recommendations from the staff that I
20 received late last week. And we actually had
21 scheduled a meeting for earlier this morning to have
22 them start walking me through the options.
23 So I'm hoping to be able to work through
24 that as soon as we can get that back on the
25 calendar. 94
1 REPRESENTATIVE REICHLEY: Okay. Well, I'm
2 sure you're very familiar that all of us represent
3 areas affected by that rating and that reimbursement
4 rate, and we are very interested in getting that
5 result.
6 I do remember my last question. The
7 $61 million, is that specifically being used to fund
8 other Aging Department programs, or is that just
9 going back to the General Fund? The $61 million, is
10 that---
11 ACTING SECRETARY HALL: It's stays within
12 the Lottery account. It just reduces our drawdown of
13 that. I don't think -- it's not displacing the
14 General Fund? No.
15 REPRESENTATIVE REICHLEY: You're right; I'm
16 sorry. It goes to the Lottery Fund.
17 And there's nothing else that you can point
18 to that you are funding or paying for with that extra
19 $61 million then?
20 ACTING SECRETARY HALL: I mean, one of the
21 things -- our total Lottery expenditures are down in
22 this budget, as you've noticed.
23 One of the things that we tried to do is to
24 rebuild the reserve back to the historical level that
25 it's been for the last few years. 95
1 In fact, I asked the staff to portray -- and
2 we can provide a copy of this to the Chair -- to
3 portray both what the beginning Lottery balance and
4 also what the Lottery Fund Reserve historically had
5 been back to 1998.
6 We started this fiscal year at the lowest
7 level for the beginning balance since 1998-99. And
8 historically, I think going back to 2001-2002, the
9 Legislature and the Administration had agreed that
10 it was prudent to set the fund reserve at about
11 $100 million.
12 Last year was a departure from that. But
13 this proposal, in addition to reducing that
14 $125 million transfer that I talked about earlier in
15 response to Representative Civera's question, it also
16 proposes to take the reserve back to the historical
17 level.
18 And one of the things we were trying to do
19 in this budget is figure out that with the savings we
20 are realizing, that we can accomplish those two goals
21 -- reduce the fund transfer to long-term care and
22 restore the reserve to historical levels.
23 REPRESENTATIVE REICHLEY: Okay. Thank you
24 very much.
25 Thank you, Mr. Chairman. 96
1 VICE CHAIRMAN KELLER: Thank you.
2 Representative DePasquale.
3 REPRESENTATIVE DePASQUALE: Thank you,
4 Mr. Chairman. I'll be very brief.
5 Can you just let us know, Mr. Secretary --
6 and thank you for your time today -- where we are
7 time frame on the issues regarding the assisted
8 living regulations and also where we are for the
9 negotiations on the Medicare, the Centers for
10 Medicaid and Medicare Services? If you could give me
11 an update and the committee an update on those two
12 sets of issues.
13 ACTING SECRETARY HALL: Sure.
14 Just very quickly, on assisted living, we
15 had anticipated and had originally indicated that our
16 proposal was to have regulations ready to send to the
17 IRRC by late last year, by November.
18 Based upon the comments that we received
19 through the notice and comment process, we decided
20 that the right thing to do was to slow that process
21 down so that we could really give a thorough, fair
22 reading to each of the comments we received.
23 So our staff spent the fall and winter
24 reviewing every single one of those comments and
25 sorting them and cataloging them. 97
1 And right now, we're in the process of
2 developing revisions to the regulations based upon
3 the input and comment and suggestions that we
4 received from a wide spectrum of people who
5 participated in that process.
6 We're hoping to have a revised -- we were
7 originally indicating, and we sent out a public
8 notice to this effect, that we would have revised
9 regulations ready by the first part of March.
10 One of the things we're doing right now is
11 still working through the revisions. And we know
12 that there are also some conversations going on
13 between providers and consumers, and we want to make
14 sure that we don't inadvertently preempt those.
15 So we're trying to adjust our time frame
16 and have something to the IRRC pretty soon, but at
17 the same time being respectful of that other
18 discussion.
19 With respect to CMS and the issue of
20 applying for an Assisted Living Waiver, we have held
21 off on filing that because what exactly is in the
22 waiver will -- how the regulations turn out will
23 determine what the service package is that needs to
24 be in the waiver. So we didn't want to have the cart
25 ahead of the horse. 98
1 REPRESENTATIVE DePASQUALE: Thank you.
2 VICE CHAIRMAN KELLER: Representative Petri,
3 please.
4 REPRESENTATIVE PETRI: Thank you,
5 Mr. Chairman.
6 Last year when we had these budget hearings,
7 we discussed the fact that the Department and the
8 State was saving $6 million a week as a result of
9 Medicare Part D.
10 Did that continue through the year from the
11 time period, roughly at this time, when we had the
12 Appropriations hearing?
13 ACTING SECRETARY HALL: Well, I think that
14 I've said earlier and I think it's in the same
15 ballpark, Representative Petri, that we're saving
16 about $20 million a month now. So we have been able
17 to sustain significant savings.
18 REPRESENTATIVE PETRI: Okay. And last year
19 we talked about what to do with some of those
20 savings, and one of the solutions I proposed at that
21 time and would seek your comment on is, shouldn't we
22 be disbursing that to some of the AAAs that have been
23 underfunded?
24 And I know you don't want to get into this
25 discussion about winners and losers, but there are 99
1 about $30 -- there's $31 million due counties
2 providing the county AAAs that are underfunded
3 according to our existing formula. Why can't we make
4 everybody winners and give them one and a half
5 month's worth of savings?
6 ACTING SECRETARY HALL: Well, partly because
7 I think that the existing formula is itself flawed
8 because it fails to take into account some of the
9 factors that we talked about earlier in our
10 discussion.
11 And I have a concern, and I've shared this
12 with the Area Agencies on Aging, that pouring money
13 into the flawed formula would actually exacerbate and
14 attenuate some of the challenges and the inequities
15 that we already have.
16 REPRESENTATIVE PETRI: Well, and I
17 appreciate that, and I appreciate the time you and
18 your staff have spent in talking with some of the
19 Bucks County delegation about this funding formula
20 issue.
21 I know you mentioned a number of factors
22 that you think are important, and I agree with you --
23 age of the seniors, those particularly over 80;
24 acuity of care; and then some sort of regional
25 adjustment for pricing, if you will, or for cost 100
1 analysis, and you suggested six regions.
2 If the Legislature were to propose that,
3 would you support that kind of funding formula?
4 ACTING SECRETARY HALL: I think if the
5 Legislature were to support a funding formula that
6 accomplished some of the principals that we've talked
7 about and had the kind of broad-based support among
8 the Area Agencies on Aging that I think we need to
9 have in order to get to move this discussion ahead,
10 then it's certainly something that we would try and
11 work with the Legislature on to accomplish.
12 One of the things I think is important is
13 trying to build, because of the very divergent
14 interests that the various Area Agencies on Aging
15 have, trying to build broad-based support for any
16 solution.
17 REPRESENTATIVE PETRI: Well, I realize that
18 that probably would take a long time, and given the
19 diversity of Pennsylvania, just, you know, as far as
20 rural, city, suburban, in any issue we take, that
21 sounds like a project for ten years.
22 Wouldn't it be more appropriate just to redo
23 the formula, put it out there, and then make sure
24 that everybody was made whole with the money we're
25 saving from Medicare Part D? 101
1 ACTING SECRETARY HALL: Well, let me---
2 REPRESENTATIVE PETRI: We could do it in
3 six months.
4 ACTING SECRETARY HALL: Well, I'm not sure
5 that it's -- I mean, this is an issue that has been
6 resistant to solution for 18 years. I'm not sure
7 that it could be resolved in six months.
8 But let me say that I don't think we have
9 the luxury of waiting for ten years anyway. The
10 timeline that we've agreed to with the Federal
11 Government around equalizing the reimbursement for
12 the Aging Waiver requires us to have this done by
13 early in 2012, slightly more than two years.
14 And as you've heard me say in response to
15 questions from other members, I think the discussion
16 you have around equalizing the waiver is inextricably
17 linked to the discussion you have around OPTIONS and
18 the funding formula.
19 REPRESENTATIVE PETRI: I want to move to
20 another topic.
21 ACTING SECRETARY HALL: Sure.
22 REPRESENTATIVE REICHLEY: Tell me if the
23 information I have is correct. I'm being told that
24 the MCO's generic utilization rate is currently
25 around 74 to 75 percent, serving 1.2 million 102
1 people.
2 ACTING SECRETARY HALL: For the MCOs that
3 are connected with the Medicaid program?
4 REPRESENTATIVE PETRI: For PACE and PACENET,
5 the generic utilization rate.
6 ACTING SECRETARY HALL: We're not aware of
7 that. We're not aware of that statistic,
8 Representative, but we'll be happy to talk with you
9 after the hearing.
10 REPRESENTATIVE PETRI: Okay; if you would.
11 And then follow up with them, because I
12 believe you're going to find their dispensing fee is
13 $3, which is a lot lower than what you're proposing
14 and they're achieving higher rates.
15 Okay. You mentioned earlier in response to
16 a question that we would in fact be the first State
17 to change this dispensing formula or dispensing
18 fee.
19 ACTING SECRETARY HALL: The purchasing
20 formula.
21 REPRESENTATIVE PETRI: The purchasing;
22 right.
23 Are you comfortable proceeding without it,
24 you know, kind of being the test case?
25 ACTING SECRETARY HALL: Well, I think there 103
1 are lots of examples where Pennsylvania has seen
2 other States move well ahead in solving public
3 policy problems while we have watched from the
4 sidelines.
5 One of the things we're doing in much of our
6 long-term living initiative is trying to catch up to
7 where the rest of the country is.
8 This is an area where I think trying to
9 figure out -- I mean, Pennsylvania historically has
10 been an innovator and a leader in how we administer
11 our pharmaceutical programs.
12 We had the best, most innovative solution in
13 the country, I think, for how we implemented the
14 Part D program. And this is another area where we
15 think coming up with an accurate way to get good
16 value for taxpayers makes sense, even if we're out in
17 front.
18 REPRESENTATIVE PETRI: And I would agree
19 with the comment about taxpayers. A question I would
20 have is, though, has the department looked at the
21 other side?
22 I think Representative Ellis brought up the
23 issue of pharmacists. Has anybody looked at what the
24 impact would be to the pharmacy industry or the
25 pharmaceutical industry? 104
1 In the southeast where I'm from, there are
2 something like 60,000 people that travel every day to
3 one of those big biofirms and earn substantial
4 money. And with Wyeth leaving or announcing a
5 merger, what's the other side? What's the flip
6 side? And what's the loss of jobs? Has anybody
7 looked at that?
8 ACTING SECRETARY HALL: Well, I think from
9 our perspective, we're a very, very large purchaser
10 of pharmaceuticals in this State, not only in the
11 PACE and PACENET programs but in our Medicaid and in
12 the PEBTF program as well.
13 Historically, the pharmaceutical
14 manufacturers have done a reasonably good job of
15 getting their voices heard in bodies like this across
16 the nation.
17 What we are trying to do is make sure that
18 we administer these programs in a way that gets the
19 best possible deal for our consumers who don't have
20 the wherewithal to be heard quite as well, and also
21 making sure that we pay attention to the Main Street
22 pharmacies in this State.
23 REPRESENTATIVE PETRI: I understand.
24 Mr. Chairman, a final comment.
25 I would urge my colleagues to really study 105
1 and look at this issue involving AAAs. I've been
2 complaining about it for three budgets now.
3 And in a county like Bucks County, it is now
4 up to $2.8 million that they're due in shortages --
5 and a growing list of people on the list needing
6 services, and it's impacting all our counties. And
7 we have to do something and we have to do something
8 rapidly.
9 Thank you, Mr. Chairman.
10 VICE CHAIRMAN KELLER: Thank you.
11 Representative Gingrich, please.
12 REPRESENTATIVE GINGRICH: Thank you,
13 Mr. Chairman.
14 And I guess we should have warned you that
15 you needed to pack an overnight bag, or at least
16 given you an energy bar at the door.
17 ACTING SECRETARY HALL: I have some power
18 drink here.
19 REPRESENTATIVE GINGRICH: Can I have some,
20 please?
21 ACTING SECRETARY HALL: Sure.
22 REPRESENTATIVE GINGRICH: I'm just kidding.
23 I think it's exciting that this room is so
24 full of enduring people who care just as much as we
25 all do about a lot of these aging issues. So thank 106
1 you, Mr. Secretary, and your able team.
2 ACTING SECRETARY HALL: Thank you.
3 REPRESENTATIVE GINGRICH: I want to talk a
4 little bit about the genesis and evolution of
5 your particular Office of Long Term Living. It
6 sounds very biblical, but I'll be very secular about
7 it.
8 We talked earlier about it having been
9 done, not by legislative statute but by Executive
10 order.
11 ACTING SECRETARY HALL: Yes.
12 REPRESENTATIVE GINGRICH: As
13 Deputy Secretary, you served two masters, so to
14 speak---
15 ACTING SECRETARY HALL: Yes.
16 REPRESENTATIVE GINGRICH: ---answering to
17 both our Department of Aging and Department of
18 Welfare on the various issues.
19 ACTING SECRETARY HALL: Yes.
20 REPRESENTATIVE GINGRICH: So as a result of
21 that, I think a lot of us heard that we've had a few
22 problems with confusion.
23 I mean, there were two information systems
24 for entering data. There were two HR departments.
25 There were two Secretaries for you to report to 107
1 at that point, but now you've moved up the
2 ladder.
3 So there was some confusion, a little bit
4 of frustration on the inside and the outside of
5 that.
6 So I see now that probably this was the
7 seedpod for where we are today, the Office of
8 Long Term Living, and that may be all well and
9 good.
10 Regardless, the train has left the station,
11 so we need to make sure we don't run over people on
12 the way, so to speak. It's a silly cliche, but true
13 in this case.
14 I'm equally concerned -- well, let's back
15 up, because you did talk with our Minority
16 Chairman, Tim Hennessey, whom I'm privileged to
17 work with on the Aging Committee, earlier about the
18 legislation.
19 You can imagine, we are chomping at the bit
20 to see that legislation. And to hear you say that it
21 is forthcoming, it will generate a lot more
22 questions, but it's going to answer a lot of things
23 for us as far as---
24 ACTING SECRETARY HALL: Sure.
25 REPRESENTATIVE GINGRICH: And not just us, 108
1 but providers and also our older and disabled
2 populations.
3 ACTING SECRETARY HALL: And I think it will
4 also put some anxieties to rest.
5 REPRESENTATIVE GINGRICH: It will. Mine,
6 too.
7 You and I are going to use our best-time
8 management skills here so I don't hold you too much
9 longer.
10 We're worried about protecting and limiting
11 the use of the Lottery funds, of course, for the
12 aging population for which it was designed. However,
13 I am equally concerned about providing adequate care
14 to our disabled population, in that mix, without
15 blurring it to the degree that somebody is getting
16 the shorter end of the stick.
17 ACTING SECRETARY HALL: Right.
18 REPRESENTATIVE GINGRICH: We're looking at
19 a population of our disabled that -- we're talking
20 about the population 18 to 59 and then they
21 transition over to the senior level of services.
22 But at this point, they're not even
23 protected by an Adult Protective Services Act.
24 ACTING SECRETARY HALL: Right.
25 REPRESENTATIVE GINGRICH: So we need -- I'm 109
1 just saying, we've got to look at that and that's got
2 to be done.
3 So my question is -- I do back up, because
4 you mentioned early on -- and I've been awake the
5 whole time, believe it or not.
6 You talked about the staff transition -- you
7 talked as though the merger is happening. And, you
8 know, I'm okay with that. I'm understanding you. It
9 needs to be done legislatively, and that has not
10 happened yet. We all agree.
11 However, you've made some staff transitions.
12 Am I correct, you talked about changing locations.
13 You've already done some of that before it has gone
14 through the process?
15 ACTING SECRETARY HALL: No.
16 REPRESENTATIVE GINGRICH: Okay. Then I
17 misunderstood you.
18 ACTING SECRETARY HALL: No.
19 In the Office of Long Term Living where we
20 were bringing together the staff from the Department
21 of Public Welfare and staff from the Department of
22 Aging into this joint office -- and I served at that
23 time as Deputy in both departments and had management
24 and line authority over both groups of those staffs
25 -- one of the things that we started to do, and I 110
1 think this was part of the intent, the Governor's
2 intention in designing and creating the office, was
3 to rationalize those programs and to eliminate the
4 kind of confusion and overlap that you were talking
5 about earlier. And I think we've made significant
6 progress in that regard.
7 So, for instance, instead of having staff
8 who were writing policy over in the Department of
9 Aging and a separate group of staff half a mile down
10 the road who were writing -- actually a mile down the
11 road who were writing policy in the Bertolino
12 Building, we put all the policy people together in
13 one place.
14 And they sit side by side, and they have in
15 some of the bureaus -- in the policy area, actually
16 the Director of that group now is a fellow who came
17 to us from the Department of Aging. But in other
18 bureaus, we might have somebody where the
19 Bureau Director is somebody whose complement
20 position is actually assigned to the Department of
21 Public Welfare.
22 What I meant to say -- and this is what I
23 want to make sure that I am clear with you about,
24 Representative Gingrich -- I didn't mean to say nor
25 have we approached this from the standpoint of 111
1 putting in place the structure in advance of the
2 passage of the legislation.
3 All I mean to say is that whether it's in
4 the corporate world or whether it's in the government
5 world, when you combine or merge two organizations,
6 there often are some challenges that go along with
7 that, with bringing together different management
8 structures, different cultures, a different way of
9 dealing with things as mundane, as you said, as HR
10 issues.
11 People have asked whether we would have some
12 of those same challenges in doing this kind of
13 merger, and my answer to that is because the Office
14 of Long Term Living allowed us to troubleshoot a
15 lot of these issues over the course of the last
16 two years, we think if the Legislature approves this
17 and when it is consummated, this would be a much
18 smoother transition than is usually the case.
19 REPRESENTATIVE GINGRICH: Thank you. That's
20 what I meant about being potentially the seedpod for
21 this whole thing.
22 I admire efficiency, so that's certainly not
23 a problem there; just not putting the cart before the
24 horse, and you've explained that.
25 Last question. We've been privileged to 112
1 have a fine Department of Aging for many years here
2 in Pennsylvania. Not all States are structured like
3 ours.
4 And you mentioned earlier, I think you said
5 about 16 other States have incorporated an operation
6 much like we're looking at. How many of them
7 actually mirrored, truly mirrored what we have here
8 in Pennsylvania?
9 Because the blends are different -- I've
10 done a little research on this myself, and the blends
11 are different across the country. So how many have
12 actually taken the structure we're doing with, you
13 know, our very fragile as well as disabled community
14 in the ages and numbers we're talking about and
15 merged it with aging?
16 ACTING SECRETARY HALL: I think the core,
17 the core issue has been the aging programs and the
18 programs that we're talking about here, the programs
19 that serve adults with disabilities, the over- and
20 under-60 populations.
21 REPRESENTATIVE GINGRICH: Okay.
22 ACTING SECRETARY HALL: If you look at
23 the 15 States that have already done this, the
24 commonality is that you will find that they have each
25 brought those programs together. 113
1 Now, if you look at those States, there are
2 more -- there are other pieces that some of them have
3 added to that and have gone even further than what we
4 are proposing here.
5 In a State where I used to work several
6 years ago, they moved their developmental
7 disabilities programs into the combined department
8 as well. The programs that currently are at DPW
9 for OMSAS and ODP were also part of this
10 consolidated department. We're not proposing to do
11 that here.
12 If you look from State to State, you find
13 some idiosyncrasies around the margins of what
14 additional programs were integrated. In some States,
15 they may include the Office of Vocational
16 Rehabilitation.
17 What we're proposing here is really just the
18 core activities of the Older Pennsylvanians'
19 programs, with the adults with disabilities, and not
20 some of the other permutations that other States may
21 have done.
22 REPRESENTATIVE GINGRICH: Thank you very
23 much, and thanks for your endurance and patience.
24 And I'll be one of the first in line to read
25 the legislative language so that we can get all the 114
1 specifics that we need to be able to work together on
2 this.
3 ACTING SECRETARY HALL: Okay.
4 VICE CHAIRMAN KELLER: Thank you,
5 Mr. Secretary.
6 As I said, you and your staff have done a
7 great job, and you're very knowledgeable on this
8 issue.
9 ACTING SECRETARY HALL: Thank you.
10 VICE CHAIRMAN KELLER: We wish you a lot of
11 luck with the merger. It sounds like a good idea and
12 it makes a lot of sense, but fortunately a lot of
13 things that are good ideas and make a lot of sense
14 don't get turned into law around here.
15 So we know you have a lot of work to do, and
16 I hope we're here to support you.
17 ACTING SECRETARY HALL: Thank you.
18 VICE CHAIRMAN KELLER: I'd like to thank the
19 Democratic Chairman of the Aging Committee,
20 Representative Mundy, and the Republican Chairman,
21 Representative Hennessey, for being here.
22 We're going to take a shortened lunch break.
23 We'll be back here at 2:30 with the Department of
24 Health. We will start at 2:30. We are recessed
25 until then. 115
1 Thank you very much.
2 ACTING SECRETARY HALL: Thank you,
3 Mr. Chairman.
4
5 (The hearing concluded at 1:40 p.m.)
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25 116
1 I hereby certify that the proceedings and
2 evidence are contained fully and accurately in the
3 notes taken by me on the within proceedings and that
4 this is a correct transcript of the same.
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7 ______Jean M. Davis, Reporter 8 Notary Public
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