Transcript Slide 1

2011 Legislative Update
Texas Health Law Conference
Jennifer Banda, J.D.
Vice President
Advocacy, Public Policy & HOSPAC
Texas Hospital Association
October 10, 2011
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.
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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.
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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.
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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.
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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.
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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
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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.
OB Delivery Code
59409
59410
59514
59515
59612
59614
59620
59622
Modifier
U1
U2
Indication
Medically necessary delivery prior to 39 weeks of gestation
Delivery at 39 weeks of gestation or later
U3
Non-medically necessary delivery prior to 39 weeks of gestation
Modifier Not
Present
Claim Status
Covered Service
Covered Service
Claim Denied,
payment subject to
recoupment
Claim Denied,
payment subject to
recoupment
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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.
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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.
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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 decisionmaking 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
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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
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in cases of gross negligence.
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 evidencebased 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 President
Advocacy, Public Policy & HOSPAC
512/465-1046
[email protected]
www.tha.org