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The House Appropriations -SC on Article II heard invited and public testimony regarding Interim Charge #4, including HHSC Managed Care contracts and Interim Charge #10 relating to the Early Childhood Intervention Program.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it 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.

Interim Charge 4, including: When reviewing the Health and Human Services Commission’s (HHSC) managed care contracts, determine if HHSC has adequate data, staff, and processes to provide appropriately rigorous contract oversight, including but not limited to the use of outcome metrics. Consider whether HHSC properly enforces contractual sanctions when managed care organizations (MCOs) are out of compliance, as well as how HHSC uses Medicaid participants’ complaints regarding access to care to improve quality.

Ben Cross and Mike Diehl, Legislative Budget Board (LBB)

  • Gave presentation
  • 48 active Managed Care contracts worth $91.7 billion
  • LBB is authorized to conduct contract oversight
  • Reviewed 2018-2019 appropriations for Medicaid contracts and CHIP Constricts
    • Rider 195 requires HHSC to obtain written approval from the LBB and the Governor before making any transfers of funding, FTEs, or capital budget authority into or out of either strategy
    • HHSC has not requested any transfers into or out of either strategy for the 2018-2019 biennium
  • Discussed agency requested funding- HHSC LAR for 2018-2019 biennium included request for $13.7 million in All Funds and 79 FTEs for contract management
  • Reviewed costs of MCO contract oversight
    • $9.1 million All Funds
    • $3.8 million General Revenue
  • Reviewed costs of HHSC internal Audits
    • $5.7 million All Funds
    • $2.3 million General Revenue
  • MCO contracts require annual financial statistical reports (FSRs)
    • The FSR serves as the basis for the calculation of Experience Rebate payments to the state.
  • Discussed External Quality Review with the EQRO and the Acute Care Utilization Review
  • Bonnen- referencing pg. 6 showing general appropriations for Medicaid and CHIP contracts and administration, there is no care paid for in the $1.3 billion?
    • Correct
  • Davis- on page 12 the state is appropriating a lot of money for contract oversight, but reports showed that HHSC was allowing for non-allowable items, why didn’t anyone in HHSC find issues that the state auditor found?
    • Sarah Keeton, LBB- defer to the agency for response to that questions

 

Charles Smith and Stephanie Muth, Texas Health and Human Services Commission (HHSC)

  • Gave presentation
  • Regarding funding allocations, $23.2 billion is dedicated to FIFA Service and Managed Care funds
  • The remainder of funds flows through contract administration which ensures claims are being paid, etc.
  • Discussed Medicaid cost growth
    • Caseload has grown 35% since 2016
    • Largely growing in relation to population growth
    • Medicaid cost per person is growing at a slower rate (5.8% growth)
  • Working toward more holistic outcomes
  • Bonnen- how are you doing that?
    • Through value-based purchasing and other strategies
  • Working with stakeholders to find more holistic approaches for health care in Texas
  • Bonnen- the distance between agency executives and those receiving care is pretty large, so the intention is good but very theoretical.
  • Focusing on outcomes is the best way to get long-term value from Medicaid
  • Bonnen- the concern is that the plans are good are antagonizing physicians and not achieving results, a concern that strategies are adding to the problem not solving it
    • The process cannot be top-down driven and required stakeholder input
  • Bonnen- may consider proof of concept trials to be sure that the strategies work as intended
  • Briefly discussed the growth of managed care- 92% of growth is in managed care
  • Discussed various contract oversight tools
    • Recently implemented operational review process
  • Detailed financial oversight actions
    • A quarterly financial report provided by MCOs
    • Specific staff auditing and validating the quarterly report
    • MCOs annual financial audit- 2 independent auditors conduct this review
    • Audits are completed one year after books close
  • Audits are conducted 12 months after book close and the timing of SAO audits often allow them to reveal items that otherwise haven’t been found yet by the agency
  • There is a cap on administrative expenses, MCOs can spend more than that but is not recognized
  • Discussed MCOs profit sharing with the state
  • Davis- have we seen a lot of profit sharing?
    • In FY ’17 there were profits ranged between 2.3-2.5% for MCOs so the state received $112 million back
  • Been developing new modules to review the value-based purchasing
  • Performance audits include risk scoring items
  • Discussed utilization reviews conducted by nurses to ensure that people are correctly entering patients into Star Plus System
  • Davis- how often are the utilization reviews being conducted?
    • Constantly conducting reviews with an annual report required
  • Davis- when did the legislature make that a requirement?
    • Believe in 2013
    • Reports are produced on an annual basis
  • Davis- there must have been some serious issues regarding the management and services?
    • That is correct, which is why this is such a good oversight tool
  • Davis- discussion on liquidated damages process
    • Many new procedures regarding liquidating damages
    • As strengthening oversight tools, seeing an increase in liquidated damages
  • Working on strengthening capabilities of analyzing complaint trends
  • Next steps include
    • Maximizing current resources
    • Implementing annual review of deliverables provided by MCOs
    • Working on a proposal to increase resources on oversight staff and contract review
  • Began discussion on internal audit processes
  • Important that auditors remain independent
  • Used to find generalized solutions across the agency
  • Specific audit in August 2016 audited enrollment broker vendors
    • Recommends: improve critical contract monitoring processes, clearly define contract monitoring, etc.
    • In response to the audit, found inconsistency in the timing of oversight which has been adjusted
    • Better defining roles of those involved in the auditing process
    • Have enhanced monthly desk reviews MCOs are sending in, strengthening deliverables as a result

 

Sonja Gains, HHSC

  • The audit conducted in September 2017 was for monitoring mental health services
  • Over 30 performance measures used in audits
  • Used to ensure LMHAs are meeting expectations
  • About 6 items identified regarding shoring up procedures
  • Davis- would like to see more specific details regarding the audit
    • Will provide the information, but includes:
    • 84th required to engage 3rd party administrator to conduct an audit, still engaging administrator to implement plan
    • Required to withhold 10% of funds from mental health providers until at the end of year proved that they meet measures, determined that practice was an additional administrative function, moving toward recouping as opposed to withholding
    • Did not have trending data for outcomes across the whole system, did have multiple individual measures, working toward more consistent and robust trending
    • Contracts relating to crisis hotlines and services showed a need for better services and procedures

 

Ron Pigott, HHSC

  • 84th SB 20- new audit policies have been implemented including risk analysis items for contract review
  • Vastly improved enhanced monitoring guidance to contract managers and have made a huge difference
  • Updated training requirements for contract managers
  • Working with LBB to add everything into portal and identifying contracts appropriately

 

Charles Smith and Trey Wood, HHSC

  • Davis- update on CHIP funding?
    • Will get enhanced FMAP for CHIP
    • CHIP has been extended 10 years
    • Increased level of funding needed to make up for loss of super-enhanced FMAP
  • Davis- what is happening with federal; dollars for women’s health?
    • In January began negotiations with CMS on Healthy Texas Women Program, which are ongoing
    • Regarding AG letter, is aware of
  • Davis- did you try to make corrections?
    • Do not have authority to edit the letter
  • Davis- were you consulted and what has your response been?
    • Were not consulted
    • Have not written a letter to HHS to correct inaccuracies

 

Jamie Dudensing, Texas Association of Health Plans

  • There are many tools for managed care including bringing in innovative services
  • Provides continuation and consistency of care
  • Provides budget certainty
  • Improves the quality of health care and creates a community of care
  • Contract oversight has the goal of bringing additional improvements to the healthcare system
  • Affordable coverage factors- MCOs take on full financial risk, administrative costs are capped, profits are capped along with profit sharing
  • Average cost per member per year growth is significantly lower than outside plans
  • Creates efficient Medicaid dollar
  • Davis- where does recouped profit dollars go?
    • It is put into GR
  • Goal of contracts is to get higher quality health care and MCOs are measured on those metrics
  • Discussed great prenatal care
  • Davis- if there is great prenatal and women’s care, why does Texas have such a high rate of maternal mortality?
    • Could not say specifically
    • Prenatal care visits were exceeding private market, does not speak to improving maternal mortality
    • Can provide additional information
  • Creating access to care that did not exist prior
    • Medicaid plays a huge role in child health care in Texas
  • Moving forward- value-based contracting being added to MCOs
    • Intended to align quality measure to the system
  • Does add complexity to providers due to taking on additional risk
    • Changes based on sophistication of provider group
    • Important to provide flexibility to providers when implementing
  • Need to have a conversation about outlining contract goals and aligning contracts to desired outcomes
  • Interested in the program having a name
  • Ensuring transparency in extremely important
    • Having more real-time information would be very beneficial
    • Modernizing contract should include deliverable matrix on one place online
  • Support alternative payment models
    • Need to ensure flexibility
  • Davis- need for MCOs to play role in reducing the maternal mortality rate

 

Interim Charge 10: Examine the Early Childhood Intervention Program (ECI) in Texas, including a review of historical funding levels, programmatic changes, challenges providers face within the program, and utilization trends. Evaluate ECI’s impact on reducing the long-term costs of public education and health care. Identify solutions to strengthen the program.

 

Ruston Dudley, LBB

  • Presented Infographic
  • Gave presentation
  • ECI provides services to children up to the age of 3 which have developmental delay, certain medically diagnosed conditions, or auditory or visual impairment
  • Transferred from the Department of Assistive and Rehabilitative Services (DARS) to HHSC in 2016 after 84th legislature
  • Discussed funding within and outside General Appropriations from 2014-2019
    • Appropriations include GR, foundation school fund, Medicaid federal funds, IDEA, Medicaid and Chip Strategies
    • Outside general appropriations include private insurance, TRICARE, Family Cost Share, locally collected funds
    • Total services funding in 2017- $193.6 million
  • Briefly discussed ECI expenditures
  • 2017 target number of children served- 27,170
    • Actual number served 28,681
    • Goal for 2019 is 30,004
  • 2017 average service hours per child- 2.85 (target was 2.75)
  • 11 ECI providers have terminated contracts
  • Discussed ECI 2018-2019 Riders

 

Charles Smith, Lindsey Rogers and Trey Wood, HHSC

  • Gave presentation
  • Expect to see ECI funding increases correlated with caseload, but has not been the case
    • Financial burden on the state
    • 16 providers have left
  • Bonnen- funding is treated as a block grant, is there no consideration for demographic adjustment?
    • Discussed with feds that state must make changes to eligibility to reduce fiscal implications of the program
    • Suggested that the feds look at requirements of the program, didn’t see any motivation to deal with the issues
  • Bonnen- how does Texas funding stack up to other states?
    • Do not have specific amounts but sustainability challenges are a problem nationwide
    • Will follow up with funding trends
  • Gonzalez- how does the loss of the provider impact the program?
    • Some providers expand the area of coverage
    • Stretches funds available
  • Davis- since this is a federal entitlement program if we lose providers could the state be sued for failing to provide the entitlement?
    • It is possible but would fall on legislatures to make adjustments to avoid a scenario like that
  • Davis- changes would have to be approved by Department of Education?
    • Correct
  • Davis- do we know what other states are doing as far as eligibility?
    • Texas is in a class of states that operates the program similar to other states
  • Gave brief overview of ECI
  • ECI has changed the trajectory of child’s life and saved taxpayer dollars
  • There is a family co-share but those with Medicaid coverage are exempted from paying out of pocket and those paying out of pocket will do so on a sliding scale
  • There are several ways a child can become eligible such as critical developmental delay
  • Operated through cost-reimbursement
  • All children determined eligible shall be served
  • Federal funding has remained fairly level
  • Davis – is there a waitlist
    • There is no allowability of a waitlist, it would be inconsistent with federal regulations
    • May drive providers into the red because they have to provide services
  • 18 providers have left between 2010 and 2018
  • ECI contractors are exceeding targets but they must make up the difference in costs
  • Ongoing challenges include: Part C requirements, population growth, contractors and multiple contractors have indicated the likelihood they will exit the program
  • Map provided to committee illustrating potential gaps in coverage based on contractors saying they will exit the program
  • Davis – do services that place at the school?
    • Federal requirement is natural environment

 

Patricia Forest, practicing pediatrician in San Antonio

  • Was a teacher before she became a pediatrician
  • Those going through ECI have shown marked improvement
  • Reviews statistics including 46% in ECI did not need services by the time they reached Kindergarten due to early push in of services
  • Required to refer if child not reaching developmental delays, Texas physicians make a bulk of referrals to ECI so they depend on a robust network
  • Robust network is in jeopardy, they need more to the needed job
    • Decrease in per child allotment in certain circumstances, etc.
  • Appropriated contact funding is not being provided
  • ECI contractors saying the amount of funding per child has been decreased
  • Urge committee to:
    • Maintain functional eligibility criteria
    • Fully fund HHS LAR exceptional item for growth
    • Increase funding per child to get closer to covering actual cost per child
  • Gonzalez – how off is Texas on actual cost per child?
    • Will try to find that out and get it back to the committee

 

Laura Kender, MHMR Tarrant County

  • Recalls grassroots efforts for this program
  • Notes trauma can occur from a variety of experiences and early intervention in ECI is important
  • Eligibility must not become so restricted that children identified by federal law do not quality
  • ECI services is comprehensive and meets above and beyond licensure requirements
  • Relationship based teaming reviewed
  • Reviewed outcomes goals – measure child and family outcomes
  • Chart provided on current funding per child compared to 2010, amounts are less today
    • Results are fewer dollars on direct investment
  • In 2017 enrollment count avg. 400-500 less than their actual monthly enrollment

 

Chasey Reed-Boston, Bay Area Rehabilitation Center

  •  Chart provided illustrating unfunded (red) and funded children (blue)
    • Less than 50% of funding is provided for children in blue
    • No funding is provided for children in red
  • Narrowing eligibility is a tricky discussion
  • Funds received divided by children served brings the cost per child to about $2,000 per child
  • Many expenses are not included in funding or reimbursements, only direct services are funded
  • Discussed utilization trends
    • 40% of children require high-level services
    • Majority require multiple therapies

 

Christi Shaw, West Texas Centers

  • Supports 23 rural west Texas counties
  • Requires being creative with funding
  • Telehealth services are not covered but hopefully will find a way to cover that in the future
  • Autism identification resources are extremely limited
  • Discussed number of people served above contract amount
  • Does work closely with CPS, accounting for 30% of referrals
  • Regarding eligibility, if constrained would likely be losing CPS children from the program
    • Recommends that be the last option in terms of reducing costs
  • Return on investment to ECI should be investigated as to the savings to school districts

 

Public Testimony

Elizabeth George, Self

  • Discussed positive personal experience with ECI

 

Linda Ledwig, Region 3 ESC ECI

  • Funding should adequately provide for services provided
  • Funding should pay for caseload growth

 

Charlsey Flynn, Helen Farabee Centers

  • In transition into new agency, loss of providers caused loss many children receiving services
    • Lost half of staff, and a majority of equipment
  • Need adequate funding for all ECI programs
  • Sheffield- how do reimbursements compare to private insurance plans
    • It doesn’t compare because there are so many things that are not eligible for reimbursement
  • Bonnen- does the program have a restriction on a number of visits?
    • It does not, the services are provided even without reimbursements
    • Number of visits is individually determined

 

Courtney Hoffman, Texas Association of Behavior Analysis

  • Contracts are being canceled at alarming rate
  • Recommends addressing varied ECI funding levels across the state
  • Fund caseload growth
  • Need additional flexibility in practice management
  • Support private provider insurance coverage of ECI

 

Claire Markle, Self

  • Described specific personal examples of ECI success
  • ECI cost per child has decreased significantly in Nueces County
    • 2016 began cutting personnel and benefits due to lack of funding
  • Need to fund growth and cost per child

 

Stephanie Ruben, Texans Care for Children

  • Would save GR money to ensure insurance covers some of these services
  • Disproportionality of services lost on certain demographics
  • Federal/state funding- many states provider significantly more from GR because of the ROI

 

Megan Storheim, Self

  • Described personal experience with ECI programs
  • Davis- you work in ECI, was your experience with your child what inspired you to work in ECI?
    • Correct

 

Jolene Sanders, Easterseals Central Texas

  • Specialized skills training and targeted case management should qualify for reimbursement
  • Davis- in terms of denial from commercial insurance plans, is that historic or recent?
    • That has been an ongoing issue

 

Amy Litzinger, Easterseals Central Texas

  • Recommends ECI be viewed as an investment
  • Encourage reviewing funding streams which may also be applicable

 

Don McBeth, Texas Organization of Rural and Community Hospitals

  • Riders were intended to minimize loss from treating Medicaid patients
  • Agree that CMS will not let Texas micromanage MCOs but has the right to monitor specific requirements in the contracts
  • Needs more precise language in contracts with rural hospitals

 

Will Francis, National Association of Social Workers

  • Complaint system for providers
  • If a provider has a complaint they are referred to HPM, would like to see a health plan monitor

 

Cathy Cranston, Adaptive Texas

  • Need to have MCOs measures be developed with stakeholders and be linked to the contract

 

Bob Cranston, Adaptive Texas

  • Relayed personal story
  • Need balance with legislation and the folks at the ground level