Budget Office Projecting $45M Shortfall In DHHS’ IT Spending
The Michigan Department of Health and Human Services (DHHS) could be as much as $45 million in the hole by the end of the fiscal year if “major adjustments” are not made to address the agency’s IT budget shortfall, according to the State Budget Office.
On May 31, the SBO informed the legislative appropriations chairs that DHHS is the only agency at risk of spending more than it’s allotted to spend this fiscal year, which ends Sept. 30.
While no appropriations have been overspent, according to Budget Director Chris Kolb in the letter, the shortfall could result in overspending by the end of Fiscal Year 2019. The $45 million figure was given as the “high-end” estimate.
There’s been prior documented IT project spending overages associated with the DHHS—the department was dragged before a committee hearing earlier this year to explain itself.
The FY 2019 budget included a $4.1 million General Fund appropriation to address an ongoing funding shortfall, after DHHS told the Legislature in May 2018 there was a $15 million shortfall in GF in its FY 2018 budget, according to a report by the House Fiscal Agency. The agency halted all new IT projects deemed as non-essential at that point.
By November 2018, the state requested, and the Legislature approved, a transfer request to redirect $15.1 million in GF dollars from other DHHS programs, plus a $50 million boost in federal revenue spending, to address a FY 2018 budget shortfall in IT.
Finally, in December 2018, the supplemental spending bill approved at the end of the lame duck session added another $47 million–$11.8 million in GF dollars – to address a shortfall in FY 2019 funding.
In early April, according to Kolb in the letter, the DHHS “became aware of the much larger magnitude of this projected shortfall.”
Kolb said he asked the SBO’s Office of Internal Audit Services to dig into the DHHS IT shortfall to see how it came about. According to the review, “the previous administration pursued multiple major IT initiatives without correctly accounting for the long-term cost impacts. Short-term budget maneuvers were used for several years before the resulting shortfall reached this magnitude.”
Senate Appropriations Chair Jim Stamas (R-Midland) said today the projected shortfall is a concern but said he’s comfortable with Kolb finding a solution to address this problem.
Based on positive interactions he has had with the SBO, Stamas said he doesn’t think any immediate action is required, as lawmakers wait to see what Kolb comes back with.
“I was told months ago this IT ‘shortfall’ was going to be addressed from within, or as much within before asking or trying to get a supplemental,” said Sen. Peter MacGregor (R-Rockford), chair of the Senate DHHS Appropriations Subcommittee.
The administration is looking into getting concessions from IT vendors, as well as prioritizing and stopping IT projects that will not negatively impact service delivery.
House Appropriations Chair Shane Hernandez (R-Port Huron) said July 10 the DHHS IT shortfall has been a concern for lawmakers prior to the SBO’s letter.
That is why Hernandez initiated a task force focused on IT overspending across state government, as well as pushing for 25 percent reductions in department IT budgets for FY 2020.
Hernandez said he’s hoping the task force’s work will prevent this from happening in the future. And he’s hoping to determine which IT projects are essential and non-essential, and stop those that are considered non-essential.
Wozniak Ties Deductibles To Unlimited Lifetime Coverage
A new twist on Michigan’s new auto insurance law would be the ability to purchase the unlimited lifetime benefit with a deductible to lower the price of the driver’s premium, under legislation introduced by Rep. Doug Wozniak (R-Shelby Twp.).
The elder law attorney by trade said he has been involved with the brain injury association and the folks at the Coalition to Protect Auto No-Fault (CPAN) for several years. He wants to encourage drivers to continue buying the unlimited lifetime medical benefit in cases of catastrophic crashes, but he understands it could still be cost-prohibitive for many.
Under his HB 4734, drivers could purchase the benefit at any a deductible level in $1,000 increments. Obviously, the higher the deductible, the lower the cost.
Some health insurance company may even be willing to cover that deductible in their policy, he said. Drivers could also cover the cost of the deductible out of pocket or sue the other driver for it if they are not at fault in the accident.
“I’m committed to leaving no stone unturned on no-fault reform because the people of Michigan deserve dependable coverage at an affordable price,” Wozniak. “By making the unlimited PIP coverage level more attractive to drivers, we can help ensure more families across Michigan have access to life-saving benefits and are adequately covered in a tragic accident.”
Wozniak said he is expanding on a concept initially advanced by Detroit Mayor Mike Duggan, that by offering deductibles, drivers would be able to find more affordable products. By encouraging more drivers to stay in the unlimited lifetime pool, the lower the premiums will be for everyone.
Under the mandatory rate rollbacks called for in this year’s reform, those who purchase the unlimited benefits coverage is being guaranteed 10 percent savings on the personal injury protection section of their policies. He said that may not be enough for some drivers.
Insulin Patients Still Experiencing Sugar Shock Over Prices Of Meds
Rep. Sara Cambensy (D-Marquette) felt the need to “push back” after an insulin industry spokesperson told MIRS that “discounts and rebates . . . have kept net prices flat to declining in recent years.”
As a Type 1 diabetic who uses an insulin pump and has been on the same brand of insulin for 30 years, Cambensy said she has seen prices increase closer to those identified by U.S. Rep. Haley Stevens (D-Birmingham). Stevens issued a report in late June stating insulin prices have risen tenfold in the last two decades.
“If I go all the way back, it has probably increased even more than that,” Cambensy said.
Last week, Cambensy and Rep. John Chirkun (D-Roseville) introduced legislation intended to address the rising price of insulin in Michigan. Cambensy’s HB 4701 would cap the co-pay insurance companies could set for insulin prescriptions at no more than $100 per month.
Chirkun’s HB 4702 calls for an Attorney General investigation of insulin pricing and the business practices related to price-setting. Manufacturers would not have to reveal trade secrets, but the bill would give the AG administrative subpoena power to gather information from state departments, pharmacy benefit managers and insulin makers. The Attorney General would be asked to report back to lawmakers a summary of pricing practices and give recommendations to preventing overpricing.
Cambensy points to practices like “pay for delay” agreements, in which a patent dispute for a biosimilar (essentially, generic insulin) is settled by an agreement to refrain from marketing the new product for a specific period of time.
Business Insider has noted that there are three main producers of insulin in the United States but competition has not brought down insulin prices. Rather, the business magazine points to the competitors raising prices side-by-side in which it refers to as “shadow pricing.”
The public reaction to the rising prices is strong enough that the American Diabetes Association is running an online petition drive to lower prices.
The public outcry also spurred two hearings in April in the U.S. House Committee on Energy and Commerce, Subcommittee on Oversight and Investigations.
The hearings featured testimony from senior management of the Big Three insulin producers.
Michael Mason, senior vice president of Eli Lilly and Company, told the committee that, “Over the past several years, however, we have recognized that there is an increased need to address affordability challenges and have been implementing a wide range of initiatives to make our insulin as affordable as possible for as many people as possible.”
Mason acknowledged that the list price for Humalog (U100), its most commonly used insulin, has climbed 51.9% from 2014 to 2018, jumping from $391 in 2014 to $594 in 2018. However, the net price, the amount Lilly actually receives after discounts and rebates, has actually dropped 8.1%, he contended. Mason said the net price was $147 in 2014 and $135 in 2018.
“Overall, the system continues to work well for the majority of people who are prescribed a Lilly insulin,” Mason told the committee. “As noted above, the out-of-pocket cost for Humalog, Lilly’s most commonly prescribed insulin, is less than $50 a month for 90% of retail prescriptions, and less than $100 for 95% of retail prescriptions. Moreover, as discussed further below, individuals without insurance or on Medicare Part D whose income is less than 400% of the federal poverty line can obtain Lilly insulin for free.”
Under Medicaid, Mason contended, insulin is available at little or no cost.
“Indeed, Humalog is essentially free to Medicaid programs, as Lilly pays a rebate of approximately 100%. Public programs designed to assist the medically needy and financially vulnerable, including Medicaid, have expanded greatly in recent years. With enactment of the Affordable Care Act, the Medicaid population increased from 54.5 million in 2010 to 73.4 million in 2017. Providing insulin to this population at little or no cost is a significant step toward ensuring affordable access for those in need,” he told the committee.
Doug Langa, of Novo Nordisk, told a similar story. Yes, the list price of the NovoLog FlexPen had increased 310% from 2003 to 2018, but the net price had actually dropped 21%, he told the committee.
Kathleen Tegoning, of Sanofi, said her company had launched a saving program with no income requirements so that those without insurance could access a one-month supply insulin for $99 or $149 for a pack of pens.
“Despite the many challenges and perverse incentives that exist in our healthcare system, Sanofi’s commitment to patient affordability means that today, approximately 75 percent of all patients taking Sanofi insulin pay less than $50 per month,” Tegoning said.
Senate Passes Bills To Keep Worthy Recipients On Medicaid
The Senate unanimously passed legislation to prevent Medicaid recipients from losing coverage due to any bureaucratic red-tape tangles from the state’s new Medicaid work requirement.
Sen. Curtis Hertel Jr.’s (D-East Lansing) SB 0362 and Senate Majority Leader Mike Shirkey’s’s (R-Clarklake) SB 0363 make it clear that that when it comes to meeting the work requirements, recipients are eligible for Medicaid “unless proven otherwise.”
Shirkey and Hertel testified on the bills in mid June. The bills were discharged from the Senate Health and Human Services Committee and added to the Senate’s agenda in late June.
“The reason we’re doing this now is mostly because this is time sensitive,” Shirkey spokesperson Katherine Japinga told reporters.
The Senate also unanimously passed HB 4225, sponsored by Rep. Rep. Bronna Kahle (R-Adrian), which excludes hospices from the prohibition against prescribing a schedule 2 to 5 controlled substance to a patient who does not have a bona fide prescriber-patient relationship with the prescriber.
In addition, the Senate unanimously passed HB 4077, sponsored by Rep, Sheldon Neeley (D-Flint), a bill to allow a Flint rehabilitation project to move ahead in spite of a paperwork error that would have otherwise made it ineligible to continue.
In addition, the Senate unanimously passed HB 4227, sponsored by Rep. Sara Cambensy (D-Marquette), which would create the “Committee on Michigan’s Mining Future” within the Department of Environment, Great Lakes, and Energy (DEGLE).
Smoking Pot While Pregnant Can Be Hazardous To Your Infant’s Health
Recreational and medical marijuana products sold in Michigan would have to have a label warning pregnant women and breastfeeding mothers that smoking pot can have harmful effects on infants, under a set of bills discussed today by the House Judiciary Committee.
HB 4126 and HB 4126, sponsored by Rep. Thomas Albert (R-Lowell) and Rep. Daire Rendon (R-Lake City), would require the labels just as tobacco and alcohol products carry warning labels now.
The warning would read: “Use by pregnant or breastfeeding women, or by women planning to become pregnant, may result in fetal injury, preterm birth, low birth weight, or developmental problems for the child.”
Albert said preliminary research indicates marijuana is able to reach babies in the womb and may result in low birth weight and harm brain development. The U.S. Centers for Disease Control and the American College of Obstetricians and Gynecologists advise against marijuana use during pregnancy and while breastfeeding.
However, Albert said, recent studies show that roughly half of females who are regular users of marijuana continue to use during pregnancy. And 20% of women in the United States have reported using marijuana while pregnant.
“I will not argue that a warning label alone will eliminate the usage of addictive products among pregnant and breastfeeding mothers,” Albert told the committee. “That being said, I will say that a warning label has a substantial impact on forming public opinion and changes the decision making of those that might be on the fence.”
Perception of harm from marijuana during pregnancy is extremely low, Rendon argued.
“Last year a study was conducted in Colorado and 400 marijuana dispensaries randomly were selected. A woman called asking about using marijuana to help with morning sickness. About seven in 10 dispensaries recommended using marijuana to treat morning sickness. Roughly a third of the respondents said marijuana is safe during pregnancy,” Rendon said.
The committee did not vote on the bills.
But several other marijuana-related issues were on the agenda.
Rep. Mike Mueller (R-Linden) proposed HB 4693 to give park officers in Michigan’s state parks, at boat launches and in state forests the ability to enforce marijuana-related laws.
“Park officers already have the ability to enforce laws related to alcohol and other controlled substances on state land and this bill would simply extend that authority in statute to marijuana-related offenses under the new citizens initiative marijuana law,” Mueller said.
Also on the House Judiciary Committee agenda today was HCR 4, by Rep. Jeff Yaroch (R-Richmond), which calls on Congress to clarify its position on the legality of marijuana under the Controlled Substances Act of 1970.
“Marijuana is illegal in all of the United States based on federal law,” Yaroch told the committee. “I will say that Congress has done one bipartisan thing. For the last 11 years, bipartisanly they have buried their head in the sand on this issue. There have been little things here and there, but fundamentally they yet to decide what they are doing about this. They have obfuscated their authority to the federal Attorney General and every time we get a new Attorney General we get another opinion.”
Oversight Demands Better Data From DHHS On Medicaid Payments
The House Oversight Committee wants the Michigan Department of Health and Human Services to check Medicaid benefit claims against actual medical records.
The ask comes after a recent audit found little errors in those claims might result in $228 million in overpayments when extrapolated through the entire $7.2 billion Comprehensive Health Care Program (CHCP).
“If they do scientific samples of medical records, actual medical records, they’ll get the data right. The better the data is, the better the actuarial numbers will be,” Chair Matt Hall (R-Emmett Twp.) explained.
The Oversight Committee voted 9-0 to report its findings to the Appropriations Committee, asking it to include language in the budget requiring DHHS to perform additional reviews comparing encounter claims data to actual medical records for Medicaid Health Plans and to develop processes to fully explain the actuarial methods used to reconcile that claims data.
A recent audit found that when claims and medical records were compared, the records were missing or did not support the claim in 14% of cases. The Office of the Auditor General estimated that could lead to $228 million in overpayments in the future..
DHHS officials and the department’s actuary agreed with the audit’s findings but disagreed with the amount of overpayment that could result, saying they believed any overpayment would be “de minimis.”
“The problem here is we can’t verify whether it is $1 million or $220-some million because they cannot present their data, in what they call a waterfall chart, which says we accounted for duplicates and this is how many people we accounted for and how it adjusted or effected the rates,” Hall said.
“I believe the Appropriations Committee should include boilerplate language that requires them to formulate their data in that manner so that the Auditor General or the Legislature can easily look and say, ‘OK, they’ve accounted for all these things,’ or ‘They have not.’
“This is either a big problem of hundreds of millions of dollars or it is not. Without that information, the appropriators and our committee cannot make a determination how big of a problem this is. But if it is costing hundreds of millions of dollars of taxpayers’ money, that’s a big problem.”
State Goes After McLaren Over Legionella Risks; Hospital Says It’s ‘Unfounded’
Two state agencies issued orders requiring McLaren Flint Hospital to “immediately correct conditions” at its facility to reduce the risk of future exposure to Legionella, according to a press release June 12.
In 2019, two cases of Legionnaires’ disease with association to McLaren Flint have been reported, according to the state. In response, the Michigan Department of Health and Human Services requested investigation assistance from the federal Centers for Disease Control and Prevention.
However, the DHHS said the hospital “has attempted to set conditions for the public health investigation that the department and CDC feel would hinder the investigation.”
In 2018, three patients at McLaren Flint experienced conditions that the DHHS believes to be Legionnaires’ disease with a possible association with their stays at the hospital, and the state said the CDC agreed with the DHHS, according to the state press release.
The state said McLaren Flint has “disputed the determinations and refused to fully implement recommendations” given by both the CDC and DHHS on “how to investigate suspected cases in the future, and on the steps to be taken regarding the water system to better assure public health.”
The state also said McLaren Flint was the subject of Legionella disease outbreak investigations in 2014, 2015 and 2016.
The orders, issued by the DHHS and the Michigan Department of Licensing and Regulatory Affairs, require McLaren Flint Hospital to immediately comply with water restrictions, patient notification, data requests, public health investigations and official recommendations from the department.
“The department has attempted to work with McLaren Flint to assure that all appropriate steps are being taken in a timely manner to protect the health, safety and welfare of patients, staff and visitors within the health facility,” DHHS Director Robert Gordon said in a statement.
According to a report from WNEM, the hospital responded via a statement that, “we believe it is unfounded and represents the state’s continuous efforts to shift blame for their bad decisions made five years ago onto our hospital.”
The McLaren Flint statement continued, “Despite considerable evidence to the contrary, including a 100% increase in Legionnaire’s disease cases in Genesee County last year, the State continually attributes those cases to our facility.”
The hospital said it is reviewing the state order and will respond to the DHHS, and that they “are exploring possible legal action against the department.”
Lansing Lines is presented in cooperation with MIRS, a Lansing-based news and information service.