Transcript Slide 1

Texas Legislative Update
Healthcare Landscape 2013
John Hawkins
Texas Hospital Association
Still implementing changes from 2011:
 Medicaid Managed Care Statewide = no more UPL funding
 Medicaid Transformation Waiver transitions UPL to new regional
payment arrangement
 10% rate cut plus transition to inpatient statewide rate (SDA) with add-
on for high cost services (trauma, teaching and wage adjustment)
 Diagnoses codes expanded and implemented (MS-DRG to APR-DRG)
 Outpatient cuts, including 40% cut for non-emergent patients in the ED
 Medicaid & Medicare Dual Eligible cuts
 Maternity and NICU changes include no payment for elective deliveries
before 39 weeks, and NICU accreditation coming soon
 Potentially Preventable Readmission reductions 9/1/2012 (now
delayed to Spring 2013)
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UPL
Medicaid 1115 Transformation Waiver
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Regional Healthcare Partnerships
 All 20 RHP plans were timely submitted to
HHSC
 Some 1,341 Category 1 and Category 2
projects were proposed in the 20 plans.
 Most common issues are the failure to
demonstrate patient benefit and insufficient
information to justify the claimed valuation
 HHSC will be conducting two reviews: a
technical review and a valuation review
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January 8, 2013
83rd Texas Legislature Convenes
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The Upcoming Session
 Historic Turnover in the Texas Capitol
– Texas Senate
 4 new senators of 31
 New Finance & Education committee chairs
– Texas House
 Speaker Straus retains gavel?
 40 new members of the House (150 total)
 Tea Party Effect
– Limited growth and revenue options
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State Budget Situation
 For 2014-15, the state can expect to have
$101.4 B in funds available for general-purpose
spending
 This represents a 12.4 percent increase from
the corresponding amount of funds available for
2012-13
 State has an $8.8 B surplus compared to a $27
B shortfall last session
 Strong sales tax collections and oil and gas
severance fees
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House Bill 1
 The bill appropriates $89.1 B in General
Revenue, and a total of $187.7 B in All Funds
 Assumes the passage of a $6.8 billion
supplemental bill in the coming weeks
 Represents a $2.2 billion decrease from 2012-
13 levels and spends $3.7 billion less than
allowed by the Constitutional Spending Limit
and $5.5 billion less than is available under the
Comptroller’s Biennial Revenue Estimate
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Medicaid GR Budget Shortfall for Current Budget
FMAP Revision
From LAR , $0.6
Cost
Increases, $1.2
Caseload
Increases, $1.0
5 Months Not
Budgeted for
FY2012-13, $4.7
Full 24 Months
Budgeted for
FY2014-15, $4.7
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How badly it is raining?
Texas Rainy Day Fund FY 2013
Balance
9/1/2012
FY2013
Contributions
$6.2B
$1.9B
Total
Available
In FY2013
$8.1B
FY2012-13
Medicaid
Supplement
$4.7B
Education
Deferral
$1.9B
Balance
8/31/2013
$3.4B
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Looking forward to 2014-2015 Budget
$2,400,000
Monthly Sales Tax Collections
FY2009 - FY 2012
$2,300,000
$2,200,000
$2,100,000
2012
$2,000,000
2011
2010
$1,900,000
2009
$1,800,000
$1,700,000
$1,600,000
$1,500,000
May
June
July
August
Spurred by continued strength in energy, manufacturing sectors; increased 30 straight months
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Priority Budget Issues for THA
 How to Fund Medicaid
– State Share for the Transformational Waiver
– State Share for Medicaid DSH
– Acute Care Provider Rates
– Outpatient Provider Rates
– Graduate Medical Education
– Physician Rates and Participation
 Workforce (nursing shortage, allied health)
 Mental Health
 Trauma Fund Maintained, Fully Allocated
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LBB GEER Report
 Allowing Medicaid expansion permitted under ACA to be enacted at a
county-by-county level
 Funding, in part, the Texas Medicaid DSH program by placing an
assessment fee on non-public hospitals
 Increasing state-owned hospital participation in drawing down payments
made under the Transformational Waiver’s Uncompensated Care Pool
 Increasing oversight of Medicaid managed care organizations by HHSC
 Requiring that Medicaid services provided by advanced practice nurses and
physician assistants be reimbursed at a rate lower than the physician rate
 Identifying and limiting “unnecessary” diagnostic ancillary services and
adopting cost-effective strategies to ensure appropriate use of these
services in the Texas Medicaid program
 Maximizing the capacity of nursing education programs to reduce the
shortage of nurses in Texas
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Seeking a Solution for DSH Funding
 THA is working with the Legislature to secure
additional funding for Medicaid DSH
 It is expected that FY 2013 DSH payments, in
the aggregate, will be funded at about 80-85
percent of FY 2012 amounts
 FY 2013 “state share” DSH funding is estimated
to be $418 million ($318M transferring public
hospitals + $100M state funds), compared with
$502 million provided by intergovernmental
transfer in FY 2012
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HHSC NICU Council Annual Report
 THHSC, DSHS and a proposed task force should collaborate to
develop a process for the designation of maternal and neonatal
levels of care for hospitals performing deliveries and/or caring for
neonates:
– Allowing individual facilities to have different levels of maternal and
neonatal care; and
– Limiting Medicaid program payments to designated facilities.
 The Task Force should be made up of representatives from the
NICU Council plus one general hospital representative (current
constituency = 12 doctors, 1 children’s hospital CEO, and 1
children’s hospital representative)
 The levels of neonatal care and maternal care should be based on
the current American Academy of Pediatrics standards and current
Guidelines for Perinatal Care publication
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SCOTUS Ruling on PPACA
 March 2010, the Patient Protection and
Affordable Care Act was signed into law
 Challenged by 26 states and NFIB
 June 28, 2012, Supreme Court rules:
– Individual Mandate is constitutional
– Medicaid Expansion is optional for states
 July 16, 2012, Gov. Perry says Texas won’t
expand its Medicaid program or create a state
insurance exchange, leaving it up to the feds
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Reactions to Ruling
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AHA & THA Background on ACA
 Hospitals agreed to $155B in cuts in Medicare
and Medicaid over 10 years
 In return for more insured patients:
– Insurance Exchanges w/ Subsidies for Affordability
– Medicaid expansion to 133% of FPL, which equates to $30,657 for
a family of 4.
– Insurance Mandate
– Insurance Reforms (lifetime limits, preexisting conditions, medical
loss ratios, etc.)
– Movement to a Quality-Based Payment System
 Full expansion was financed by $500B in cuts to
hospitals, home health, nursing homes and Medicare
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advantage plans
We’re Number One
 More than 6B uninsured in Texas today (#1)
 If Medicaid expanded to 133% FPL ($30,657
family of 4):
– Moderate Expectations = 3M more covered in TX
 50% private coverage, 50% Medicaid
– 11.6% of Texans remain uninsured
 With no Medicaid expansion and only increase
in private insurance coverage = 4.4M still
uninsured
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Budgetary Considerations of Expansion
 Texas cost estimate to fully expand ACA Medicaid =
$15.5B over 10 years
– Includes the “Woodwork Effect” of those eligible today
 100% federal for 3 years, 90% for remainder
 Federal matching funds = $100.1B over 10 years
 Net gain to Texas = $85B + more insured Texans
 Doughnut hole created for 1 million Texans
– Over 100% FPL can go into exchange w/ subsidy
– Under 100% not eligible for exchange so remain uninsured
because priced out of market
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Medicaid Expansion Considerations
 Cost
 EMTALA -1986 in Budget Reconciliation bill
 TX Hospitals already providing $5B/year in UC.
 Cost Shift from the Uninsured
– Private insurance now $1,800/year to cover the 1 in 4
Texans who are uninsured.
 http://www.americanprogressaction.org/wp-content/uploads/issues/2009/03/pdf/cost_shift.pdf
 Increased Medicaid Coverage will reduce
mortality among adults
– Esp. ages 35 – 64, minorities, impoverished areas
 http://www.nejm.org/doi/full/10.1056/NEJMsa1202099
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Economic Benefit of Expansion
 Perryman Report on Economic Activity of Expansion:
– Medicaid expenditures lead to substantial economic activity, federal
funds inflow, reduction in costs for uncompensated care and
insurance, and enhanced productivity from a healthier population.
– When these outcomes and the related multiplier effects are
considered, every $1 spent by the State returns $1.29 in dynamic
State GR over the first 10 years of the expansion.
– Over the first 10 years of implementation, economic gains (even
when fully adjusted for the diversion of State funding for other
purposes) include an estimated $255.8 billion (2012 dollars) in
output (real gross product) and 3,031,400 person-years of
employment (an average of over 300,000 per year).
 http://www.perrymangroup.com/reports/MedicaidExpansionwithTables12_1003.pdf
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Debate Entering 2013 Session
 Is Medicaid “broken” and how to fix it?
– Desire for more flexibility for states in admin of Medicaid.
 Value of Medicaid:
– Non-disabled children are 66% of Medicaid caseload, 32% of cost.
– Aged and disabled are 25% of Medicaid caseload, 58% of cost.
 How to expand coverage to adults under 100% of
FPL ($30k) and address the doughnut hole.
 Can we rely on DSH to continue to cover the cost of
the uninsured and Medicaid shortfall?
 Growth of HHS portion of the budget.
– 32% is HHS; 42% on Education
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Physician Participation In Medicaid
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Bottom Line for Hospitals
 Hospitals cannot sustain 25% uninsured
rates or additional payment cuts in 2013
without meaningful coverage expansion
– Viable options must be found
 Hospitals need financial stability to be able to
reform the system to lower cost and increase
quality:
– Continued focus on payment cuts and reforms
– Delivery system reform (ACOs, EHRs, etc.)
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Cumulative Impact of Cuts
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The Regulatory Burden
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Questions?
John Hawkins
Senior Vice President
Government Relations
512/465-1505
[email protected]
www.THA.org