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The House Appropriations Committee met on February 6 to hear invited testimony from the Department of Family and Protective Services and the Health and Human Services Commission on Child Protective Services, State Hospitals, Medicaid, and Health and Human Services Contracting.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Department of Family and Protective Services

Hank Whitman, Commissioner, Department of Family and Protective Services

  • Introduced the agency and thanked the Committee

 

Kristene Blackstone, Associate Commissioner, Department of Family and Protective Services

  • Provided an update on CPS. Highlights:
    • Texas is in the bottom ten states per capita for removals.
  • Toth – 66% of the time a child is not removed, how does this compare to the rest of the country?
    • Texas has historically been in the bottom ten in removals per capita in the country.
  • Toth – How does this compare to other states on a percentage basis?
    • We don’t know that exact number.
  • Toth – Are there graphs or data points you can provide us?
    • Will provide data.
  • Blackstone continued update on CPS. Highlights:
    • More than 87% of children in the foster care setting are placed in family like settings. Texas prioritizes placing children with their own family members. HB4 from last session supports these placements with monetary compensations to caregivers.
    • Overview of CBC. CBC requires the state to contract with a single source continuous contractor.
    • Department has contracted with Chapin Hall at the University of Chicago to provide methodology for determining the proper daily rate for residential services and for case management startup.
    • Department is analyzing the required and optional provision of FFPSA.
  • Wilson – Asks after 4E funds
    • 4E funds are the federal funds that help pay for services to children in foster care.
  • Wilson – Is there anything specific about those services that it covers?
    • It covers residential placement services, administrative costs, and other supported services.

 

Audrey Carmical, General Counsel, Department of Family and Protective Services

  • Update on the status of the current class action lawsuit. Highlights:
    • The 5th circuit court of appeals dismissed some of the district court’s rulings in October. District court modified the order and sent it back to the 5th
    • The state is currently appealing specific provisions in the modified injunction.
    • Still included in that order, but not in the current exceptional item, are provisions that require an extensive IT system and capped caseloads.
    • Exceptional item reflects the possibility of the stay being lifted and the order taking effect during the upcoming biennium. The cost included in the estimate are primarily those having to do with training, staff and caregivers, and tracking and monitoring various provisions.
  • Howard – Do you have any idea on what the cost of litigation is to date?
    • Estimates about $7 million but can provide final numbers.
  • Howard – Highlights that IT is an issue that needs to be resolved across many agencies.
  • Wu – Asked for clarification on the definition of community-based care.
    • It refers to community-based care as passed in SB11. It is in two stages.
    • 1st stage is placement and services to children and 2nd stage is the case management services. The department has not moved to stage two in any catchment areas yet.
  • Wu – Which areas on here are proposed for phase 2?
    • We are requesting exceptional items for Region 3B – Fort Worth Area, Region 2 – Abilene, Wichita Falls, and Bexar County, as well as for Lubbock, who will move into the startup staff.
  • Wu – Points out that going from stage 1 to stage 2 is a big jump because private providers take over the job of DFPS as the case worker. Not many states have a DFPS system where cases are not handled by the government.
    • Kansas and Florida outsource of their system. Other states have various parts of their system outsourced.
  • Wu – Cautions the department to be careful going into phase 2. Emphasizes the need for results from phase 2 before allocating more money to spread it throughout the state.
  • Wu – Worried whether or not there would be any results before funding phase 2.
    • There are metrics and performance measures in the contract. Stage 2 has not been rolled out yet on any site, however.
  • Minjarez – The department makes a reference for the need in additional investment to pull down the federal match funds, what is the dollar amount of what this investment should be?
    • We do not have that amount yet. The federal government has released 13 programs so far that they believe will be funded through prevention services. None of those programs are widely used in Texas.
  • Minjarez – The department mentions prevention, substance abuse services, and the other services are optional, has the ACF provided any guidance as to what the optional prevention services will include?
    • They released 13 programs thus far that anticipate funding. They do plan to release more.

 

Kezeli Wold, Associate Commissioner, Adult Protective Services

  • Provided an overview of the program’s functions and available resources. Highlights:
    • APS is requesting salary levels on par with CPS.
    • Aging population has increased caseload.
    • APS is experiencing high turnover rates.
  • Howard – Asked for insight on the recourse available through DFPS for constituents who are affected by health providers.
    • It depends on several factors, such as Medicaid vs Private pay funding sources. HHSC does Medicaid investigations and APS does private pay investigations.
  • Wu – With the oncoming bubble of baby boomers hitting retirement age, do you have a predicted measure of your future caseload?
    • We have a forecast and have an exceptional item to maintain current caseload. We can share our forecasting. We forecast using pragmatic numbers and do not use population as a base.
  • Wu – As caseload goes up, and case-to-worker ratio stays flat, it will drive case workers out of the system. Are you taking this into consideration?
    • The two primary drivers for turnover are workload and pay. This puts our clients at risk because as workloads grow, our caseworkers have to prioritize, and some cases could go unseen.
  • Toth – What is a typical day for a caseworker?
    • They see anywhere from 3 to 5 to 8 depending on caseload. Our caseworkers are mobile workers, so they are usually on the road going house to house.
  • Toth – Do you keep workers confined to a regional area?
    • Yes, we have 500 caseworkers to cover all 250 counties of the state.
  • Toth – What is the typical number of cases a caseworker will have.
    • The average daily caseload runs about 30-32. Right now, we are at about 34. It varies through the year.
  • Toth – Of the downturn of 8.5%, what percentage of people are just retired?
    • We can get you the number of people who retired. The majority, however, are going to other jobs. Our staff is making around 34-40K a year starting salary, so they are going elsewhere to get a better pay.
  • Toth – What do you see as the main contributing factors to turnover?
    • Pay grade and heavy caseloads.

 

Health and Human Services Commission

Courtney Phillips, Executive Commissioner, Health and Human Services Commission

  • Provided an overview of the department’s functions. Highlights:
    • Potential opportunities to improve that are being worked on: Reform of procurement and contracting; improvement of oversight of managed care; update on plan to modernize state hospital system.

 

Mike Maples, Deputy Executive Commissioner, Health & Specialty Care System

  • Provided an overview of the state hospital system and redesign efforts. Highlights:
    • Working to collaborate with academia.
    • Working to enhance patient safety; expand maximum security capacity; decrease waiting list.
    • 60% of the population served today are a criminal code commitment. 40% are those not guilty by criminal insanity. The 60% was 20% 8-10 years ago.
  • Rose – Can you provide us with list of the areas where patients are waiting?
    • Yes, we will provide that to you.
  • Maples continued to provide an update and overview of their ten-year plan. Highlights:
    • Contracting with UT health to provide physicians.
    • 350 bed capacity is already paid for from $300 million draw.
    • Pending projects are building a new hospital in Dallas; and partnering with Texas Tech to increase capacity in West Texas.
    • We are currently looking at options for people who need structure, but not at the level of a psychiatric facility.
    • Third of current capacity has been there for more than a year, so we are looking at the use and efficiency of our beds.
    • People are waiting over 240 days for non-violent commitments, so we are working with jails to initiate treatment.
    • There is an exceptional item to increase the pay of direct care personnel.
    • About $716 million is needed for projects.
    • Overall needed for phase 2 is $784 million, which is included in the exceptional item.
  • Wu – Can you provide us with a summary of total capacity for each category of patients, over the next ten years.
    • We can provide that. Overall it is about 2160 beds. 20 of those beds are currently offline. Projects that are paid for will add 350 beds.
  • Rose – Asked for an overview of the current waitlist.
  • Sheffield – 60% of the population are criminal code, why has this changed?
    • There has been a trend in forensics to identify those who are mentally ill. We have become more develop in alternatives to coming into the state hospitals, so those who are involved in the criminal justice system are ending up in the state hospitals.
  • Sherman – Expressed concerned on waiting days and the fact that there is not a state facility in the Dallas Metro Area. What are the projections on how the Dallas facility will impact waiting days?
    • We have not made any projections because we have not even been approved for the preplanning of that project. We do believe, however, that having a facility in Dallas will relieve capacity and alleviate the waiting list.
  • Sherman – You mentioned the use of a differed maintenance fund, what is the balance of that fund?
    • Last session we were appropriated about $160 million for both State Hospital and State Supported Living Centers. We have an exceptional item coming forward with our maintenance needs.
  • Sherman – can you explain to me the by beds locally concept?
    • With the inpatient capacity we have, we looked at the capacity at local hospitals so that we could appropriate money to them to divert patients. E.g., John Peter Smith in Fort Worth.
  • Sherman – Does it involve their medical staff as well?
    • Correct, they buy the bed and medical staff of the hospital.

 

Trey Wood, CFO, Health and Human Services Commission

  • Provided an overview of the state Medicaid program. Highlights:
    • 2018-2019 appropriated nearly $29 billion in general revenue. 81.2% went directly for the Medicaid client services program.
    • Key budget drivers: Caseload is estimated to increase by 1% each year of the biennium and 4½% for CHIP; cost growth for Medicaid program is estimated to increase 3.2% and 5.5% for each year of the biennium.
    • Estimated caseloads are assumed to be identical to those in HB1.
    • Texas and Medicaid FMAPs are 58.19% for FY19.
  • Wilson – Why was there a decrease in caseloads for FY17-19?
    • We attribute that to the Texas Economy.
  • Cortez – The Medicaid caseload is trending on a stagnant line, correct?
    • Yes, we have been relatively stable in terms of caseload.
  • Cortez – You mentioned that a majority of these cases are children, and yet, Texas ranks 50th in uninsured children, correct?
    • I am not aware of that percentage.
  • Cortez – We have a flat caseload, yet he has so many uninsured children?
    • That can be contributed to the eligibility that we have for the Medicaid program.
  • Cortez – Points out that we should be insuring more children.
    • From an eligibility perspective, we have not seen any changes in the way that we do that. Fewer people are coming through the door that are eligible. We have populations in Texas that don’t qualify for the Medicaid program, such as non-citizens.
  • Cortez – Emphasized that more children should be insured.
  • Toth – What percentage of births in Texas are Medicaid births?
    • 53% of the births in the state of Texas are covered by the Medicaid program.
  • Toth – Non-citizens are not eligible for Medicaid, but if they go into a hospital, will that hospital be reimbursed by Medicaid?
    • Federal law requires hospital to provide coverage, and there is an emergency Medicaid program that will pay to stabilize that individual.
  • Toth – is pregnancy considered an acute state?
    • Yes, the birth would be covered.

 

Stephanie Muth, Deputy Executive Commissioner, Health and Human Services Commission

  • Continued the overview of the Medicaid program. Highlights:
    • Caseload growth has been the primary increase in costs related to Medicaid from 2008-2017. Caseloads grew 41% during this time period. Per person, per member cost, increased 14%, equivalent to 1 ½% per year.
  • Howard – what accounts for the discrepancy in cost?
    • A good portion of the increase is the movement to managed case from fee for service. Also, Medicaid does have levers that private health insurance cannot control. E.g., rates.
  • Howard – So a factor could be low reimbursements compared to the private sector?
    • That could be a factor. Nevertheless, our 1.5% per year cost growth is still favorable compared to other states.
  • Howard – Points out that although it is good to save money, Texan’s health care is still a priority.
  • Muth continued presentation. Highlights:
    • 70% of caseload is non-disabled children, representing 30% of the cost of the Medicaid program. Aged and disabled population makes up 24% of the caseload, representing 61% of the cost.
  • Zerwas – Points out that the state is a leader in establishing waiver programs, but also looks to save money on biggest spends.
  • Muth continued presentation. Highlights:
    • Two models of service delivery in Texas: Fee for service (5% of Medicaid population) and Managed care (95% of Medicaid population).
  • Zerwas – what category do the medically dependent fragile children fall under?
    • They are in the MDC program and the STAR-Kids program under managed care.
  • Zerwas – Addressed the members about the Star Kids program.
  • Muth continued presentation. Highlights:
    • STAR program serves around 67% of the Medicaid managed care population.
    • Across the thirteen service delivery areas, there are more than 40 contracts related to Medicaid managed care.
    • Managed care is effective in financial oversight because of the standards for reported financial data included in the contracts. Elements unique to the Texas contracts include caps on administrative expenses and limits on profits.
    • Contracts require manage care organizations to submit quarterly financial reports, which include medical and administrative expenditures.
    • In addition to the quarterly reviews, external auditors review the financial reports and validate expenditures.
    • If a managed care organization pays more than the allowed cap on administrative expenses, that counts towards the calculation of their profits. In Texas, there are profit sharing requirements in contracts. If a managed care organization’s profits are less than 3%, there is no profit sharing with the state. Anything above 3%, there is a profit-sharing agreement and they must return some of the profit to the state.
    • In terms of contract terms to addressing noncompliance, there is anything from corrective action plan up to liquidated damages or suspension of default enrollment. Remedies are taken based on the severity of situation.
    • There has been a focus on oversight, which is seen through the increase in liquidated damages collected. In 2016, $5.2 million was collected in liquidated damages. In the first three quarters of 2017, $27.3 million was collected in liquidated damages.
    • Six key areas to strengthen oversight:
      • Network adequacy: Improving accuracy of provider directory; increasing use of telemedicine; automating time and distance standards.
      • Complaint process: establishing common definitions and categorizations.
      • Clinical oversight: expanding utilization review resources; collecting and analyzing prior authorization data.
      • Outcome focus performance management: asking managed care organizations for the things that matter.
      • Service and care coordination: specifically, on the STAR health service and care coordination; establishing common definitions and categorizations.
      • Administrative simplification: timely claims payments; establishing a new provider management enrollment system.
    • Munoz – Regarding liquidated damages, when will the last quarter of 2017 be available?
      • It will be available in the next month.
    • Munoz – When will the 2018 liquid damages collections chart be available?
      • We will get back to you on the exact date.
    • Munoz – How many referrals has the agency made to OIG concerning any managed care companies having issues with contracts.
      • From a contract oversight perspective, I don’t believe we have identified anything that would have to go to OIG.
    • Munoz – What is the difference between managed care organizations being able to offer value added services versus other health care providers not being allowed to do that.
      • If you are referring to marketing restrictions, I cannot speak on that part.
    • Munoz – If you were to take the last four years, how much has managed care saved to date? Do you have a number?
      • I do not have a number. But last session, rider 61 had an independent entity evaluate managed care, and they provided a range of savings.
    • Munoz – Who was contracted to do that evaluation?
    • Munoz – Do you know what the cost was for that evaluation?
      • I will get you the cost of the report.
    • Munoz – There has been reports that about $400 million in damages and sanctions against managed care companies has been reduced. Are you aware of this?
      • I am not aware of an audit that speaks to that. There was reference to this in a newspaper article.
    • Munoz – Are you familiar with that article?
    • Munoz – Is any of that information contained in the article incorrect?
      • The period of time that the article spoke to was prior to my time as Medicaid director. One of the things I put in place was a formalized process whereby staff have to document any recommendation around a liquidated damage; therefore, any reductions or waivers would be documented. I would not be able to say what happened prior to this, because there was no documentation process in place.
    • Munoz – There was no written documentation prior to your tenure?
      • There was documentation regarding what was assessed, but there was no documentation in terms of the decision-making process and whether staff made any changes to recommendations.
    • Munoz – Going back to 2011, could you at least provide us with what the recommendations were to asses a liquidated damage?
      • Since that was not documented, all I know is what was assessed. I can provide you that since 2018, when we put in the formalized process.
    • Munoz – So there would be no emails or records that would highlight any recommendations made to assess amounts in liquidated damages?
      • Not that I am aware of.
    • Munoz – Can someone look into this?
      • We can, but there was not a regular consistent process that was applied.
    • Munoz – As director now, don’t you find that troubling?
      • Yes, that why I put in the documented process.
    • Munoz – Don’t you think that this is something the OIG should investigate to find out why there was no documented process? And who was involved?
      • I would leave that decision up to the OIG.
    • Davis – Would you mind providing us with a copy of the Texas Medicaid and Chip Reference Guide?
      • Will do.

 

Victoria Ford, CPO and Interim COO, Health and Human Services Commission

  • Provided an update of the procurement and contracting department. Highlights:
    • Conducted a review to find procurement errors, and either fixed the errors or canceled the procurements.
    • Worked with state auditors, governor’s office, DIR, and comptroller’s office, to review procurements and ensure that daily business was brought into compliance.
      • Put in place a compliance and quality control division.
      • Developed a comprehensive check list for purchasers in the procurement team.
      • Developed a similar check list for the goods team, and one for the services team.
      • Fixed and updated scoresheet process.
    • Worked with Ernst & Young to conduct an assessment and analyze business processes.
    • Legislative funding will determine the department’s ability to fulfil the recommendations that will help optimize the procurement practice system.
    • Contracts active at one point or another in 2018 equaled 57,475.
    • Medicaid and CHIP services contracts make up around 4,000 contracts. Only 723 of those contracts are not provider enrollment contracts.
    • There is currently an effort to modernize IT department.
  • Capriglione – When you look at the maturity model, how did we end up in the position we were at?
    • We spend a lot of time focused on how to get the client to the service, on contract management, and on front facing pieces. We did not focus on measuring the level of performance of our purchasers.
  • Capriglione – Do you picture a point where you will go through another one of these assessments to evaluate how you are doing?
    • There is an evaluation component in the Ernst & Young contract.