2011 Legislative UpdateTexas Health Law Conference

Jennifer Banda, J.D.Vice President Advocacy, Public Policy & HOSPACTexas Hospital Association

October 10, 2011

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2012-2013 State Budget

Shortfall approximately $27B Projected $72B in available revenue to fund an estimated

$99B in current services.– Current services impacted by Medicaid caseload

growth, public school enrollment, etc.– Loss of Federal stimulus funding.

Historically dire budget situation – 2003 shortfall was “only” $10B resulting in significant cuts.

House and Senate both filed initial versions of budget that assume no new revenue.

Medicaid Essentials

Joint State and Federal initiative Funded with State and Federal Funds

– TX pays 42%; Feds pay 58% State funds include local government funds Basic Coverage for low income Texans

– Minimum Population and Services Covered– Minimum Rates Paid to Providers

States have to provide their state share of funds to receive Federal Medicaid Funds

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Medicaid Overview in Texas

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Factors driving the Medicaid Shortfall

Growth of Medicaid Enrollment Double Digit Increases; Budgeted at 3%

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How did they balance Art. II HHS?

$4.8B under-funding of Medicaid– Expected to be made up thru supplemental

appropriation in 2013 (Rainy Day Fund) Spending reductions

– Cost-containment initiatives – Medicaid managed care expansion statewide

Federal Flexibility– Rider 59 Cost-containment to save $700M w/

flexibility in eligibility, benefits, copays, feds pay 100% of cost of unauthorized immigrants. 6

Hospital Payment System Concerns

Inability of state to adequately fund program– Hospitals paid ~50% of cost in Medicaid today

Unequal access supplemental Medicaid payments (UPL through local IGTs, private UPL programs)

Transparency of local UPL programs questioned Need to protect UPL under Medicaid managed

care expansion Impact of system that pays similar hospitals

differently led to SDA discussion

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Budget – Hospital Impact

8% rate cut for hospitals (added to 2% cut in 2010-11) = 10% cumulative cut–Rurals and Childrens paid at cost

Statewide Hospital SDA Implementation for 9/1/2011

Expansion of Medicaid managed care ($272M in savings)

Medicaid Cost Savings implemented (non-emergent care, OB modifier, dual eligibles)

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Standard Dollar Amount (SDA)

HHSC directed in H.B. 1 Rider 67 to implement a statewide inpatient SDA by 9/1/11.

Incorporates 8% cut in hospital rates Adjustments for trauma, teaching, and reclassified

wage index to base payment. Trauma add-on funded with trauma fund ($63M AF)

– $31m in trauma fund at DSHS remaining Establishes a ceiling of $4684. Funds a hold harmless at 87% of 9/1/11 rate. AP-DRGs implemented 9/1/2012 (acute care).

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UPL - Medicaid Survival for Hospitals

UPL – Upper Payment Limit– Supplemental Medicaid Payment to Mitigate

Losses in Medicaid – Pays no more than what Medicare would

reasonably pay– Annual $2.8B in payments to hospitals/physicians

Funded by Texas public hospitals with IGT Private hospitals collaborate with local

governments for payments

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Overview of Medicaid 1115 Waiver

Expansion of Managed Care Statewide threatened Hospital Medicaid Supplemental UPL Payments.– UPL payments not allowed on managed care

patients/capitated pymts Expands managed care to more than 3 million

Texans statewide. HHSC is pursuing an 1115 Medicaid Waiver to

continue UPL funding streams.

Overview of Medicaid 1115 Waiver cont.

Protects funding, while providing for a transition to a hospital performance and quality-based payment system.

Promote critical systemic design. Increases federal supplemental Medicaid funds to

Texas hospitals.– Using regional healthcare partnerships.

Local IGT continues. HHSC will manage the regional partnerships, secure

federal match, distribute funds to hospitals.12

Regional Health Partnerships (RHP)

Waiver envisions creation of RHPs that:– Are organized through public/transferring

hospitals.– Create regional assessment, planning and

redesign infrastructure.– Include private hospitals and health stakeholders

in regional health assessments, system redesign, system investments, and reporting on outcomes.

RHPs would be responsible for developing a 5-year coordinated regional health plan with needs, resources, milestones, metrics.

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1115 Waiver Funding - Overview

Two sub-parts to the funding pool.1. Uncompensated Care (UC) will cover:

– Medicaid shortfall not covered by DSH; – Medicaid hospital UC costs and costs of services

to uninsured patients not covered by DSH; and– Medicaid non-hospital UC costs including

physician, clinic, and pharmacy. State will make UC payments based on IGT

provided and UC reported in waiver application.

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Delivery System Reform Incentive Pool

2. DSRIP pool is based on the principles of CMS’ overarching triple aim:

– Improving the experience of care, – Improving the health of populations, and– Containing costs.

Central Structure for DSRIP:– RHPs led by the public hospitals and local

governments providing IGT. Modeled after the California DSRIP program, but

there will be additional goals that are unique to Texas. 15

1115 Waiver Next Steps

Preliminary Survey of Public Hospitals Follow up with “exceptional” areas Focused work with South Texas and Rural

Texas Development of Program, Funding

Protocols and RHPs Transition Period

For additional information on the Waiver, see http://www.hhsc.state.tx.us/

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Cost Containment Riders in Budget

Rider 61 requires HHSC to achieve $450m GR funds through: (of 30 items)– Payment reform and quality based payments– Increasing neonatal intensive care management– More appropriate ER rates for non-emergent care

Resulting in 40% cut in reimbursement

– Maximizing copays in Medicaid– Improving birth outcomes by reducing birth trauma and elective

inductions Resulting in OB modifier requirement for all Medicaid births

– Medicare Equalization – dual eligibles– Increasing fraud, waste and abuse detection 17

OB Modifier on Medicaid Deliveries

HHSC is now requiring a modifier on each physician delivery claim in Medicaid. Effective 10/1/2011.

Denial on physician and hospital claim for mother.

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OB Delivery Code

5940959410595145951559612596145962059622

Modifier Indication Claim StatusU1 Medically necessary delivery prior to 39 weeks of gestation Covered ServiceU2 Delivery at 39 weeks of gestation or later Covered Service

U3 Non-medically necessary delivery prior to 39 weeks of gestation

Claim Denied, payment subject to

recoupment

Modifier Not Present  

Claim Denied, payment subject to

recoupment

Non-Emergent Patients in the ED

HHSC is implemented rule to lower reimbursement of non-emergent emergency room visits by 40%.

Effective 9/1/2011. HHSC will lower the reimbursement on

claims with the lowest 3 levels of acuity based on E&M codes.

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Cuts in Dual Eligible Reimbursement

Article II Special Provisions Sec. 17 HHSC “Medicare Equalization” HHSC implementing rule that limits

payments of deductibles and coinsurance for Medicare-Medicaid dually eligible clients.– Capped amount will be “what Medicaid would

have paid”.– Can capture as part of bad debt?

$150M (AF in 2013) savings hospitals– $302M (AF) savings physicians. 20

Nursing & Trauma Funding

Nursing Shortage Reduction Fund = $30 M total for the biennium – will allow nursing schools to maintain increased enrollment

Nursing education received $5-6 million from tobacco settlement funds

Provides for $57.5 million per year in funding for designated trauma facilities, which is a 23 percent reduction from the $75 million per year originally appropriated for the current biennium. 21

Hospital Operational Issues

SB 894 by Sen. Duncan gives hospitals in counties of 50,000 or less, sole community hospitals & critical access hospitals the option to directly employ physicians. Effective 5/12/11.

– TMB Rules just published in Texas Register

Physician employment legislation also passed for hospital districts in El Paso, Ft. Worth, Houston and San Antonio; bill also passed for Texas Scottish Rite Hospital for Children in Dallas

Protects Autonomy of Physician while allowing more recruitment and retention.

Hospital Operational Issues

SB 1661 by Sen. Duncan places some of the same protections from SB 894 (rural physician employment) in the statute for 5.01(a) corporations: – Requires 5.01(a) corporations to have policies related to

credentialing, quality assurance, UR and peer review. – Policies must preserve independent medical decision-

making by physicians in 5.01(a). – The Texas Medical Board may impose a range of penalties

against the 5.01(a). Current statute only allowed refusal to certify or revocation of certificate as TMB penalty.

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Hospital Operational Issues

SB 7 – Policy on Vaccine-preventable Diseases– Health care facilities must develop/implement policy by

09/01/12 definition of “covered individuals” types of vaccines and covered individuals required to be

vaccinated based on routine and direct exposure to patients

exemptions prohibition against retaliation of person with medical

exemption maintenance of written/electronic record disciplinary actions for failure to comply 24

Hospital Operational Issues

SB 321 – Employee Possession of Firearms in Parking Areas

– Employer cannot restrict employee who holds a license to carry a concealed handgun from transporting/storing a gun or ammunition in a locked, privately owned automobile in a parking area the employer provides for employees.

– Employer can prohibit possession of handgun in vehicle owned/leased by employer and used by employee in the course and scope of employment.

– Employer cannot be held liable for employee’s actions except in cases of gross negligence.

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Hospital Operational Issues

HB 2636 –NICU Standards and Accreditation – DSHS already meeting re: standards– NICU Council nominations due 10/12/11– Accreditation will impact Medicaid reimbursement

HB 3336 – Pertussis Information in Parent’s Newborn Resource Pamphlet – Information on disease and vaccine– CDC recommendation of Tdap for parents

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Hospital Operational Issues

SB 7 – Standardized Patient Risk Identification System

– DSHS must coordinate with hospitals to develop a statewide standardized patient risk identification system in accordance with evidence-based medicine.

– Every hospital must implement the system unless DSHS authorizes an exemption for hospitals that have adopted another identification methodology adopted by evidence-based protocols.

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Hospital Operational Issues

SB 7 – Reporting Health Care-Associated Infections and Preventable Adverse Events

– Modifies reporting requirements to allow DSHS to designate CDC’s National Healthcare Safety Network (NHSN) as recipient of Texas data

– Requires health care facility-specific data on HAI and PAE be made available to the public at least quarterly and be aggregated

– Removes 50-procedure threshold for reporting incidence of surgical site infections

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Hospital Operational Issues

HB 118 – Notice Requirement on Destruction of Medical Records

– Must inform patients that their medical records may be disposed of according to time periods in existing law destruction in 10 years after treatment; or destruction based on requirements for minors’ records

– NOTE: Not in Bill – May consider including in hospital admission information

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Hospital Operational Issues

SB 328 – Notice of Hospital Lien– Hospitals must give patients notice of a hospital lien

filed for amounts owed as a result of services provided by the hospital in connection with an injury resulting from an accident. The lien attaches to any cause of action or claim the patient may have against another person for the patient’s injuries; it does not attach to real property owned by the patient.

– Notice must be sent to the patient no later than the 5th business day after the lien has been filed and hospital notified that lien has been recorded in the county records.

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Questions?

Jennifer Banda, J.D.Vice PresidentAdvocacy, Public Policy & HOSPAC512/465-1046jbanda@tha.org

www.tha.org