On February 1, Senate Finance heard from the remaining agencies on Article II – Health and Human Services:
- Department of Family and Protective Services
- Department of Aging and Disability Services
- Special Provisions Relating to All Health and Human Services Agencies
- Health and Human Services Commission (also included Medicaid discussion)
In regards to Medicaid the Legislative Budget Board (LBB) summary testimony reviewed the following:
- Rate and Cost Reductions
- Cost is held to fiscal year 2011 costs, which include a 1% provider rate reduction from the 5% reduction plan implemented in 2010-11 and reductions for one-time rate increases under Article II, Special Provisions Section 54, General Appropriations Act 2010-11.
- The introduced bill includes a 10% provider rate reduction totaling $1,125.7 million in General Revenue Funds over the biennium.
- HMO premiums are held to fiscal year 2010 levels before being reduced by 10% to account for increases in rates in fiscal year 2011, despite the 1% rate reduction. The biennial cost savings realized is approximately $217.7 million in General Revenue Funds.
- Medicaid optional services are reduced by $45.0 million in General Revenue Funds over the biennium (approximately 10% of agency estimates of Medicaid optional services costs).
- The introduced bill reduces fees that have increased over the past two biennia. This includes a $1 reduction for Vendor Drug Dispensing Fee, a fee paid to pharmacies per prescription, resulting in a biennial savings of approximately $26.8 million in General Revenue Funds. Fee reductions also include a $1 reduction to Primary Care Case Management (PCCM) fees paid to primary care providers for managing patient care, resulting in a biennial savings of approximately $8.0 million in General Revenue Funds.
- Children’s hospital upper payment limit (UPL) payments, which are solely funded with General Revenue Funds, are reduced by 100%. “UPL” is defined in federal regulations as the difference between what Medicaid actually paid for a service and what Medicare would have paid for the same service. This reduction results in a biennial savings of $25.0 million in General Revenue Funds.
- General administrative reductions in travel, contract costs, IT costs, and unfilled positions result in a biennial savings of approximately $38.2 million in General Revenue Funds.
- Rider 61 outlines savings initiatives for HHSC to achieve a reduction of $450.0 million in General Revenue Funds included in the introduced bill in the Medicaid strategies. These savings can be allocated across the health and human services agencies.
- Rider 62 assumes Texas will receive a more favorable FMAP over the biennium and reduces Medicaid by $1.0 billion in General Revenue
- Funds and increases Federal Funds by the same amount.
- Managed Care Expansion
- HHSC included a request for expansion of the managed care model for the provision of Medicaid and CHIP services as a cost savings mechanism in the Legislative Appropriations Request (LAR) document. The introduced bill includes the costs and savings of the expansion of the managed care model. In strategy B.4.2, Expansion of Managed Care, there is a biennial increase of $171.3 million in General Revenue Funds. This is the net total of the transfer of funding from DADS (for the provision of certain long-term care services related to the expansion of managed care to contiguous and urban counties and to South Texas) totaling $524.5 million in General Revenue Funds and the savings realized at HHSC through the managed care model, totaling $353.2 million in General Revenue Funds. Managed Care expansion at HHSC will also include the expansion of the Exclusive Provider Organization (EPO) model to rural counties, the capitation of Medicaid dental services, the “carving-in” of hospital costs to STAR+PLUS managed care premiums, and the capitation of Medicaid and CHIP Vendor Drug programs.
The LBB also noted that the introduced bill does not include funding to serve the projected number of eligible clients who will enroll in the Medicaid program or for anticipated increases in cost.
Committee members discussed managed care expansion and its potential to generate cost savings while other committee members voiced their concern of access to care being negatively impacted.
Health and Human Services Commissioner Tom Suehs noted that federal health care reform “provides no flexibility for reducing caseload eligibility.” He noted that if savings cannot be met, then they will have to target the following additional reductions:
- Impose Substantial Rate Reductions, e.g., reimburse hospitals at the minimum SDA per DRG
- Maximize Client Cost Sharing (current federal law limits ability to impose cost sharing)
- Reduce or Eliminate Other Medicaid Optional Services
For exceptional items, HHSC presented the following requests:
- Maintain Access to Primary Care Physicians & Specialists for Medicaid Children
- Maintain Access to Primary Care Physicians & Specialists for CHIP Children
- Maintain Medicaid Client Services with S.B. 1 Savings Initiatives
- Maintain CHIP Client Services with S.B. 1 Savings Initiatives
- Support FY 2012-13 Medicaid Cost Trends with S.B. 1 Savings Initiatives
- Provide Eligibility Support Services Costs Associated with Caseload Growth & Managed Care Expansion
- Add Eligibility Determination Units to Keep Pace with Caseload Growth
- Support Veteran’s Health Initiative
- Maintain Physician’s Loan Repayment Program
- Maintain Health Home Initiative
- Maintain Ombudsman Services
- Increase Attendant Hourly Wage 50 Cents Annually
- Information Technology – HHS Security Improvements
- Implement MEPD Asset Verification System
- Upgrade Pharmacy & Medication Administration Applications for State Hospitals & State-Supported Living Centers
- Implement Acquired Brain Injury Waiver
- Provide GR Funding in Lieu of Rider 62 Reduction
HHSC presentation: http://www.hhsc.state.tx.us/news/presentations/2011/Finance-Committee-0211.pdf
To view the complete LBB document on Article II: http://www.lbb.state.tx.us/Senate_Finance/SFC_Summary_Recs/Agency_529.pdf