Tennessee State Representative David Shepard

Read the Full Transcript

• SUSAN DENTZER:

  Representative Shepard, thanks very much for joining us. Let's start by talking a bit about the governor's latest proposal, as announced in January. What's your impression of it?

• REPRESENTATIVE SHEPARD:

  It's going to be pretty tough. I mean, the, the restrictions are going to be, I think, hard on people. But I do understand why he did it and I do understand that he's tried real hard to get a better proposal. I think he actually did not want to take anybody off TennCare. But I think we've been kind of blocked in that.

  So, I think he feels very strongly that we've got to do this in order to, to meet our budget requirements. And he's required by law to, to balance the budget and I suspect he's doing what he thinks he has to do to, to reach that goal.

• SUSAN DENTZER:

  You were saying earlier that you believe–that the governor believes that he was painted into a corner.

• REPRESENTATIVE SHEPARD:

  Yeah.

• SUSAN DENTZER:

  Would you say that to me again and then explain a little bit why he feels that way.

• REPRESENTATIVE SHEPARD:

  Well, he inherited a program that was already out of control. I mean, it really was. And I've been on the TennCare Oversight Committee before he became governor. And we used to question a lot of things about why we can't–why we couldn't make some adjustments in the benefits; why we couldn't make adjustments and have co-pays on, not only doctor visits, but maybe the prescriptions like other states do.

  So, when he was elected, you know, he inherited this program that was kind of a run away train and when he got in office, I think he found out that some of the legal consent decrees that had been agreed to by the state even further constrained him, to the point that, every time he would turn around and try to make some move to save the program, there was a fear or threat of going to court and being blocked by the courts.

  So, I think until the thing came out in the end of December in 2004, I think he really felt like they could resolve some of these differences, maybe get some relief in court and he could implement those changes that he needed to do to the program, like other states around us do on their Medicaid program. But I guess he felt like that wasn't going to be allowed to happen. So, he came out with this more drastic cut.

  And, and the sad part is the 323,000 people that are going to lose their benefits. And these are people that pay premiums. They pay co-pays and they are good stewards of their, of the system and these are people because of no fault through their own, they're uninsurable because they have health care problems that make them uninsurable by most commercial plans.

  So, the wonderful thing about TennCare is, we were able to include these people on our roles. So, we, we actually probably have the highest percentage in the country of, of insurance rights. In other words, we have a large percent of our population that are insured because of TennCare.

• SUSAN DENTZER:

  And that says TennCare really was a model.

• REPRESENTATIVE SHEPARD:

  Yeah and it still could be.

• SUSAN DENTZER:

  When it was passed, people said, Eureka, a state that's expanding coverage for the uninsured.

• REPRESENTATIVE SHEPARD:

  It's something I think slowly started eating up more and more of the budget, the dollars that were available. And as we talked about off camera, the managed care concept that it was developed under was felt to be the thing that was going to save a lot of money and the managed care concept was never allowed to really work the way it was supposed to.

  And then it became more managed cost than it did managed care. There were no controls trying to reduce or kind of control utilization. There weren't any controls to, to talk about, you know, what would be done in certain situations for disease states and those types of things. And we had problems with our managed care organizations, one of which came to Tennessee, two were developed in Tennessee, that went bankrupt.

  So, they left the state owing providers a lot of money. Providers weren't real happy with TennCare because they were losing money through the managed care organizations. And the most consistent one that stayed with us has been Blue Cross/Blue Shield of Tennessee, which is our biggest commercial insurance company.

• SUSAN DENTZER:

  Let's go back for a moment and talk a little bit more about the people who are going to be affected. You represent some of those folks.

• REPRESENTATIVE SHEPARD:

  I represent a lot of them.

• SUSAN DENTZER:

  Tell me about some of them.

• REPRESENTATIVE SHEPARD:

  Good people, you know, people that are just like you and I, that work everyday–well, they don't work maybe now, because of illness, but they worked. And they pay premiums, some of which are probably more than they would pay in the commercial market. But the commercial market is not available to them. So, they pay premiums. They gladly pay them. They pay co-pays on their doctor visits. They pay co-pays on their prescriptions. They don't abuse the system. They utilize it appropriately and now they are getting ready to get kicked off.

  And they don't have real hope, because there's not a safety net out there right now to offer them some kind of catastrophic health insurance.

  And these are people that are friends of mine, good, upstanding people in the community, some of which obviously can afford to pay five or $600 a month premiums, but gladly would do it if they had the option of doing it.

  Now, should we be covering people that could afford to pay five or $600 a month? You know, that might be a whole different question. Maybe that's where TennCare went wrong. Maybe we should have had a little bit–but these are people that were uninsurable medically. These are people–and that's the whole purpose of the program. Let's do–open our rolls up to people who could not get health insurance through other means.

  Now, did the health insurance companies dump sick people on TennCare? I think they did. All they had to do was get a letter of denial from the insurance company and maybe two letters from two companies and they were automatically qualified for TennCare. So, you know, we allowed some of the insurance companies, I think, to kind of take their sickest people, put them on TennCare and we took care of them and they were able to not incur the costs of taking care of them.

• SUSAN DENTZER:

  Is there proof of that or is there just a suspicion that that's what was happening?

• REPRESENTATIVE SHEPARD:

  I don't personally have any proof, other than I do know that insurance companies kind of changed their, their method of approval for health insurance. And but I mean, we hear those stories all the time about–and the TennCare Oversight Committee about people who were unable to get health insurance for various reasons, most of which were not reasons that you would suspect the insurance company would completely deny them. So, and I'm sure the TennCare Bureau has proof of that.

• SUSAN DENTZER:

  Back again to the people who are going to be affected, 30,000 people with severe persistent mental illness, a number of the so-called dual eligibles—very vulnerable people, 1500 of them in nursing homes.

• REPRESENTATIVE SHEPARD:

  Right.

• SUSAN DENTZER:

  You're on a commission now to look at the safety net that might be, perhaps, be able to care for these people. Is that a realistic hope?

• REPRESENTATIVE SHEPARD:

  I think so. And I don't know if we can take care of that large of a number. But one of the things that we talked about in our first and only meeting that we've had, we really need numbers. We need to know how, how big the net has to be and what kind of nets do we need? Do we need a net for mental health people? Do we need a net for nursing home people? Do we need a net for people who just have uninsurable because of medical disorders?

  But there–the committee that the governor appointed is composed of some very bright, very experienced health care professionals in our state. And I represent the House of Representatives and there's a senator that happens to be a pharmacist who represents the Senate. So, we are the kind of political two on the committee. But there are some very smart people that are already in the business of certain types of care where, you know, it's kind of charity care through their non-profit arms, those types of things.

  So, I do have hope that it can happen, but I don't know if we can get a big enough net to take care of those people. Now, some of them, I think, when they recertify them, financially will qualify for Medicaid. So, a lot of them will stay on TennCare because they are either in the poverty level or they spend down quickly to the point that they're eligible through spin down. So, I don't know how many of those people there will be.

  But you know, hopefully, we're going to build a big net and try to do what we can.

• SUSAN DENTZER:

  Do you think it's realistic to conceive of faith-based organizations and others rising to meet this challenge?

• REPRESENTATIVE SHEPARD:

  I think they, they will rise to the challenge. I just don't know if they're going to be able to do it quick enough and in a, in a large enough way. I do believe that, you know, the people that are coming off, I think, some of them will probably be able to pick up some health insurance. Maybe we can get the insurance industry to relax some of their requirements, you know.

  So, I, I'm hopeful that some of them will be able to get insurance. We may have to look at a, at a catastrophic pool like we had before TennCare. Even though it's very expensive, at least we can give some of them that can afford it the option.

  But the hard thing about the safety net is we really don't know what the numbers are going to be. And the 30,000 people that [are] seriously and persistently mentally ill, 30,000 of these people they estimate are going to be–lose their benefits with this cut. I don't know what options are out there for them. I would suspect that they'll start having to pay for their care. They will probably have to start paying for their medicines.

  Now, I think there are some patient assistance programs, particularly with some of the mental health drugs that maybe they can qualify for some of the patient assistant programs. I know one of the drug companies who has an atypical anti-psychotic that's very expensive, has already told me that they have programs like that, that they will actually provide for free the patients' medicine if they're unable to purchase it or the state's unable to pay for it through some kind of an insurance plan.

  So, we're hopeful that, you know, we'll find those kind of programs out there.

• SUSAN DENTZER:

  Let's go back for a moment to the standoff between the governor and the advocates.

• REPRESENTATIVE SHEPARD:

  Okay.

• SUSAN DENTZER:

  The governor says these consent decrees that the advocates got the courts to approve won't allow the creation, for example, of a formulary. The advocates say that's nonsense. We think a formulary is a good idea. Who is right about this? Why this impasse?

• REPRESENTATIVE SHEPARD:

  Well, I think they're probably both right. I, I'm not a lawyer and I haven't read the consent decree, the entire length of it. But I do know that we do have a pharmacy preferred drug list, a formulary, old word. The new word is preferred drug list and it's been in existence about two years. And we've saved substantial money through the implementation of it.

  But there are a couple more categories that they really need to look at. And the governor and, I think, the administration has chosen not to do that for fear that it would cause possible lawsuits with the advocacy groups. Now, whether that would happen or not, I don't know.

  The other side where they're right, is that I've been told the other side, the advocacy attorney, did agree to go in from the 14-day supply of medicine on the original Greer consent back to 72 hours, which is what [federal law] requires for states that have Medicaid. And if that's the case and we don't have to do the 14-day anymore, then obviously that should help solve some of the problems with run away drug costs.

  But I think there's just a fear that we're going to go to court and lose in court again. And some of the things that I think everybody knows that we need to do to control pharmaceutical costs aren't being implemented because of this fear.

• SUSAN DENTZER:

  A point that you made that I would like to explore again is that, maybe this program was not managed as well as it could have been. Let's talk about that

• REPRESENTATIVE SHEPARD:

  Okay.

  Well, well, the program has probably been poorly managed in the last two or three years, some of which is because of agreeing to the consent decrees and not realizing the financial impact that it would have on the state. As the example, when the Greer consent was agreed to, immediately thereafter the percentage of brand name pharmaceutical dispensing for TennCare recipients went up about 15 percent. And in turn, the generic utilization of pharmaceuticals went down 15 percent.

  The, the cost–they estimated, some of the MCOs that at that time had they own pharmacy benefit management, the cost they estimated was about $200 million over about a year's period of time that they saw in extra costs because of the Greer consent.

• SUSAN DENTZER:

  Just to say that in very general terms, the effect of that was there were no limits anymore?

• REPRESENTATIVE SHEPARD:

  There were no limits. We didn't have a formulary anymore. I mean, all the managed care organizations had their own pharmacy benefit management company that did their processing. So, Blue Cross had one. A couple of others here in the state had their own. And they each had a different formulary or preferred drug list, which made it difficult for providers really.

  But as soon as Greer came out, it's almost like all of them had to throw away their formularies, because the pharmaceutical companies were very creative and their reps would go out and tell the doctors, well, we don't really have a formulary anymore and every drug is covered. And that's what happened.

  And then utilization went up. Generic utilization went down. It was very, very expensive for the state.

  Now, as a practicing pharmacist, I can tell you what my reaction was and this is before I came into the legislature. I was appalled. I mean, I couldn't understand why all of a sudden we were covering drugs that had generic equivalents available and the doctor did not want me to dispense the generic. And I found out that, one of the problems was that he was told that the brand name was now okay to use on the formulary.

• SUSAN DENTZER:

  And he was told that by the pharmaceutical companies?

• REPRESENTATIVE SHEPARD:

  They even provided prescription pads and, and told the doctor to write on it Greer. And that was his message to the pharmacists to not call him; don't bother him; dispense the drug that he wrote. And so, you know, the message was that, you know, I want what I've written and don't bother me. Even if there's a generic equivalent and even if it saves the state a lot of money, don't bother me.

• SUSAN DENTZER:

  So, we shouldn't be surprised that the McKinsey report said that 60 percent of the growth of the dollars in TennCare was going to come in drugs. —

• REPRESENTATIVE SHEPARD:

  Yes, because it had gotten so out of control literally over the last three or four years because of a lot of reasons, not just Greer. But utilization was up, new drugs that were coming out. Disease state standards of care now — I mean, it's a four drug disease for some patients.

  I mean, diabetes is a, is a disease now that's typically going to be managed by using insulin or insulin plus oral medicines. And the oral medicines could be either two or three different oral medicines, because all of them have different mechanisms of action. Now, diabetes can be well controlled now with proper diet, proper medication usage and problem monitoring. But it's expensive to treat and it's expensive to monitor.

  As an example, the prescriptions are four for prescriptions to treat the disease. Then if you're going to monitor your disease, you need the glucose monitor. You need strips to use in it. You need alcohol swabs to swipe your finger and you need a lancet to get your blood and those types of things. So, I mean, it could cost–the utilization of the eight prescriptions just to manage that one disease.

• SUSAN DENTZER:

  And if the governor's plan goes through and these people remain on TennCare but are subject to the four prescriptions limit, what happens?

• REPRESENTATIVE SHEPARD:

  I don't know. You know, people are going to have to make choices and, hopefully, that's where the safety net will come in. I mean, I do know that there are some other pharmaceutical companies that have opened up some patient assistance programs. In fact, a new one was just announced a couple of weeks ago. It's going to be really good for people that are in the middle income level, where before, they were mostly low income.

  And the other thing is, a lot of the people that are on spend-down in the 323,000 people are going to be covered by a Medicare prescription drug plan in another, hopefully, nine or ten months, the 1st of 2006. So, their needs were only on the TennCare program for prescription coverage. So, their needs are going to be met by another program that, hopefully, will work for them.

  But there are all kinds of things being done now, you know, as far as pharmaceutical assistance programs and drug discount cards, those types of things.

• SUSAN DENTZER:

  Let's talk in general terms about high levels of drug use here in the State of Tennessee.

• REPRESENTATIVE SHEPARD:

  Well, what I did was I had them pull the total number of prescriptions that were filled on the TennCare program last year for a 12-month period. And then I divided that by the number of people that are on the TennCare rolls. And it came out to be about two point–excuse me. It came out to be 32 prescriptions per enrollee per year. And that's the key, per year.

  And if you divide that by 12, then you're looking at about 2.7 prescriptions per month, which is really a reasonable number, given what we just talked about, about diabetes and those types of things.

  Now, of the 1.36 million TennCare recipients, there are only about 650,000 people that actually utilize prescriptions. They, the rest of the TennCare recipients obviously don't get prescriptions filled. And of those and, you multiply and do the division, it works out to about 5.5 prescriptions per month, which is probably more in line with what we see on an average.

  Now, there are patients that use 14 and there are patients that probably use two. So, this is an average. But given the fact that the governor is proposing four prescriptions, if you look at that number that I just gave you, then it's not far off of what he's proposing.

  And he's also said very clearly that, if we an get some relief from the, from the courts and if we can get some relief on Greer primarily, then we might be able to increase that number. Now, what the increase is, I don't know.

• SUSAN DENTZER:

  Seven prescriptions.

• REPRESENTATIVE SHEPARD:

  Seven would be–in the early '90s, it was seven prescriptions when we had a Medicaid program. And to be honest with you, what pharmacists did is, every month they would talk to their patients and they would help them choose what to get filled on the Medicaid program. And the cheapest, obviously, were the ones that they reserved if they wanted to get them, that they paid for themselves or a lot of times the pharmacist may have gotten the doctor to give them samples for things.

  So, we managed that pretty well, but health care has changed so much since the early '90s. I mean, there are diseases now like diabetes, we just talked about, that have all these new therapies that you, you may be practicing bad medicine if you don't utilize the newest, most up to date therapies for certain diseases. Everybody needs to be on a cholesterol lowering medicine now. I mean, everybody needs to be taking an aspirin product.

  So, there are those kinds of things that have happened in the medical arena that actually have driven up utilization. By that, you increase costs.

• SUSAN DENTZER:

  So, a lot of this is not the fact or, as the allegation is made, that TennCare itself is an overly generous program? It's just that it's sitting in the midst of an increasingly costly health care system with more drugs for everybody.

• REPRESENTATIVE SHEPARD:

  And I think that's true. I think–you know, if you look at all the states around us, we probably have a much more generous program than they do, because they've been trying to restrict and control their Medicaid costs for several years. And we, we've not had a strict formulary. We've not had a limit on prescriptions. We've not had a limit on office visits. We've not had a limit on hospital days.

  So, you know, we've kind of been an unusual state in the middle of a bunch of states that have restrictions. So, I think the governor, what he'd like to do is get us more in line with what all the other states are around us. And if you had a chronic disease and you had to take 12 prescriptions and you only got four of them covered in Alabama and you had to pay co-pays in Alabama, then you might be tempted to move to Tennessee, because we don't have a formulary and we don't have restrictions.

  And there have been a lot–you know, there have been some allegations that we've had people move to our state, because we have such a generous program. I suspect that, partly that's true. I mean, I don't have any hard evidence, but I, I think, I think it's more–it makes sense to me, to be true.

• SUSAN DENTZER:

  Why shouldn't the state go ask the Federal Government for more money?

• REPRESENTATIVE SHEPARD:

  Well, I don't know if there is anymore money, given the Bush administration's speech the other night and, and just the whole atmosphere in Washington. I think states are going to have to start being responsible for their own programs and their own costs. I do know our governor feels very strongly that we don't need Washington to bail us out; that we need to take care of our ourselves. And he actually feels like that, people need to be more responsible that we're providing services to.

  And that's why I talked about, a little bit about co-pays, because co-pays are at least a buy-in by the patient. They're having to pay a little bit of the cost. And it may not be very much, but sometimes that little bit might make them think about whether they really need to get that particular prescription that they only take once every three or four months filled if they have to pay something for it.

  And the other thing is, if you had to pay a small fee when you go to see the doctor, it might make them think a little bit more before they go to the doctor for some self–some illness that's probably going to go away in a couple of days. And I mean, I, I don't go to the doctor every time I get the sniffles, because I'm going to have to pay a co-pay. And I know that it's going to be self-limiting. It's going to go away.

  But when there's no limits and, you know, you might choose to go to the doctor just to be on the safe side and there's nothing wrong with that. It's just that, if you're going to utilize the system, you may ought to have to pay something. And I think the governor has said in several speeches that he feels very strongly that people need to have a buy-in to the program. They need to have a–oh, at least pay a little bit of the share of the cost, a share of the bonus, so to speak.

• SUSAN DENTZER:

  If the state proceeds with the governor's current plan, cuts 323,000 people from the rolls, he will save about $650 million. But in giving that up, it will also give up 1.2 billion more in federal funding.

• REPRESENTATIVE SHEPARD:

  Right.

• SUSAN DENTZER:

  Can–how is the state going to survive 1.2 billion federal dollars, in effect, flowing out back to Washington?

• REPRESENTATIVE SHEPARD:

  Yeah, that's the scary part. I'm real worried about the health care infrastructure that's been built up over the last ten or twelve years to take care of this population. I mean, there are hospitals that have built rural medical clinics. There are rural medical clinics, primary care clinics that have opened up in underserved areas. There are mental health clinics that have opened up to take care, in smaller, rural communities, to take care of the mentally ill. There are pharmacies all over the state that have opened up to take care of those patients in their area. I mean, there are all kinds of health care facilities that have opened up to take care of this population.

  And if the population is reduced and if the limits and, particularly, the benefits are reduced, then it's going to reduce the need for some of those facilities. And you're going to lose jobs and you're going to lose taxes. You're going to lose all kinds of things. So, the infrastructure will probably go away or some of it.

• SUSAN DENTZER:

  The Center on Budget and Policy Priorities said, the state is going to lose $1.6 billion in economic activity.

• REPRESENTATIVE SHEPARD:

  Right.

• SUSAN DENTZER:

  One hundred and forty-five thousand jobs will go away.

• REPRESENTATIVE SHEPARD:

  Right. Well, I, I've read that report. I'm not, I don't, I'm not really sure about the jobs, but I know the $1.6 billion is accurate. But I, I would suspect, in the health care arena, you know, if you have a rural medical clinic that closes and you staffed it with a nurse-practitioner and two clerks and maybe two nurse, two nurses and those are five people that are going to lose their job, because there's not a need for that clinic anymore.

  Pharmacies that are really busy filling a lot of prescriptions, if their volume is cut in half because of TennCare reduction in the number of scripts that they can get, then they're not going to need as many pharmacy technicians and clerks and pharmacists. So, there's, there's all kinds of infrastructure that's going to be affected.

  Now, the question is, is do we have too much infrastructure already in place? We may have. Yeah, that's going to be difficult.

• SUSAN DENTZER:

  There are a lot of people who believe or maybe hope that much of this, if not all of it, will be a burden. That the state will win some relief in the courts, to put in place some of these changes, a formulary and so forth. That it will be able to project that the rate of cost growth in TennCare will be much lower than it is currently. And, therefore, you won't have to kick 323,000 people off the rolls.

• REPRESENTATIVE SHEPARD:

  Right.

• SUSAN DENTZER:

  Do you think that will be the outcome that will, in effect, be more positive than the way it looks today?

• REPRESENTATIVE SHEPARD:

  I'm cautiously optimistic that we're going to be able to resolve some of our differences with the advocacy groups and the court system. I do know that the governor is going to go on the offensive. He's going to go back to court and ask for relief and I think they feel confident that they may win relief from some of the consent decrees.

  Now, whether that transforms into allowing 323,000 people to stay on the rolls and not being quite as drastic in the benefit limits, I don't know. But I do know that there are a lot of things that we can put into place to save this program. And I think the governor just wants kind of a free hand to be able to do that and not be encumbered by the fear of always being sued.

  I mean, I do know that, that we're looking at, if we haven't already done it, signing a contract to be a part of a multi-state purchasing pool for pharmaceuticals and if we join a pool and are able to buy pharmaceuticals cheaper, then we can–obviously, we might be able to go from four prescriptions a month to seven, like we talked about.

  The other thing is, one of the things I've learned about the multi-state pools is that, when you sign a contract for a certain pharmaceutical product, it's locked in for three years. So, we're going, we're going to reduce the cost of pharmaceutical inflation because the pharmaceutical companies are not going to be able to raise their prices for three years, which is going to be very helpful.

  The other things that happens with rebates, particularly supplemental rebates that a lot of states are getting, is that pharmaceutical companies agreed to do the supplemental rebates for about 20 percent and then they raise their prices 20 percent. So, you really don't get any–you don't gain anything. But the multi-state purchasing pool will be a very good mechanism to do.

  And, and, and there are some other things. You know, the mandatory generic substitution bill that is being proposed and therapeutic substitution bill that's being proposed.

• SUSAN DENTZER:

  Exactly. So, if you could go into that again and say, I proposed an example?

• REPRESENTATIVE SHEPARD:

  Okay, sure.

  I've actually this session have proposed and in proposing a bill that would allow pharmacists in the state to mandatorily substitute generics when they're available for brand name drugs and also to therapeutically substitute for those drugs that are covered on the preferred drug list. Now, one of the requirements is, is that if the physician doesn't agree to that, he can actually write on the prescription he wants this particular drug and it's medically necessary. He has to write that in his handwriting.

  The other thing is that, we have to notify the physician or the practitioner's office within 24 hours and let them know what we've done. If we've X drug, then we need to let them know so they can chart it in the patient's chart. But a lot of states are doing this now and they have generic, mandatory generic substitution. And I don't know what the cost savings are, but they have to be very, very high, because the card PDL[ph] in every category are not, do not have exclusive generics. They have some generics and then some limited number of brand drugs.

  So, as an example, with ace inhibitor blood pressure medicines, there's about 12 of those medicines that are out and about eight of them have generics now that are available. And if we just covered the generics–and we would pretty much be covering almost the total class and we could do it in a way that's very, very beneficial to the state as far as the cost standpoint.

  Now, therapeutic substitution would be like substituting one of the proton pump inhibitors like Prilosec, which is generic, for Nexium, which is not generic. And it would allow us to substitute therapeutically and then notify the doctor if that is what was on our formulary, preferred drug list.

  Now, the governor has proposed in his proposal that, that our formulary not cover any of the proton pump inhibitors and not cover any of the non-sedating antihistamines. And that–

• SUSAN DENTZER:

  How do you feel about that?

• REPRESENTATIVE SHEPARD:

  Well, I, I think it's going to be real difficult to do that without some appeal rights, because there are some patients that have certain gastric diseases that need those drugs and they're very, they're very beneficial to them. There are certain people, obviously, who can't take the sedating antihistamines. So, the non-sedating allow them to function at work and not be sleepy all day.

  So, but right now, Claritin generic is out and it's very inexpensive over the counter. And Prilosec generic is out and it's very inexpensive over the counter. So, his thinking is–and I agree with him about this–they are available and if patients want to take a non-sedating antihistamine, they can buy it for just a couple of dollars and it may not be any more expensive than what the copay may be, particularly on the generic Claritin.

  Now, the other proton pump inhibitor, probably we'll have to make an adjustment in that. But the one that we have now on our PDL, the price that they give the state is almost the same as what you can buy generic Zantac, which is an H-2 antagonist drug that's over the counter. So, we give a very good price now on the one that we cover.

• SUSAN DENTZER:

  This proposal would have the effect, the advocates say, of shifting $700 million a year in cost to this relatively low income population.

  The people are going to be paying that out of pocket, so shifting more cost to this low income population.

• REPRESENTATIVE SHEPARD:

  Right, but I think–and I agree with that to a certain extent. But I do know from a health care standpoint that, the utilization of those two categories probably is much higher in our state than it is in other states, because they're available and because we don't have any restrictions, because it's just simpler to give somebody a proton pump inhibitor than to tell them to change their diet or to–not simpler, but that's what doctors do–or maybe to use some antacid or to use some Tagamet over the counter or Zantac over the counter.

  So, I think they're used to frequently and I think the governor's concern is not that the drug is not necessary for certain patients, but they're utilized too much. And I agree with that; they are.

• SUSAN DENTZER:

  The state is possibly going to go through this wrenching set of changes and then the Bush administration has proposed additionally a $60 billion cut in Medicaid over the next number of years–which could be a double whammy for the state. Can the state and the population and particularly the population of low income individuals so dependent on Medicaid and TennCare, can it survive on this?

• REPRESENTATIVE SHEPARD:

  I don't know. You know, that's going to be the $64,000 question. You know, I hope we can. I hope we're able to compromise a little bit and maybe negotiate something in the middle, between the governor's proposal and, and the other side's proposal. I'm hoping we can come up with some safety net issues that will help us.

  I do know from a pharmacy standpoint, that we can come up with a lot of cost saving measures to save the state a lot of money if they'll allow us to do it, implement them. I know that physicians feel like they could save the state a lot of money in certain things that they can control, visits, lab tests, hospital stays, those types of things.

  But health care is a very expensive thing right now. I mean, the inflation rate is out the roof and it costs a lot of money to go to the doctor and particularly go–health costs a lot of money to go to the hospital. So, are we shifting money from outpatient therapy and pharmaceutical therapy to forcing people to get sicker when they have to go in the hospital? That's the scary part. And if that's the case, then we won't save very much money.

• SUSAN DENTZER:

  And what about the prospect of an additional whammy from–

• REPRESENTATIVE SHEPARD:

  From the Federal Government? Well, I think that, that's going add salt to the wound. And, you know, I don't know how much that's going to impact the State of Tennessee. I do know he's talking about a $60 billion reduction, that is , significant dollars. So, I'm not sure what impact that's going to have on us, because we're a waiver state and I don't know how we're going to be counted, because I know he's talking primarily about those that have a Medicaid program. But I'm sure the news isn't good and I, I suspect that a big part of the governor's concern that it's our responsibility to fix our own program and we, we can't expect Washington to bail us out, because they're not going to bail us out. And we've got to do the things that we've got to do to save this program and try to take care of our people.

  And I think most of the people that I talk to understand that. They don't agree with it and they're scared, but they do understand it. And I–hopefully, we're a volunteer state and I hope people will volunteer to help take care of these people and, and there will be agencies to come forth that will provide free health care or reduced, sliding scale ability to pay health care.

  Some of the pharmaceutical companies will come up with ways they can help patients get cheaper medicines. That's how–we'll wait and see. It's not going to be fun, though.

• SUSAN DENTZER:

  And just finally, politically here, does the governor have a lot of support within the legislature for this or not or are people, again, hoping that the situation is finessed?

• REPRESENTATIVE SHEPARD:

  I think the governor has a lot of political support, but I also feel like that, most of that support is hopeful that he will be able to, to not go to the extremes that they were having to go to, that he's proposed. And he's a very smart man. He obviously is very experienced in the health care arena. And he's, as I–you know, I know for a fact he knows a lot of things and if anyone can save this program and solve our problems, I think Governor Phil Broadus[ph] can do that.

  Now, is it too late to do it? I don't know. Is that what he wants to happen? Yes, I think it is. I think in his heart of hearts, he really wants to fix this program. He wants to save it, but he doesn't want to completely devastate the state budget-wise if he's unable to do it. I mean, our kids are too important. Our school systems are too important. All the things that normal states, including Tennessee, have to spend money on are just as important and just as vital as health care.

  And I think his philosophy is, is we've got to get this under control before we can do other things for the other populations of our state and I agree with that. Does he have political support? Yes. Does he have people that are hoping that he can work a miracle? Yes. Will he suffer some political baggage from this? Probably.

  But I think most Tennesseans that I've talked to in my district believe in him and I think they agree that something has to be done. They hate that it has to be so drastic, but they agree something has to be done.