Governor establishes child welfare advocacy division, skirts legislative disputes

by Noah Taborda, Kansas News Service

Topeka — Gov. Laura Kelly announced Monday the establishment of a Division of the Child Advocate, circumventing an effort by the Kansas Senate to place an office overseeing the child welfare system under the direction of an attorney general seeking higher office next year.

The legislation proposed by the Senate was opposed by some Democrats and advocacy groups because it would give Kansas Attorney General Derek Schmidt, who is running for governor, unprecedented access to information about how foster care issues have been handled by past administrations. The measure fizzled after passing the Senate, 31-4.

A measure originating in the House with a differing plan was struck from the legislative calendar after receiving committee approval.

Kelly said the child advocate, who is to be appointed by the governor and serve a five-year term, will investigate complaints, recommend structural changes to lawmakers and ensure interagency cooperation.

“The establishment of a child advocate is a commonsense win for Kansas kids and families,” Kelly said in signing the executive order. “For years, our state’s essential family services were neglected and underfunded – leaving our kids and families more vulnerable than ever before. Fixing those systemic problems has been a top priority for my administration, and the Division of the Child Advocate is a significant step forward to ensure every Kansas child is protected from harm.”

Among other duties of the division will be to compile complaints on behalf of those in the child welfare system, review practices of child welfare agents, and educate children and parents as to their rights within the system. Advocates said this action was needed to provide an outlet for potential abuse or neglect of Kansas children.

Kelly said the child advocate will work under the newly established Office of Public Advocates in the Department of Administration. The office will also hold the KanCare ombudsman and long-term care ombudsman.

The governor had previously proposed housing the office under the Department of Administration, but the idea did not gain traction over concerns of independent oversight. Rep. Jarrod Ousley, a Merriam Democrat and longtime advocate for the establishment of such an office, said he would have preferred to see the House model succeed but was glad Kelly acted if legislators would not.

“It’s going to reduce the kids in care, it’s going to reduce trauma and it’s going to extend placements,” Ousley said. “It’s going to benefit the kids.”

Over the past three months, the number of missing foster children has ranged from 60 to 82 on any given day. Currently, 64 children are unaccounted for.

Reports of neglect and extraordinary tragedies have accelerated the push for the Division of the Child Advocate. Jami Reever, executive director of the Kansas Appleseed Center for Law and Justice, applauded the effort to provide true oversight and accountability for the state’s foster care system.

“All Kansas children deserve bright and hopeful futures, and we are thrilled to work in partnership with state leaders to continue to build a more thriving, inclusive and just state,” Reever said. “The Division of the Child Advocate is the transparent and truly independent watchdog our kids, families, social workers and communities need.”

Senate President Ty Masterson applauded the governor’s efforts and recognition of the issue, but he was skeptical this action would provide appropriate oversight.

“It is important that the office be independent and provide real oversight,” the Andover Republican said. “This past session, the Senate adopted (a bill) which created a true independent Office of Child Advocate that would bring accountability and transparency to the child welfare system in Kansas. This is the more appropriate course and one we will continue to pursue next session.”

Senate Minority Leader Dinah Sykes, a Lenexa Democrat, reiterated arguments made by child welfare advocates during the session earlier this year that the Senate model was unworkable and far too partisan. She said the governor’s route offers a good compromise.

Sykes left the door open to further conversations in the Senate on how to pass this model into law via the Legislature. As it stands, the executive order could easily be reversed by a future governor.

“I hope we can actually see how (this model) is working before we get into session and it shows some success so that everyone can support it and so that if the future governor decides not to keep this that we do have protections for our children because they’re our best asset,” she said.

Kansas Reflector stories, www.kansasreflector.com, may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0.
See more at https://kansasreflector.com/2021/10/04/kelly-establishes-child-welfare-advocacy-division-skirts-legislative-disputes/.

Kansas audited its $80 million CVS prescription plan, but it’s still shrouded in mystery

Taxpayers and state employees could be paying too much for medications. Experts say a 16-page audit commissioned by Kansas doesn’t dig in to find out.

by Celia Llopis-Jepsen, Kansas News Service and KCUR

Editor’s note: This article is about Kansas’ audit of drug spending related to its state employee health plan. You can read more about the state’s redactions of that audit at https://www.kcur.org/news/2021-10-01/kansas-hid-parts-of-a-100k-audit-of-drug-spending-experts-say-the-state-went-too-far.

Topeka — Kansas paid auditors $100,000 to dig into the more than $160 million it spent in 2018 and 2019 on prescription drugs for state employees, retirees and their families.

But experts who follow the pharmaceutical industry say the resulting 16-page report doesn’t tell Kansas whether the health plan — or rather, the taxpayers and public employees who fund it — got a bargain or got gouged.

Nor does it reveal what role CVS, which manages the health plan’s drug benefits and was the audit’s focus, plays in either keeping down or inflating costs.

The audit “was poorly structured and poorly performed,” New Jersey attorney Linda Cahn, CEO of Pharmacy Benefit Consultants said in an email. Her firm helps public and private health plans avoid contract loopholes that lead to overcharges on drugs. “It does not provide Kansas — or its taxpayers — with the information needed to evaluate just how much money the State wasted.”

Cahn spent more than a decade litigating pharmacy benefit issues and has reviewed hundreds of drug spending contracts like the one Kansas signed with CVS.

Both she and 3 Axis Advisors, a consulting group that investigates prescription drug costs, said the state health plan may have lost millions to ambiguous provisions in its CVS contract.

Antonio Ciaccia, president of 3 Axis Advisors, said even the largest of public and private employers often don’t know how to ask the right questions about the complex world of prescription drug deals.

What they end up with are audits that “leave everything on the cutting room floor that you actually need.”

“Some of the biggest companies in the world are getting taken advantage of,” said Ciaccia, a former lobbyist for pharmacies in Ohio, which sought an investigation in that state. “You have an incredibly opaque and complex system … There’s so many opportunities to exploit that complexity.”

By the time Ohio finished digging into the matter, it discovered more than $200 million in Medicaid spending had gone into a byzantine profit model run by the administrative middlemen.

It effectively fired the middlemen companies involved, sued one of them and got an $88 million settlement this summer.

And yet Ohio audited only a slice of what it should have, experts say, leaving unknown the full taxpayer-funded profits that middlemen took home. And that holds lessons for Kansas. Not just for its state health plan, but for its cities, counties, school districts and private employers.

Clear, thorough audits are intended to expose things like overcharges and to keep contractors honest.

In the complex business of managing prescription drugs, the stakes of those audits become even greater.

The opaqueness is compounded by how Kansas, CVS and the auditor handled inquiries from the Kansas News Service.

First, the Kansas Department of Administration redacted large swaths of the audit, saying it needed to protect trade secrets. (Lawyers who reviewed the botched redactions for the Kansas News Service disagree.)

Then the department declined an interview request, saying in an email, “the audit speaks for itself.”

CVS also declined an interview. “We would refer any questions you may have to our client, the state of Kansas,” a spokesman said by email.

And the auditor, PillarRx, said it can’t discuss its findings or even the thoroughness or quality of its work without permission from CVS — the company whose work it was paid to watchdog — and Kansas. A company vice president said her hands are tied “because of our confidentiality statements” with both parties.

PillarRx’s report found more than $1 million in overcharges that CVS paid back, but otherwise concludes that CVS largely handled the health plan’s money appropriately.

The audit conclusion is written by CVS, not the auditor. In it, the company promises to address co-pay issues related to four claims.

After that, “it is our view that we are in compliance with the contract and plan design, and there are no additional material financial discrepancies related to the findings.”

The conclusion left Ciaccia flabbergasted.

“I’ve never heard of the entity being audited having the privilege of writing their own conclusions to the audit,” he said.

Cahn said Kansas should demand to see any confidentiality agreements between PillarRx and CVS. Such agreements often limit what financial documents the auditors get to review in the first place, she said, and how much detail the auditors get to disclose to their clients. They can also grant the company under audit the right to review all drafts and preliminary findings before they reach the client. The state should demand to see all earlier drafts, she said.

“The State should also require PillarRx to provide it with all exchanges that PillarRx had with (CVS) Caremark,” Cahn said, “concerning its audit, and its draft audit reports.”

A quick primer on pharmacy middlemen

The Kansas audit homes in on the same obscure but important part of the drug supply chain that Ohio looked at — the administrators called pharmacy benefit managers.

These middlemen typically negotiate prices with pharmacies, determine what drugs a health plan should cover and process the actual claims. Health plans would struggle to get that done on their own.

So the administrators handle the money flow. They pay the drugstores. And they collect the rebates that drugmakers offer as incentives to include specific medications in their coverage.

It’s lucrative work that sometimes pulls in more money than drugmakers and insurers earn.

Three of the nation’s wealthiest corporations control most of the market: Express Scripts, CVS Caremark and OptumRx.

CVS ranks No. 4 on the Fortune 500. UnitedHealth Group (which owns OptumRx) ranks No. 5. Cigna (which controls Express Scripts) ranks No. 13.

As Fortune magazine wrote, “The company climbed more than 50 spots on the Fortune 500 after completing its merger with pharmacy benefits manager Express Scripts.” It enjoyed “skyrocketing” revenues, and all that pharmacy benefit manager business kept Cigna healthy during the pandemic.

Independent and small-chain pharmacies generally stand at odds with the pharmacy benefit managers that control payments from health plans. That tension has magnified over the years as the corporations that do this administrative work merged with drug stores and insurance companies.

CVS Health, for example, not only owns its ubiquitous drugstore chain, but also functions as an insurance company (Aetna) and a pharmacy benefit manager.

It is the pharmacy benefit manager for the Kansas employee health plan. The plan covers about 80,000 public employees, retirees and dependents. It spends about $80 million on drugs annually.

A consultant told the Kansas Department of Administration that CVS’ latest contract would save the health plan tens of millions of dollars over a three-year period.

But pharmacy middlemen have faced increasing scrutiny over how they contribute to the incredibly high prices that Americans pay for prescriptions. Americans pay more than twice as much as people in other developed countries.

Employers, meanwhile, struggle to see where the money goes, because the middlemen they hire consider vital details of their financial arrangements with drugmakers and pharmacies to be proprietary and even trade secrets.

CVS ‘underperforming’ its contract

In 2015, auditors who work for the Kansas Legislature found state officials weren’t checking up on CVS Caremark.

The state effectively took CVS at its word that the company handles claims correctly, doesn’t steer employees toward pricey medications, and doesn’t increase costs by pocketing money from drugmakers.

The legislative auditors urged a change, and the state agreed. So then-Gov. Sam Brownback’s administration contracted with an external auditor, which subcontracted with another (PillarRx) to conduct regular checks.

The 2018-2019 audit is a 16-page report. The auditors also gave state officials a shorter, 10-page version of the 16-page report. The state redacted large swaths of the audit before giving the full report to the Kansas News Service. But it botched the redactions, so some of the obscured details were ultimately still readable.

A four-page written response from CVS to the auditors is also attached to the audit, which the state blacked out in full.

The audit reveals that the state employee plan didn’t always get the discounts and fees it had been promised.

On that point, the auditors said CVS was “underperforming” its contract with Kansas.

They concluded the company owed about $1.2 million, but that it had already identified much of the overcharges itself. CVS cut checks to Kansas that covered almost the full amount by the time the audit was completed. It agreed to pay back the rest after the audit.

Meanwhile, PillarRx found no evidence that CVS mishandled payments to pharmacies.

Nor did PillarRx find evidence that CVS took any money from drugmakers that should have gone toward keeping down the costs of the health plan.

Audits and researchers in other states have found middlemen using both strategies to fatten their profits.

Kansas Attorney General Derek Schmidt’s office may be investigating similar questions. It has hired the law firm that helped Ohio and another state, Mississippi, land their recent settlements against a pharmacy benefit manager for allegedly overcharging Medicaid.

Concerns about the audit

The Kansas audit says it was designed to check whether CVS complied with its written promises to the state.

Experts say that’s not how to audit PBMs. Health plans should ask auditors to dig much deeper into where the money went.

“When the assessment of the issue is, ‘Did you achieve these contract requirements?’” pharmacist Ben Link said, “it’s kind of like having the answer key to the test before you take the test.”

Link previously worked for pharmacy benefit managers, where he helped them manage public health plans. He joined 3 Axis Advisors in 2019.

For example, the audit concludes that CVS handed over money from drugmakers as required by its contract. Yet a provision in the contract allowed the company to keep “administrative fees” equaling up to 4% of the manufacturer list prices for all the medications that Kansas employees and retirees picked up.

So how much did CVS keep? Figuring that out requires detailed claim information.

But Link offered a rough estimate based on Kansas’ brand-name drug spending — a critical component of the calculation — that the fees could add up to $2.5 million for 2018 and 2019 combined.

That revenue from drugmakers comes on top of the money that Kansas already agreed to pay CVS for its services, such as the 90 cents it got for every prescription that got filled.

The National Academy for State Health Policy recommends writing tight contracts that put a stop to pharmacy benefit managers pocketing drugmaker money in any form, including money labeled with a wide variety of terms such as “administrative fees.”

Squeezing the balloon

Kansas contractually agreed to use auditors mutually approved by CVS.

The academy’s recommendations — drawn from the experiences of several states that have wrestled aggressively with the pharmacy benefit sector — also say states need to ditch deals that give the pharmacy benefit managers sway over who audits them.

“That’s dangerous,” law professor Erin Fuse Brown said. “The (pharmacy benefit) market is extremely consolidated. … So you could imagine that (pharmacy benefit managers) have their preferred auditors.”

Fuse Brown didn’t review the Kansas contract and audit. But she is director of the Center for Law, Health and Society at Georgia State University, and helped the academy write model contract terms for states to use.

Trying to rein in the profits that pharmacy middlemen take home is like squeezing a water balloon, she said. Press their profits in one area, and the revenues simply shift somewhere else.

“There are lots of different places where (they) can suck out a little bit of revenue here and there,” she said. “And that can add up to a great deal of cost.”

Based on PillarRx’s audit of CVS, Ciaccia and Link couldn’t tell whether CVS treats non-CVS pharmacies fairly.

“That would be almost impossible to derive based on the analysis,” Ciaccia said. “It would take a much more granular look.”

Organizations such as the ERISA Industry Committee and the National Conference of State Legislatures have turned to Ciaccia to help educate private employers and state policymakers on where the money goes.

Cahn, the industry consultant, questioned sample sizes. The number of drugmakers and pharmacies included in the review. The lack of investigation into CVS’ definition of terms such as “generic” and “specialty drug,” and how this relates to its guarantees.

She pointed to a section that says PillarRx “requested reports from CVS to substantiate their performance levels … to determine if CVS had performed at the minimum level required to avoid paying a penalty to the State.”

“This is ludicrous,” Cahn said. “This is like asking a Fox to report on whether it ate the chickens in the chicken coop.”

The National Academy for State Health Policy proposes strengthening contracts to ensure health plans can conduct aggressive audits and checks that go beyond measuring contract compliance.

“Let’s say the state negotiated a not-so-strong contract on its own behalf,” Fuse Brown said. “It’s paying too much … and passing a lot of those costs on to the state employees.”

“You wouldn’t necessarily pick up on that if you were just doing an audit of whether or not the PBM lived up to the contract terms,” she said.

Celia Llopis-Jepsen reports on consumer health for the Kansas News Service. You can follow her on Twitter @celia_LJ or email her at celia (at) kcur (dot) org.
The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.
Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.
See more at https://www.kcur.org/news/2021-10-01/kansas-audited-its-80-million-cvs-prescription-plan-but-its-still-shrouded-in-mystery
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Kansas legislative leaders create special committee to rebuff federal COVID-19 mandates

by Tim Carpenter, Kansas Reflector

Topeka — Top House and Senate lawmakers agreed Monday to establish a special legislative committee to examine options for thwarting federal policy layered with COVID-19 government mandates tied to the pandemic that so far killed more than 6,000 residents of Kansas.

The Legislative Coordinating Council convened online for less than 10 minutes to authorize five days of meetings for members of the new Special Committee on Government Overreach and Impact on COVID-19 Mandates. The joint committee could lay the foundation for a special session of the Legislature. An alternative would be for committee members to make recommendations to the 2022 Legislature that convenes in January.

“We want to make sure that we do everything possible for the citizens of this state to make sure that these overreaching mandates can be handled lawfully. I’m excited for this group,” said House Speaker Ron Ryckman, an Olathe Republican.

Senate Vice President Rick Wilborn, R-McPherson, said the Legislature needed to do whatever was necessary to deter the federal government’s intrusion into personal liberties of Kansas.

“We need to check the federal government pretty hard and stop them. It’s just completely out of control,” he said. “We need to put a checkmark on the federal government. Let them know where we stand.”

‘What are our solutions?’

The GOP-led committee would consist of 11 members chosen by the House speaker and Senate president. They would be expected to meet during the next month or so to consider legal issues, public testimony and possible recommendations for deflecting actions of the administration of President Joe Biden.

Some conservative GOP legislators have urged Ryckman and President Ty Masterson to endorse convening of a special legislative session to rebuff the Democratic president’s approach to masks, testing, vaccination and other pandemic edicts.

House Minority Leader Tom Sawyer, D-Wichita, said the committee ought to move beyond federal executive orders related to the pandemic to consider how the state could convince more people to adhere to U.S. Centers for Disease Control and Prevention guidance on avoiding COVID-19.

He said the Legislature should be supportive of vaccinations and other preventative steps “to help people so they don’t die from this disease.”

Senate Minority Leader Dinah Sykes, a Johnson County Democrat, said the death of 6,024 people during the pandemic demanded less politics and more science. The Biden administration, she said, concentrated on a vaccination program or regular testing of personnel.

“What are our solutions?” Sykes said. “I just don’t want this committee to politicize this any more. How do we actually protect Kansans, keep our economy growing? I want solutions and not just a time that we can fight against Democrats and Republicans.”

Masterson, the Senate president from Andover, said activity to politicize the pandemic was being led by the White House.

“Bad news is I don’t think we can make it more political than the Biden administration has made it,” he said.

Masterson said the goal of the special committee was to concentrate on federal action, but panel members could weigh restraint of city, county or school officials with power to issue pandemic mandates.

The new committee of five senators and six representatives needs to sort through the possibilities before making a decision about calling all 165 members back to Topeka at an estimated cost of $65,000 per day, Masterson said.

“I understand we have some new members who are energetic,” Masterson said. “We’re anticipating lots of energy in our constituent base.”

Kansas tops 6,000 deaths

First-term Sen. Mark Steffen, a Hutchinson Republican, said last week during an anti-vaccination gathering hosted by Kansas For Health Freedom that he intended to seek signatures of two-thirds of the Legislature’s members to force a special session before January. He said he had requested a special session four times without success.

Senate Majority Leader Larry Alley, a Winfield Republican, said the Legislature’s special committee ought to consider ways of dealing with hospitals requiring thousands of employees in Kansas to receive coronavirus vaccinations. He said the state needed physicians and nurses, including those who oppose the vaccination, on the job at hospitals struggling to care for the flow of COVID-19 patients.

The special committee’s work shouldn’t inhibit the possibility of the LCC placing a ban on use of government funding to enforce federal mandates, said State Rep. Blaine Finch, a Republican from Ottawa on the Legislative Coordinating Council.

In addition, he said, legislative staff should be authorized to work with the Kansas attorney general’s office to prepare legal challenges to federal executive orders.

The Kansas Department of Health and Environment reported Monday that more than 400,000 Kansans have tested positive for COVID-19 since March 2021. More than 13,700 people have been hospitalized for COVID-19 and 6,024 people stricken with the virus have died.

Gov. Laura Kelly directed flags be lowered to half-staff throughout the state through sundown Wednesday to honor the lives lost to COVID-19 in Kansas.

“It is with great sadness that, for the sixth time since the pandemic began, I am ordering flags to half-staff to honor the lives and memories of another 1,000 Kansans who have died from COVID-19,” Kelly said. “We have the tools to stop the virus in its tracks and prevent further unnecessary deaths of our loved ones and neighbors. I urge all Kansans to get vaccinated, wear masks and follow best health practices.”

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