Benefits exceed costs


Performance Evaluation and Research Division

Building 1, Room W-314

State Capitol Complex


(304) 347-4890

May 1999


In 1953 the West Virginia Legislature created an advisory council to provide advice in the following three areas: 1) the Medical Services Fund, 2) disbursements from the Fund and 3) health and medical services. Medical expenses of Medicaid eligible clients are paid from the Medical Services Fund. Code of Federal Regulations 42, Section 431.12 requires that states form committees to advise Medicaid agencies, in West Virginia's case the Bureau for Medical Services, about health and medical care services. In addition to State and Federal law, case law requires Medicaid officials to consult the Advisory Council before certain policies are adopted [Dunn v. Ginsberg, USDC, Southern District, WV]. The Council pre-existed Medicaid which was created as Title XIX of the Social Security Act of 1965. Legislation adopted in 1998 amended the council's statute to reflect the creation of Medicaid as well as federal requirements. Without the Council the state would be in noncompliance with the State Medicaid Plan and federal Medicaid funds could be in jeopardy.

As of December 1997 one in five West Virginians received health care benefits through the Medicaid program. It is a $1.4 billion program, with an approximate $322 million state match, serving approximately 431,000 citizens. Health care services for the aged and disabled account for nearly two-thirds of all Medicaid expenditures. Almost 70% of nursing home revenue is attributable to Medicaid and more than 60 per cent of all hospital revenue in West Virginia is attributable to both Medicaid and Medicare. Medicaid is essentially three programs in one: first, it is a health insurance program for low income parents and children; secondly, it is a long-term care program for the elderly; and lastly, it is a funding source for services to people with disabilities. Medicaid is one of the largest expenditures within the Department of Health and Human Resources.

The Council is organized under the Bureau for Medical Services within the Department of Health and Human Resources. Nine to thirteen members, two of which are ex officio, are permitted to serve. Currently there are 13 members with one ex officio not serving. The two ex officios are the heads of public health (Bureau for Public Health) and welfare (Bureau for Children and Families). Appointed members serve staggered terms, ranging from one to four years, until they are reappointed or replaced by the Commissioner of the Bureau for Medical Services. Members meet at the call of the Bureau for Medical Services and are permitted reimbursement of reasonable and necessary travel expenses for days served attending meetings. Prior to the amendment effective June 12, 1998, members of the Council were also entitled to an honorarium of $25 per day in attendance of Council meetings, though no honorariums were claimed by members during the scope of this review (January 1996-April 1999). Table 1 displays the groups/professions represented on the Council.

Table 1

Current Membership of Council by Provider Group, State & Federal Requirements

Representative Currently Serving Required by State Statute Required by CFR
Physician 2 1 Remaining members to be chosen from both consumer groups and representatives of health professions familiar with needs of the low income population

No limitation on number to serve

Pharmacist 1

Remaining 5 to 9 members to come from hospital administration, nursing and allied professions and consumer groups
Behavioral Health 1
Labor 1
Aging Program 1
Consumer 1
Home Health 1
Hospice 1
Nursing Home 1
Hospital 1
Dentist 1 1
Ex-officio 1* 2 1
* One of the 2 ex officio members designated by Code does not currently serve on the Council. This is not due to neglect, but rather interpretation of law. Federal regulation in naming minimum membership of the Council, requires 1 of 2 named State Officers to serve ex officio, while Code provides that both shall serve. Because compliance with the State law does not impair compliance with the Federal regulation, it is the opinion of the Legislative Auditor that both are required to serve. Because of the agency's interpretation of statute, it currently has 13 members excluding the Commissioner of Children and Families which is required to serve ex officio. The Advisory Council is in excess of the 13 member maximum provided by law.

Participation of Council members is reflected in Table 2 below.

Table 2

Council Participation CY 1996-1998

Representative Member Alternate Absence Percentage
Commissioner of Public Health 3 2 3 63%
Physician I 2 1 5 38%
Physician II 6 0 2 75%
Dentist 7 0 1 88%
Hospital 0 0 8 0%
Nursing Home 2 5 1 88%
Hospice 4 2 2 75%
Consumer 8 0 0 100%
Mental Health 4 1 3 63%
Aging 5 0 3 63%
Home Health 6 1 1 88%
Pharmacist 3 0 5 38%
Nurse 1 0 7 13%
Labor Union 0 1 7 13%

As evident by Table 2, Council bylaws allow for the use of alternates for appointed members. The creating statute is silent on the use of alternates, however, the practice is consistent with the spirit of the statute in that it improves participation and representation of provider groups. The bylaws of the Council read,

Each member shall have an alternate member who must be a representative of the same provider or consumer group. The alternate shall be invited to all meetings. If both the member and alternate are in attendance, the alternate shall serve in an ex officio capacity. If only the alternate member is in attendance, he/she shall assume full membership status during that meeting. Members shall recommend to the State Agency/Commissioner this alternate.

Council minutes from its January 1999 meeting indicate that one alternate is serving for two groups. "[Alternate 1] advised he would be the permanent alternate for both [Member 1] and [Member 2]." According to Bureau staff this means that the alternate will have two votes. This particular example illustrates the need for documenting when an alternate is present for another. While the use of alternates may further the purpose of the Council, allowing one person to carry two votes creates super-member status for that person and may discourage participation. The Office of the Legislative Auditor believes these effects are contrary to Legislative intent and suggests the bylaws be amended to disallow the casting of more than one vote by one member or alternate member.

An additional concern is raised in the above quoted Council bylaw. The paragraph reads in part, "If both the member and alternate are in attendance, the alternate shall serve in an ex officio capacity." It is apparent that the term "ex officio" has been used to designate these alternate members as having no voting rights when the primary member is also present. This is a common misunderstanding of the term "ex officio" which means "by virtue of an office." Statutory ex officio members of this Council do have voting rights and using the term "ex officio" to mean "non-voting" in the Council's bylaws is certain to cause confusion. The Legislative Auditor suggests the bylaws be rephrased to reflect that alternates are welcome to attend meetings also attended by their respective primary members, however, they will have non-voting status.

Issue Area: The Benefits of the Medical Services Fund Advisory Council Outweigh its Costs

Given the low cost of this Council, about $163 in member travel reimbursement over three years, the Council has been effective in dispensing advice relative to cost. Both Bureau staff and Council members actively participate in Council meetings, ensuring that an exchange of information and ideas occurs. Recommendations and advice have addressed all the areas mandated to the Council.

Flow of Information Between Bureau and Council is Active

Bureau staff keeps the Council well informed of law and policy changes within the Medicaid system as well as anticipated changes in the budget and program services that can be offered. Council members are regularly sent memos that cover a range of topics, from the agenda of the next meeting to Medicaid policy issuances and provider regulations. Members also receive drafts of manuals that adjust Medicaid regulations for their input. Exchange of information and advice is possible because Bureau staff is always present at Council meetings to receive Council advice and give the Council information verbally.

Staff of the Legislative Auditor attended one of the Council's meetings and observed Council members asking questions of Bureau staff and making suggestions to start discussion. The Commissioner of Bureau for Medical Services also contributes at the meetings, explaining reasons something is not possible or justifications for decisions which have been made. For example, in the April 1999 meeting attended by the Legislative Auditor staff, proposed changes in a Medicaid program reimbursement policy were discussed. Bureau staff explained adjustments to a particular program, detailing exactly what will be changed under the proposal. One of the groups represented on the Council stated that his group was against the changes and the detriment the group feared would result. The Bureau's Commissioner explained that the Bureau was obligated to make the changes and the reasons why. A second Council member asked if the Council could return to this matter if the concerns the other member mentioned were realized. Bureau staff responded yes. A vote was taken with only the initial member voting against the changes.

From 1996 to 1998 the Council passed six policy recommendations, all but one of which were implemented. It is important to note the Bureau is not obligated to implement any of the Council's suggestions nor is the Council mandated to follow-up on its recommendations. During the first two years of the review scope, the Council considered recommendations by the Medicaid Crisis Panel and the several Medicaid enhancement boards. In the last complete year reviewed, all but one of these groups ceased to exist. One, the Dental Service Provider Medicaid Enhancement Board, became a subcommittee of the Advisory Council when the current administration reorganized government. The following six points briefly describe background surrounding the policy recommendations.

The first recommendation endorsed during the scope of the review was first endorsed by the Medicaid Crisis Panel and the General Medicaid Enhancement Board. Information provided to the Medical Services Fund Advisory Council came in the form of a report issued by the Medicaid Crisis Panel. Each group adopted the same decreased rate to be paid for personal care services until July 1996 at which time the rate would be determined by cost-based methodology. The decision not to move immediately to a cost-based methodology hinged on doubts that cost reporting had been in process long enough to make an accurate determination.

In addition to the recommendations passed by the Council, individual members of the Council frequently offer valuable advice which is not passed as formal motions of the Council. Input, whether it be from individual members or the council as a whole, also fulfills the Council's purpose of being an advisory body. Regardless of the recommendation's formality, the Bureau may act on this advice or be influenced by it. The following points quoted from Council minutes are examples of advice given.

Essentially the Bureau and therefore the State are receiving free of charge the provider group's professional advice. Also having consumer group representation and the applicable open meeting policy provides the public with current knowledge of medical services and direction of Medicaid funds. The Office of the Legislative Auditor is of the opinion that the benefits of the Council far exceed its cost.

In the past, the Advisory Council has primarily served as a sounding board for policy changes proposed by the Bureau or other advisory groups. Based on this review, it seems the Bureau for Medical Services could receive even greater benefit from the Council if the Council were to work at identifying Medicaid problems and solutions firsthand. This is especially true since the dissolution of the Medicaid Crisis Panel and Enhancement Boards. Minutes from the Council's September 1997 meeting indicate "The Bureau for Medical Services would like this committee to become more active in helping solve problems." Given the experience and diversity of the Council, the Legislative Auditor feels the Council could be very beneficial in this role. In addition, the Council could benefit from more regular Bureau updates regarding the impact of implemented recommendations of the Council.


The Legislative Auditor recommends the Legislature consider continuing the Council for the maximum of six years pursuant to the Sunset Law.