On January 10, 2000, the Georgia General Assembly kicks off its year 2000 Legislative Session. The Governor's education reform agenda will be paramount.

Here are a few recaps of what has been happening this past week in budget and committee hearings and summaries of recent meetings of the House Insurance Committee and a meeting of employers and health plans on the consumer choice option:

Joint House and Senate Appropriations Committee Hearings were held on the State’s Supplemental Year 2000 Budget on January 3-5, 2000. To kick off the Budget hearings, Governor Barnes addressed the Committee.

The Governor spoke to the Committee regarding his inclusions for an increase of $166 million in order that the State can increase the homestead tax exemption again this year – this would raise the exemption from $10,000 to $15,000. The Governor wants to increase this exemption to $50,000 within eight years and argued that since Georgia has been so prosperous, this would be a good way to allow taxpayers to keep their "hard-earned money."

Governor Barnes also has proposed a bond package which would reduce the current size of the State’s bond package by approximately 30% but would assure three things: "high bond ratings; low interest payments; and less debt for future generations."

He also wants to work on education and has requested $50 million for a "comprehensive, statewide student information system that will allow us to track a student’s grades, test scores, and discipline records from school-to-school across all 180 districts."

Another inclusion in his Budget recommendations is for $36.2 million for the Georgia Research Alliance and Yamacraw Initiative (the Georgia Research Alliance helps attract the next Einstein, Eminent Scholar Program, to Georgia and then provides that person with the necessary technology and staff for him or her to conduct their research). Such work has caused Georgia to become a very high-tech State as well as one of the leading states with venture capital firms.

Another concern the Governor addressed was the State’s own health insurance which is currently showing a $168 million dollar deficit. He has asked for $263 million to help tackle the deficit and prepare for the coming year with additional reserves.

Mike Hale spoke about the State's initiatives for Y2K. There were few disruptions when the State made the switch to the new Millennium. Approximately 71% of the Y2K funding went to modernization of existing computer systems.

Commissioner Orlando Martinez, from the Department of Juvenile Justice ("DJJ"), also spoke to the Committee on January 3, 2000 about his Department’s requests. There is a request for funding the "gold card" program for DJJ kids, which is purely a Medicaid card for those children in community placements. This program would be cost efficient and cost effective according to Commissioner Martinez. DJJ is also asking for additional funding in order to help get teachers certified to work in the DJJ facilities through a collaborative effort with Georgia Public TV. DJJ is also working on two models for vocational education and training for DJJ children that are in long-term treatment facilities. His Department is also working with the Department of Human Resources in an effort to get more federal funding through Title 40 and Medicaid. One new DJJ focus is on prevention and intervention programming – it is working with the Whitehead Foundation and others in this regard. Commissioner Martinez argued that one of his greatest difficulties is staffing – he needs more funding for better recruitment and training of staff. He also discussed some of the problems in converting the Irwin County Facility from 196 beds to 150 beds as this facility was originally designed as an adult facility.

Commissioner Martinez answered many questions. Some questions dealt with Medicaid for those in YDCs or RYDCs. These children are not now eligible for Medicaid dollars if they are incarcerated more than 30 days. Commissioner Martinez has proposed therapeutic foster homes for those children who need mental health and/or substance abuse treatment. This way children could get the necessary treatment covered by Medicaid. He also addressed the elimination of boot camps. While structure is better for some children, there is a need for a more balanced system. Some children do not actually belong in the DJJ system – especially those with medically related problems. Commissioner Martinez reported to the Committee that, overall, DJJ’s bed space is "okay." However, he did argue that it was not in the best interest of DJJ or for the children to have them in facilities where there are more than 150 children at one site.

Linda Schrenko gave testimony on January 4, 2000 about the Department of Education’s requests for the Supplemental Budget. She discussed the requirement that special education students must be tested similarly to regular students and what the State must do in an effort to adapt tests for this purpose. She also discussed the inclusion of approximately $67 million for additional funding for the Pupil Transportation grant. There has been an increase of 1.4% in the number of students served, partially due to the fact that the State did not previously transport students who lived within 1.5 miles of their schools. There are numerous increases for funding the State’s blind and deaf schools as these do not currently get any local funding. There is also an inclusion of approximately $1.3 million for additional funds for the Governor’s Scholarship Program (these funds go towards students that are the valedictorians, salutatorians, or Star recipients). There are also additional monies in the Budget for mandated science and social studies programs (Criterion Referenced Competency Tests). One large increase of $10 million is for a pilot project for the use of wireless computers by students.

Ms. Schrenko addressed numerous questions as well. Some dealt with the State’s storage of student records and whether records relating to a child’s medical and mental health would be kept. Such records are kept by the Department of Education if a parent notifies the school and turns over such records to the school. Rep. Childers expressed some concern about the storage of a child’s mental health records and what privacy acts were in place to protect such. Rep. Orrock asked about the inclusion of $5 million in the budget for data collection management.

Sen. Hecht asked some questions relating to the transfers of children from one school to another due to violence issues. Apparently, some new schools are not informed of a child’s problems even though the notifying school is supposed to inform the receiving school of such issues, per HB 180 passed in 1997.

Stephen Portch addressed the Committee on its needs. This included $3.75 million for funding of five Georgia Research Alliance eminent scholars. There is also an inclusion of $130,672 for persons who are getting BS/BA degrees who want to work with Georgia-based companies. There is an inclusion of $3.2 million for the funding to support the Medical College of Georgia Hospital and Clinics ("MCG"). Portch explained that since the passage of the Federal Balanced Budget Act ("BBA"), there had been numerous problems created for the teaching hospitals. Nationally, the BBA will cost those teaching hospitals $15 billion and Georgia alone will suffer a $22 million dollar loss this year. Portch has stated that MCG has encouraged employees to take early retirement as one way in which it could save some money.

Some questions dealt with what the State intends to do to help those in agribusiness as there is only one entry in the Budget to provide funds for the Agricultural Experiment Station for a feasibility study on processing and refining oil seeds. Several legislators also expressed concern about hazardous waste. Both Rep. Orrock and Sen. Burton asked questions about the use of staff at the various colleges and universities – why part-time instructors did not sometimes have offices or staff and why some experienced teachers were encouraged to retire so that the State could hire lesser-trained educators. Portch argued that some of the staffing decisions were done as a business decision. At MCG, for instance, 10% of the workforce will be affected and out of those only 50% will be replaced.

Commissioner Audrey Horne, in her first Budget hearing, told the Committee that her Department would be committed to a new child welfare delivery system and would strengthen quality of the services provided. Her focus areas would be child protection, substance abuse prevention and long-term care including obtaining employment for those with disabilities. The big Budget for Year 2001 will address most of the child protection issues. DHR would also work actively on getting persons off welfare.

Some highlights of the Budget requests include:

Approximately $5 million for the operation of DHR’s computer systems. Ms. Horne explained that this would help with eligibility issues. A request for $1.6 million for the replacement of Indigent Care Trust Fund money with State funds for non-Medicaid Community Based Services for the Elderly. There is also a request for the provision of $3 million in TANF funds for 54 positions and other operating expenses in order to conduct assessments (such as assessing a person’s physical health, mental health, education, etc.) of TANF adults who have received benefits for 30 months. There is also an inclusion of $1.6 million in an effort to replace child support incentive funds with State funds due to a drop in welfare rolls (which would eliminate approximately 100 staff positions), partially due to child support increases. Horne also recommended $3.5 million to fund increased placement of children into foster care and adoptions (there have been 5,600 children adopted out of foster care settings).

Ms. Horne was questioned by many. Sen. Madden expressed some interest in mental health, mental retardation, and substance abuse issues. Sen. Madden told Ms. Horne that the State should look at its requirement for training for persons working with persons that have mental health, mental retardation, and substance abuse problems (such as those persons hired through the Community Service Boards). Apparently, Georgia is number 22 out of 36 states that were polled on state salaries for those persons working as child protective services workers.

Rep. Mueller asked about foster care issues and raising the per diem for foster care parents. Ms. Horne explained that an outside consultant is working with DHR on this issue and many others relating to child protection issues. Rep. Mueller also asked about funding possibilities for those persons who were actually the grandparents raising such children that would otherwise be wards of the State. Rep. Mueller stated that such persons should at least be able to get assistance with the child’s health and dental care.

Rep. Sinkfield asked what exactly was going on with DHR’s computer tracking system. This has been an issue for seven years. Ms. Horne explained that another request for proposal may need to go out to address those issues as DHR cannot currently track across county lines. Rep. Sinkfield also asked about TANF issues. Ms. Horne stated that a study is being conducted and a draft should be ready soon.

There were several questions about the Terrell Peterson case. Ms. Horne said that there had been significant problems found with staff. A task force has been formed to conduct a review, which will be headed by Anne Cramer. Also, the Department of Family and Children’s Services is now under new leadership, Juanita Blount Clark.

Sen. Cheeks also asked about the closure of the Gracewood facility. Ms. Horne stated she was unaware that such was to occur. Sen. Cheeks also took exception with the manner in which two teachers were treated at Gracewood and asked that those two teachers (one with 21 years of experience and the other with 14 years of experience) be reinstated.

Rep. Childers asked about the cuts of $12 million last year in clinic option which did not appear in the new Commissioner’s budget. He was intrigued that the Department of Corrections had requested $16 million in its budget for psychotropic drugs.

Sen. Thomas asked about DHR’s thoughts on physicians taking custody of children when problems presented themselves. In Chicago, physicians are awarded custody of children until a hearing is conducted.

Rep. Heard encouraged Commissioner Horne to use more care in issuing requests for proposal in the future. He also asked about subcontracting with rehabilitation services.

Sen. Madden expressed concern over the cuts to the mental health budget. The Community Service Boards were large in the southern end of the State but were having problems in running satellite clinics.

Rep. Powell and Rep. Rogers disclosed their issues relating to the standards and requirements for the usage of septic tanks. Rep. Powell argued that the requirement of a minimum size lot for a septic tank was reverse condemnation.

Commissioner Russ Toal explained his Department’s Supplemental Budget inclusions. As previously mentioned, there is an inclusion of $263 million for the State Health Benefit Plan ("SHBP"). Currently, the SHBP is running a $168 million dollar deficit due to claims in this fiscal year. There is also a $33 million deficit for the health plan for the Board of Regents. Toal is committed to maintaining the reserves. The trend is a loss of 14% for the Board of Regents and 15% for the SHBP; the national rate is 18% for indemnity plans. There are currently 571,000 persons covered by the SHBP, including 63,000 retirees (with their dependents). Of these, 400,000 are school personnel. Toal indicated that there had been a request for proposal issued for a PPO network in November that would become effective on July 1, 2000. This would be a PPO option for employees which would cover preventive health services for the same premium for the standard indemnity option ($45 per employee). The State will leave the high option indemnity plan in place but the standard indemnity option will be replaced by the PPO option. The high option indemnity plan will have higher premiums going forward. Direct contracting with the hospitals has been a major plus for DCH. DCH is working closely with Blue Cross Blue Shield in this regard. DCH is also working on disease management efforts. The average age of the person covered in the SHBP is 54 years – this is higher than most other health plans which means that these are more experienced workers. DCH is also working with the Office of Planning and Budget along with the schools in an effort to better collect premiums.

Some other specifics included in DCH’s request include provision of funds for the increased utilization of Medicaid benefits in the amount of $50 million. This is in part due to increased pharmacy expenditures which will continue to rise. There is also a request of approximately $7.7 million for funds previously supplied by the Indigent Care Trust Fund ("ICTF") for medical education to Mercer School of Medicine. The reason for this inclusion is that these funds are not appropriate under the ICTF statute. There is also a reduction of approximately $1.5 million for the combining of two mental retardation services waiver programs (which would serve 2,700 clients) with the money being transferred to DHR.

Toal was asked numerous questions. Rep. Powell asked questions concerning the $700 million cut from hospital-based nursing home beds. This could be a big boost for the rural hospitals; currently there are 60 such hospitals across the state in financial difficulty. Toal stated that the rural hospitals are essential but have been slow in making necessary changes. One of the major reasons that the ICTF was revamped was to help those hospitals. The rural hospitals were also the reason that the designation for critical access hospitals was changed. Rep. Powell also asked Commissioner Toal about the Department of Corrections’ request for $16 million for psychotropic drugs. Toal assured Rep. Powell that DCH is working closely with the Department of Corrections about its use of pharmaceuticals and other issues. While DCH could be a purchasing, monitoring, and regulating entity, Toal stated that DCH was not in ‘direct’ care and would not do so unless the General Assembly directed it to do so.

Rep. Snow asked about the SHBP and its deficit. He questioned whether the plan was too liberal with its benefits. Toal stated that SHBP was "atypical" of most health plans. Only 28% of the persons in the SHBP are in managed care products such as HMOs; most large employers only offer HMO or other managed care types of products to their employees.

Rep. Channell asked about the expansion of PeachCare and whether the Department of Education and DCH had arrived at an agreement on outreach efforts. Toal stated that DCH is working with regional authorities as well as the Governor’s office to get children enrolled quickly with PeachCare or, when applicable, Medicaid.

Rep. Henson asked about the Prudent Buyer Program. There are apparently 162 hospitals participating. She specifically asked why DCH did not ask the out-of-state hospitals to participate (such as referrals of cases to South Carolina facilities from upper northeast Georgia facilities). She also asked about "in-plan" benefits in the case of an emergency under the SHBP’s benefits.

Rep. Holland encouraged Mr. Toal to work on the bidding processes with the private HMOs. He stated that access measures have been important. Toal stated that DCH can add practitioners when necessary to improve access. Rep. Holland also asked if it would be possible for State employees with low incomes to be eligible for PeachCare. Toal stated that the statute would not allow such. Further, the Health Care Financing Administration was working on ways to turn PeachCare into another Medicaid program which the State would not like.

Sen. Hill also asked additional questions about the use of the ICTF. There is a current prohibition for a disproportionate share hospital to be allowed any ICTF funds if that hospital does not have an OB/GYN physician. Sen. Hill asked that a resolution be prepared to urge Congress to do something about such requirement. Sen. Hill also asked for funding, from the Tobacco Settlement Dollars, of his bill passed last Session in an effort to help the rural hospitals.

Both Sen. Land and Rep. Evans also asked questions about the SHBP. Commissioner Toal explained that he did not know what the Governor was going to recommend for the 2001 Budget in an effort to help the SHBP. However, there needed to be funding done quickly in order to address the increases in the number of covered lives as well as expenditures. As for administrative costs to the SHBP, there was approximately 4% spent, but Toal did not know how much that equaled per claim.

Chairman Jimmy Lord held an Insurance Committee meeting on Tuesday to address Rep. Henrietta Turnquest’s study on managed care, including choice of provider, integrated medicine and preventive modalities, and community healthcare workers. A video presentation was given by Gary Null, Ph.D. on preventive medicine. Dr. Null explained that HMOs were reluctant to cover "alternative" care. He discussed the claim of no connection between diet and disease. He also made a statement that homeopathic remedies were better than placebo (on children) and 70 studies had been done. Therefore, no one could deny science. Dr. Null claimed that American doctors do not know how homeopathic remedies work. There have been some 20,000 studies done on the use of zinc; 13,000 studies on Vitamin E; and 40,000 studies on estrogen therapy (these by drug manufacturers). There are also some 39 articles published on natural substances to help menopausal symptoms. Dr. Null told the Committee that it should insist on legislative action for safe, reasonable and "impactive" ideas. Dr. Null also reminded the Committee that people were suffering and dying from over-medication.

There was also testimony at this meeting by various others that are in favor of alternative medicine. Dr. Shirley Carmack, a nurse anesthetist, testified about "medical mistakes." Rev. George Malkmus, from Hallelujah Acres, also testified about the use of raw foods (fruits and vegetables, whole grain foods, etc.) versus cooked foods in a person’s diet. Hallelujah Acres has done a study on Fibromyalgia of 31 persons – these people altered their diet and of these there was a 70% improvement rate in their symptoms. Also, an acupuncturist, William Michael Cargile, spoke about the State’s licensing of acupuncturists to perform procedures. Currently, acupuncture is illegal in Georgia unless done by a trained physician.

In short, Rep. Turnquest asked that managed care entities look at the possibility of covering some alternative medicine treatments.

Rep. Turnquest also asked that there be an expansion of the use of community health workers. There needs to be more collaboration between the Department of Labor, Department of Public Health, managed care entities and other insurance companies. Rep. Turnquest argued that this would be a good way to get persons off Welfare and back to work.

Ms. M.J. Sheridan with Zap Asthma testified about the use of community health workers and what was being done to improve the lives of children suffering from asthma in inner cities. There have been six HMOs in Georgia that have partnered to work on training these workers by providing funding. This project was commenced in 1995 and has shown that emergency room utilization by children with asthma has been lowered thereby producing cost savings. Testimony was also given by Allan Freedlove, a consultant with Zap Asthma, who stated that capitation payment was an issue and that plans should negotiate on an amount on a per member per month allocation and not mandate the actual benefits. Rep. Turnquest countered that there was no intention to introduce additional health insurance mandates but to see what managed care could do.

A presentation was also made by the Macon-Bibb County Board of Health Administration on its use of community health workers. Macon-Bibb is utilizing workers to help with immunization efforts of children (Resource Mothers), mentoring of juveniles and screening for prostate cancer (Friends and Fathers Program), offering programming on hygiene to children including oral hygiene (Camp CK), etc.

The Committee also heard testimony about the exclusion of certain practitioners from plans. Dr. Willis P. Cowlings, an ear, nose and throat doctor, testified that he was concerned over managed care and felt frustrated that he was excluded from plans. He claimed that his community had no access to his services even though he has "superior" credentials.

A meeting was held on January 6, 2000 with Renay Blumenthal, Policy Director for Governor Barnes, and Cathey Steinberg, Consumers’ Insurance Advocate. This meeting was a meeting of employers, Georgia Chamber of Commerce, Medical Association of Georgia, and health plans to determine the current plans on implementation and possible barriers that the employers and health plans had in implementation. Ms. Steinberg explained that Governor Barnes indicated that he would "do away" with the health plans' ability to collect the additional premiums (up to 17.5%) for persons that opt out of the "choice" option if the health plans did not implement the new law. Numerous issues were discussed by both sides, the largest of which seemed to be the timing of January 1, 2000 and the need for an additional open enrollment period for persons to elect the "choice" option. Employers claimed such an enrollment period would be extremely expensive and many health plans had just conducted open enrollment for persons to change their coverage for this year. Additional concerns were what effect such open enrollment would have on Cafeteria Plans, ERISA plans, and Section 125 plans.

Ms. Steinberg argued that perhaps a "special enrollment" period could be the answer for persons that would qualify. Such "special" election would be treated differently than an open enrollment. Section 125 allows such a change to occur if the change is not "significant," but there is no clear definition of "significant." An opinion from the IRS has been requested on this. There would not be any movement allowed between plans but only election of the new choice option. It was not the Advocate’s intention for another six weeks of full open enrollment, as she too agreed that it would be difficult and expensive. Questions were also raised about what effect an open enrollment would have on flex-funded (or partially self-funded) accounts.

Ms. Steinberg also polled the health plans present about their difficulties in administering the "choice" option. All said that there would be difficulties such as education of the employers about the option and miscommunication among the parties. There are also different views about whether the employer or the health plan should (or can) collect the additional premiums.

There were suggestions for Ms. Steinberg of waiver of the January retro-renewal under any special enrollment for the "choice" option. Perhaps an election of February 1, 2000 would be better. There was also a suggestion that clarification be obtained from the IRS concerning the tax implications especially as they relate to Cafeteria Plans, Section 125 plans, and ERISA plans.

Another concern raised by the employers (Delta, UPS, GTE, and Georgia Pacific were among those present, as well as the Georgia Chamber of Commerce), was the use of labor contracts and what effect implementation of "choice" would have when these contracts were only negotiated every fourth year.

Ms. Steinberg, along with everyone present, understands that the law created by SB 210 must be implemented. After much discussion, Ms. Steinberg and Ms. Blumenthal stated that the matter would be taken back to Governor Barnes to see if the time for implementation could be extended due to the concerns and issues raised.