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The Subcommittee on Article II heard testimony regarding House budget recommendations on the Health and Human Services Commission and special provisions in Article II.
 
Chairman Four Price

  • Current budget recommendations fund caseload growth for the state’s health programs
  • HHS enterprise recently went under an extensive Sunset review; while the Senate may have included Sunset recommendations in their budget, the House has decided to wait and let the subcommittee have input on those decisions

 
Special Provisions in Art. II
 
Malita Burger, LBB
FMAP and EFMAP

  • FMAP is anticipated to decline to 57.21% in FY15 and 57.0% in FY16
  • The EFMAP is anticipated to increase, however
    • Includes 23% increase pursuant to the ACA

Rider Highlights

  • Many riders have been deleted for multiple reasons including being unnecessary or because they may have been combined with others
  • There are two new riders related to the potential Medicaid expansion

 
HHSC
 
Christy Havel, LLB

  • Recommendations total $55.7 billion in all funds
    • 8.3% increase in all funds
    • 13% increase in GR
  • Caseload and cost assumptions create a shortfall in Medicaid of $313.5 million in GR; this need will be somewhat offset because of surplus at DADS and CHIP
  • Cost is held to 2015 average cost except for Medicaid premiums which are funded at projected federal level
  • There is an increased GR need due to a less favorable FMAP
  • Caseload is projected to grow due to Medicaid eligibility levels set by ACA as well as the transition from CHIP to Medicaid
    • Net increase in HHSC funding of $220.5 million in all funds and $22.5 million in GR  due to Medicaid’s for generous benefit package
  • Recommendations were made assuming the 1115 waiver will be renewed
  • Rep. Dawnna Dukes asked what happens if it is not renewed
    • The federal funding stream for that program will be lost; not sure what kind of gap that would create in funding
  • Disproportionate share program; Rider 86 from last budget allowed HHSC to spend $300 million in GR for the non-federal portion of DSH, the rider also prevents those funds from being used past FY1; remaining DSH funds will be distributed in March or April of 2015; recommendations do not provide any GR for the non-federal portion of DSH in 2016-17
  • Recommendations assume the continuation of cost-containment initiatives from last session and before in Medicaid
  • Recommendations do not assume continuation of PCP Medicaid rates from last session required by ACA
  • Price asked how much GR it would take to continue those rates
    • $500 million in GR; $1.1 billion in all funds
  • Dukes discussed the issue of cutting rates and not having enough Medicaid PCPs
    • Chairman John Otto noted the FMAP is still available for these rates just not the EFMAP
  • Recommendations fund CHIP totaling $141 million in GR and $1.66 billion in all funds
    • Caseload is projected to decrease because of Medicaid transfer
  • HB 1 does not include any funds to pay the health insurance providers fee or the resulting federal income tax impact
  • TANF is expected to have a slight caseload increase in FY15; recommendations continue the same funding of $62.9 million in GR
  • Dukes asked why caseloads dropped in FY13-14
    • Not sure
  • For OIG, fraud case management system is not funded in 2016-17 recommendations
  • Recommendations increase appropriations to fund program to provide mental health grants for veterans; $20 million in GR
  • For Medicaid Management Information System; in 2014 Xerox contract was ended and Accenture was contracted to serve as Medicaid claims administrator; previously Xerox made all capital expenditures related to updated the MMIS; Accenture will not take on that liability; recommendations include an increase in capital budget authority if $103 million in all funds, $28.8 million in GR for the new project
  • Dukes asked if there was a competitive bid
    • The agency can speak to that
  • Sunset recommendations; in the event the agency is not continued, funds appropriated will be used to provide for the phase-out of operations; Rider 68 – Sunset contingency

 
Kyle McKay, LBB

  • GEER report on substance use disorder benefit; expected the program would see a decrease in need for funds because of reduced need for health care upon successful completion of program
  • It was difficult to produce a conclusive evaluation
  • Report includes recommendations to modify the rider for HHSC to conduct another study and final report in 2016
  • Technique used for evaluation relied on claims data but was inconclusive; recommendation would require data improvement in order to perform evaluation; may need to extend evaluation time and produce report during interim
  • Patient movement between managed care and fee for service makes monitoring and data analysis difficult
  • Dukes asked chairman/members to talk to county judges and commissioners on the impact this has had in their community–savings, etc…
  • Rep. Sarah Davis asked how they will be measuring specific client outcomes and what the LBB will be looking at
    • Directed Davis to protocol method for outcome measures in handout
  • Overarching theme is percentage of adults who have diagnosis for substance abuse that received Medicaid funded treatment is low;
  • Rep. Armando Walle asked what penetration rate is; what is a 2% penetration rate and how was it calculated
    • Used claims data to identify those diagnosed with substance abuse disorder and who received a treatment based on substance abuse codes
  • Dukes asked for the penetration rates for areas in the footnote-Medicaid FFS, STAR- against areas that are not in; also wants demographics (region, ethnicity, age, race, gender) for the 149,000 that received service for substance use; also wants to know if treatment was voluntary or referred by court along with demographics–especially Hispanic/black youth in the court referred category to identify discrimination and provide fair and equal services to all
  • Recommendations are estimated to have no significant fiscal impact

 
Norma Herrera, LBB

  • Studies show pay for performance will likely improve quality of service
  • Recommend HHSC use rider to evaluate pay for care services and whether they improve the quality of care
  • Recommendation will have no significant fiscal impact
  • Walle asked exactly what metrics will be evaluated with this recommendation; specifically what types of infections will be monitored
    • There is no independent source that could identify the current rate of healthcare associated infections

 
Katie Fallon, LBB

  • GEER report–Improved transparency in STAR program rate setting process
  • Rates vary significantly and it is difficult to assess reasonableness of rates based on current data
  • Amend statute to more clearly describe methodology for reporting rates; more clearly identify components that are assumptions and how they were developed
  • Focused on 3 components–encounter data and how it becomes experience data; trend factors; acuity risk adjustment (health status of certain regions)
  • Walle asked whether 13 geographic regions have the same populations; and do you know why rates vary so much
    • No the populations vary significantly
    • Rates vary for dozens of reasons–age of patients for instance

 
Brian Adley, LBB

  • Overview of state’s family planning program at HHSC and DSHS
  • Women’s health program saved state $72 million with roughly $29 million of that being GR
  • Report does not include any recommendations
  • Davis asked why Texas women’s health programs has seen a decrease in federal funding
    • It’s because of dispute with feds over what providers would be in the program and how they should be tiered
  • Dukes asked why there is such little data on the program; how do we not have conclusive data in four years
    • DSHS hasn’t provided LBB with all of the data

 
Angelica Ramirez, State Auditor’s Office
Michael Simon, State Auditor’s Office

  • Recently audited the telecommunications contract at HHSC from the planning phase all the way through oversight
  • Price noted this will be useful in understanding mechanics of contracting at the agency
  • The TMS contract provides telecommunications services to all five enterprise agencies
  • Otto asked if members from the contract advisory team were interviewed
    • No
  • Otto asked if the mission of the contract advisory team is to look in depth or just at the surface
    • The amount of the contract estimate basically determines the level of depth the team goes into
  • Price noted cost estimates may start low to prevent contracts from starting at a high dollar amount; initial cost estimates should not be considered as the expected amount of the contract
    • Correct; they are sort of a place holder
  • Price asked if it is commonplace for there to be an initial cost estimate that is significantly different from what returned RFPs show
    • Not sure at this time
  • Dukes asked if it was the intent of the legislature when they put in place the additional provision for review of contracts that placeholders would be put in place; how does this help budget appropriately
    • Assume the estimate would have been a good estimate
  • Initial cost was around $47 million it was then extended to around $80 million and ultimately to $105 million
  • Dukes asked if it is common for contract amendments to take place
    • It is uncommon to submit amendments without proper support for those amendments but amendments are common
  • Walle asked who signs off on amendments
    • Generally the commissioner
  • Dukes noted there must be a team within the agency to make recommendations to the commissioner
    • There is; not sure who the team is made up of
  • Dukes asked if the initial contract had provisions allowing for renewals
    • It did but it was amendments that increased the price as well, not just an extension
  • Dukes asked what entity underestimated what services needed to be provided; the agency or the respondent
    • Would be better answered by the commission; were not able to get information on what led to the increases
  • Dukes asked what type of telecommunications were provided
    • 39,000 stations, voicemail and a sort of help desk
  • Dukes asked if any part of the contract was related to the legislative initiative related to real time data for agencies
    • Not sure based on what was seen in testing
  • Otto asked if the contract was competitively bid
    • Yes
  • Otto asked if the RFP and its detail were comparative to the initially executed contract
    • Generally speaking, yes
  • Otto asked if later amendments were things that were never mentioned in the original RFP
    • Will have to look and get back to the committee
  • HHSC did not fully comply with state requirements to manage and monitor the contract to ensure performance met contract requirements; conflict of interest forms were not fully completed; HHSC did not adequately estimate the cost of the contract
  • Dukes asked if there was conflict of interest
    • An employee who was the initial contract manager used to work at AT&T and she did not note that on her form
  • There were deficiencies in HHSCs payment process; HHSC did not review contractor invoices to line up discounts; ten discounts were not applied correctly
  • Price asked what the dollar effect of those findings was regarding discounts
    • Not sure yet
  • HHSC could not determine total amount expended on the TMS contract
  • Dukes asked if all of this was done in-house
    • Yes
  • HHSC did not verify the accuracy of contract provider information or contract monitoring reports
  • HHSC did not adequately monitor contract deliverables to ensure they were received
  • Dukes asked if it is possible that since these issues have been raised regarding agency credits that the agency could do a recovery or clawback
    • One recommendation put into the report was to go back and review invoices to see if anything was left on the table
  • Dukes noted she would like to believe that this is uncommon but in her 22 years multiple committees have been created to include participants from the auditor’s office, general services commission, comptroller’s office, contracting specialists, etc to look at teaching agencies how to better negotiate contracts; the state has had issues like this before and it should be getting better
  • Walle asked if in the findings there were any instances where invoices were falsified
    • Did not find that; found invoices that lacked some detail, also found payments being made for products that were out of scope
  • Duke asked if those items were added into scope when amendments were made
    • No

 
Sarah Kirkle, Sunset Advisory Commission

  • Sunset recommendations will have a positive fiscal impact
  • Reorganization; problem is with the nature of the system and incompletion of its setup
    • Needs structural authority and direction to move forward as a system
  • While HHSC is responsible for the whole system statutorily, this isn’t clear in practice
  • In statute a line says the executive commissioner is responsible for the system, however, in statute each agency is its own independent agency so there is infighting over authority to compel independent agencies to do things
  • Dukes believes she has never seen this infighting or any problem with HHSC being able to compel agencies to act
    • Determined this was happening in private meetings and interviews
  • Dukes noted she has seen Sunset glean certain information and problems that may not ever exist; information may be coming from contracted entities, members of the public or Sunset staff assumptions
    • Tug of war happening as recently as with the development of the LARs
  • Dukes asked if Sunset took into account HB 2292 and how some of the clients and their services ended up being lost in the bigger pool of things; want the agencies to be separated so problems can be pinpointed such as wait lists and problematic programs; thinks the quality of service will decrease under a huge behemoth type agency
    • Client service improvement is the basis of all of the Sunset recommendations for HHSC
  • The intent of 2292 was driven largely by budget savings and was intended to improve the integration of services
    • Dukes noted she believes 2292 was intended to knock people off of services, only to reduce cost; it eliminated Medicaid provider networks, reduced rates, outsourced contracts; the recommendation for consolidation is off-base
  • Price noted his understanding is that motivating factors behind the recommendation for consolidation were based on improving services and the fiscal impact was a side note
  • Davis asked how many advisory councils are associated with HHSC
    • Thirty five in statute; Sunset recommends removing thirty two of them
  • Sunset commission voted to consolidate women’s health programs at HHSC
  • Dukes asked what problems within the program need to be rectified
    • Because they are fragmented there is not a unified approach to service delivery
  • Dukes asked why the programs are different
    • They were developed with federal funding restrictions and are now almost solely funded through state revenue
  • Davis noted she believes providers will be lost because of the expanded service requirements of providers
  • Current HHSC structure prevents common sense oversight of contracting; HHSC cannot systematically elevate large or problematic contracts because of  the lack of system-wide authority
  • For OIG there are lots of issues that would benefit from a closer relationship with HHSC
    • Dukes noted there was a good reason that OIG was separated from HHSC; in order for OIG to operate as intended they need independence
  • Federal law requires that Medicaid investigation units be separated from the entity that runs Medicaid; trying to find a way to improve accountability; some portions of OIG duties need HHSC input because of the complex nature of Medicaid and other programs and the understanding HHSC has of these programs
  • Larger contract failures often boil down to the need for some common sense oversight tools; until structural systemic problems are solved much progress will not be made on contract issues

 
Kyle Janek, Executive Commissioner, HHSC

  • HHSC runs an agency that has key functions within but also is the manager for the other four agencies in the enterprise
    • 72% of dollars appropriated in Article II go to HHSC, mostly for Medicaid/CHIP
    • For FTEs, in HHSC the vast majority go to eligibility services (9,400 or 16% of all HHS enterprise employees)
  • This biennium, have successfully implemented STAR+PLUS expansion, acute care carve-in, behavioral health carve-in, and working on the nursing carve-in
  • Have established a new data analytics unit, have implemented about 1,400 DSRIP projects as well as a pay for quality program
  • Price asked what the timing of the extension for the 1115 waiver is
    • Conversations with CMS have begun and more dialogue will happen this spring
  • Price asked if Janek has any reason to disagree with the LBB numbers assuming the 1115 will be extended
    • That is an assumption without a whole lot of certainty around it
  • Walle asked what would be the fiscal impact if the waiver weren’t extended
    • It would be a pretty serious negative impact; those billions of dollars that serve that particular population would be gone
  • Walle asked if Medicaid works
    • Medicaid is a safety net program for a great number of people, the vast majority of whom are kids; along with other programs, Medicaid tries to catch as many people as necessary with the safety net while protecting taxpayer dollars
  • Walle asked what the fiscal impact would be to expand Medicaid
    • Have not considered that in some time; a few years ago it was expected to be between $80-100 billion from the state over a decade; 100% federal for the first three years and a 90/10 match every year after that
  • Otto asked if any other states have similar waivers
    • Believe so; cannot name any
  • Rep. JD Sheffield asked if there is anything HHSC sees that CMS doesn’t want in the waiver going forward
    • Not yet; working on those relationships so the communications line is open
  • Dukes asked about a cost containment rider and how it affected mental health care; caused patients to be released and have to wait to get readmitted; continuum of care is very important; please provide an understanding of whether or not that problem has been addressed
    • The behavioral health carve-in will be beneficial to the entire situation;
    • Sometimes it is difficult to look at data across agencies; can focus in on certain areas but it isn’t the same as having it all readily available within the system
  • Dukes noted education should be a big part of the push; some populations do not fully understand the importance of getting interventions and it is obvious that interventions can help prevent crimes and additional health care spending
  • Dukes noted great things have been done with the monies provided; particularly pleased with presentations made in the interim which gave real-time numbers on how waiting lists have been reduced; this session the impression has been given through LBB and Sunset that there are lots of problems and hold-ups
    • Janek noted that discussion is about how data is captured within the Medicaid system which is different than how money is appropriated and used within the system; will pool resources to try and come up with something to give a better picture
  • Rep. Oscar Longoria asked who makes decisions on who gets into the system
    • It has a lot to do with LMHAs; DSHS put together a report regarding where services can be accessed throughout the state
  • Longoria noted there are certain things that have been pointed out that prevent individuals from accessing programs such as an evading arrest charge; there are problems with getting access for patients that need it the most; jail diversion is an important piece of mental/behavioral health
    • Janek will make sure the state isn’t putting things in place that prevent access
  • Longoria noted if it is all local, HHSC needs to be more aggressive with their guidance on that issue
  • Janek continued, projected there would be a need for over $500 million in Medicaid but some funds have been identified within CHIP, DADS, DSHS, etc. that would reduce the supplemental need to $486.9 million
  • Price asked how those available funds were realized
    • Lisa Subia, HHSC noted most of it was freed up GR from getting an enhanced match for some programs
  • Price asked about change for caseload in TANF
    • Subia replied that LBB assumptions are slightly higher than HHSC estimates
  • Dukes asked why the healthcare provider insurance fee and associated income tax aren’t funded and what happens if not paid
    • Has to do with the ACA; a tax imposed on insurance premiums; have had discussions with MCOs who paid the tax last year; it is a cost that will need to be compensated
  • Dukes noted it could become a huge problem in providing Medicaid services if the taxes aren’t paid and MCOs decide not to provide services in the state
    • Janek noted the state is still not to the point of re-procurement of MCOs; if the tax is required to be paid by the client and the state pays the client’s premium, the state would need to fund those obligations
  • Dukes asked about the 105,000 people who have been seen through the Texas Women’s Health program; a reduction from about 200,000; why are fewer women being seen in the program; what has been proposed to get those numbers back up
    • Have seen Title 10 grants go to an outside agency so women are receiving services there; mailers are being sent to help increase participation, also trying to increase provider participation and show them they won’t be losing money;
    • Because of the statutory requirement that providers and their affiliates not provide abortions, the landscape changed; still have interest from providers
  • Dukes noted there is a need to rebuild the network
    • Janek noted the Title 10 dollars are still being used and the old Medicaid Women’s Health program can be improved upon; a woman needs to be able to get services as quickly and efficiently as possible; need to find innovative ways to provide those services
  • Davis noted it seems the state is reducing the number of providers which is destroying the safety net; need to maintain focus on rebuilding that net; if providers are tiered the 75% federal match for cervical and breast cancer screenings will be lost; can put as much money as we want into the program but if there aren’t providers it is a futile effort
  • Walle asked how many providers in that program there are
    • Leslie French, HHSC noted there are just more than 4,000 providers
  • Dukes and Janek discussed previous issues with finding a number of providers and the list being populated with providers who are not taking new patients; Dukes wants to ensure providers are listed who provide whole women’s health services so the state has a good grip on what the program and its providers look like
  • Exceptional items
  • Maintain Medicaid and CHIP current services including cost growth and payment of health insurance providers fees and associated taxes
    • $1.7 billion in GR; $4.1 billion in all funds
  • Maintain claims administrator costs; has to do with the transfer from Xerox to Accenture; the disagreement with Xerox was in regard to management decisions and prior authorizations; not having three years to negotiate a new contract; entered an emergency contract negotiation to see if the current subcontractor could pick up the rest of the contract; need the contract because so much is done on top of FFS; handles drug manufacturer negotiations and pricing, MMIS, etc.
  • Price asked how much the additional funds result from growth and the CHIP to Medicaid transfer
    • There will be additional cost to Medicaid claims administration from that growth to Medicaid no matter the vendor; the dollar amount from the transfer will be directly related to those in FFS programs
  • There is an exceptional item that is a placeholder to keep defensive positions on legal issues regarding foster care litigation
  • Walle noted more needs to be done for the foster youth of Texas
  • Also looking to increase capacity for the existing family violence providers; shelter, counseling, emergency services, etc.; need to provide services for more folks
  • Requesting food management and nutrition software to assist with and ensure patients are getting the right food in the right form
  • The TMS contract will be up for re-procurement soon; a big part of the contract will be software because of the technology in phone systems; need to make sure phones don’t become antiquated before they are brought back up to speed; asked for the state auditor’s report because of the kinds of considerations they have brought up; the points the auditor made are valid; need to make sure the correct documentation is being used so the trail can be followed; there was never a million dollar contract that grew to $105 million; HHSC does not have a good concept of what these things may cost going in; there was a procurement request form for programs that needed new phones; they aren’t really sure how much they cost or for how many agencies’ systems will be procured; Janek looked at the audit report and gave some legislators a heads up that it would be in the spotlight because of the way the audit looked; the million dollar amount was not a placeholder, it was a trigger if anything
  • Dukes asked about the contract extensions/expansions of scope
    • Bowden Hight, Deputy Executive Commissioner for IT, HHSC replied that the initial contract expanded to include more agencies, equipment and more sights; the amendment increased the amount to around $80 million based on those increases; then there were also extensions that increased the contract to $105 million
  • Dukes asked if it is customary and allowable under procurement practices to expand a contract this much in scope as opposed to going to back out to bid
    • This was originally done as an enterprise level contract; Hight believes all the enhancements were under the original scope of the contract
  • Dukes asked if there are recommendations to put into place so this type of issue does not happen again
    • Janek noted there can be some common sense safeguards; strengthening the policy manual on disclosing conflicts of interest; very concerned about the timeframe on extensions; should be able to determine the number of contracts within the agency at any given time
  • Dukes noted she is concerned about credits not being received by the state and performance measures not being met
    • One concern is whether you want people at the program level to have contract oversight, they are using the services of the contract, or do you want a dispassionate person who just watches it to grade whether the contract is getting everything they should be; another problem is having something this complex on a short timeline, sometimes it is easier to do an extension as opposed to a re-procurement
  • Dukes noted the majority of the contracts in the agency are large scale; need to have processes that work for large-scale contracts
  • Dukes asked when the Accenture contract ends
    • August 31, 2017
  • Dukes asked when the contract began with Xerox
    • The Xerox contract was from Oct. 1, 2012 to July 31, 2014
  • Dukes noted it seems it could have gone back out to bid rather than doing an extension
    • Janek noted he came into office in 2012 and there wasn’t time to re-bid the contract; having someone who was a subcontractor to the Xerox piece seemed like a good idea rather than trying to re-procure in a three month period; the contract is going back out for a re-bid soon
    • If the will of the legislature is to modernize the contract and break it up then that will be reconsidered
    • Putting very specific liquidated damages in the contract will help; did that with the Accenture subcontract
  • Dukes asked about recovery from the TMS contract; what about clawbacks for the credits not collected; was a measure put in place to collect those credits
    • Asked the legal department for a count of all the settlement credits out there; settlement credits are done as an alternative to liquidated damages; want to know where they all are and who owes how much
  • Dukes asked when the agency will be able to inform the committee about the number of credits
    • Hight noted it would take a few months; before session ends
  • Dukes requested that they find an answer in 20-30 days
  • Janek noted when he looks at the credit problem he sees a bigger issue; money was appropriated to a specific program and the agency needs to use settlement credits for the purpose the money was appropriated for
  • Additional exceptional items include improving Medicaid staffing and support; need some FTEs for health plan management, data analytics; Medicaid/CHIP does some great things and they have made the case of how they need some additional FTEs to improve oversight
  • Asking for money to improve employee technical support; want to procure software solutions to automate what are currently manual processes; software updates, virus scanning
  • Asking for money to maintain enterprise data warehouse functions; did not go forward with the data warehouse procurement last fall for multiple reasons; money, duplicate services