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The House Appropriations – SC on Article II heard invited and public testimony regarding the following interim charges:

Interim Charge 11: Monitor Congressional action on federal healthcare reform and CHIP reauthorization. Identify potential impacts of any proposed federal changes. Identify short- and long-term benefits and challenges related to converting Texas Medicaid funding to a block grant or per capita cap methodology. Determine how Texas should best prepare for federal changes, including statutory and regulatory revisions, as well as any new administrative functions that may be needed. Explore opportunities to increase the state’s flexibility in administering its Medicaid program, including but not limited to the use of 1115 and 1332 waivers.

Interim Charge 12: Review the state’s readiness to care for aging Texans by reviewing the reimbursement methodologies for nursing homes and assisted living facilities, including supplemental payments, Medicaid add-on payments, and availability of alternative methods of finance. Identify methodologies to adequately finance Medicaid rates for long-term care facilities under managed care capitation, support high-quality care for Texas seniors, accommodate new models of care, and encourage care coordination to treat higher incidence of complex conditions.

Interim Charge 18: Monitor the agencies and programs under the Committee’s jurisdiction and oversee the implementation of relevant legislation passed by the 85th Legislature. In conducting this oversight, the Committee will also specifically monitor:  g. Medicaid cost-containment efforts

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.

Cecile Young, Kara Crawford and Stephanie Muth, Texas Health and Human Services Commission (HHSC)

  • Reauthorization of CHIP extends maintenance of CHIP participants through 2023
  • Discussed 1115 waiver
    • Expands and extends Medicaid Managed Care while preserving hospital funding
    • in 2022 DSRIP is phased out
    • written testimony shows funding mechanisms for UC pools and includes additional requirements relating to deadlines
    • draft of UC payment protocol, 1st deadline met
    • penalties for missing deadlines results in a reduction of UC payments by 20%
  • Davis: do you expect to meet the deadlines, and do you have a plan if you do not meet them?
    • HHSC fully expects to meet the deadlines
    • Too important to the safety of the system
  • Davis: when do we start to lose the super-enhanced match?
    • Begin to see a reduction in FY 2020 and another reduction in FY 2021
    • By FY 2022 we will be at regular enhanced Federal Medical Assistance Percentage (FMAP)
  • David: that will require the state to make up some of that funding?
    • Correct that will require the state to put in GR for the maintenance of effort requirement
  • Davis: are you able to calculate how much GR is anticipated to be needed?
    • Believe it will be somewhere between $650 million and $800 million
    • Still working on that calculation
  • Briefly described budget neutrality in the managed care waiver
    • A critical component of the waiver
    • Allows the state to administer a managed care model state-wide- resulting in saving for the state
    • Maintains supplemental programs for hospital providers
  • Davis: what are the savings to the state through managed care?
    • It is a more efficient model and the savings go toward supporting other supplemental payment programs
  • Davis: what are the specific savings?
    • Referred to the written testimony to identify the savings
    • Difference between $23 billion per year in managed care program funding and top-line funding of $3 billion per year (traditional fee-for service spending) is considered managed care savings or budget neutrality room
  • Described supplemental programs paid for by budget neutrality: quality-based payment, uniform hospital rate increase program and the network access improvement program
  • Discussed block grant funding for Medicaid and per capita caps (would adjust for population growth)
    • Feds see these as ways to offer flexibility to states
    • Would also create fixed expenditures for the feds
  • Davis: Federal government is designing flexibility or allowing states to create flexibility?
    • The amount of prescribed flexibility varies for each proposal
  • Written testimony includes a proposal which contains provisions for both block grants and per-capita caps (HR 1628)
  • Davis: What is HHSC advocating for?
    • HHSC is monitoring federal proposals, and are not advocating any particular proposal
  • Davis: Do you think that HHSC should have some direction given by the Governor?
    • There is nothing to respond to at this point, any major changes would have to be directed by elected officials
  • Discussed Medicaid expansion programs and eligibility
    • Fed encourage to align work requirements with CHIP requirements
  • Written testimony shows list of items approved by CMS for expansion

 

John Hawkins, Texas Hospital Association

  • Getting the 1115 waiver continued was very important
    • HHSC has done a good job working with the industry
  • Challenges moving forward with Medicaid reporting
    • information reporting- ensuring the right data points are being reported, and ensuring the integrity of the information
    • Have worked through issues on the first protocol
  • Discussed Medicaid shortfall issue
    • Using budget neutrality to help makeup some of the difference
  • CMS has said they are moving Medicaid to a value-based system
    • Doing good work on increasing physician participation, access to clinics and behavioral health
    • Need to transition the things that are working in DSRIP into the system
  • Need a more comprehensive way to care for uninsured
    • Should be regionally based
  • Texas has reformed health care in many ways that can be continued like using block grants as effectively as possible
  • Concerned with proposals in Congress which continue to pass costs to the states
  • Have not reconciled expansion vs non-expansion states

 

Stacy Wilson, Children’s Hospital Association of Texas

  • Provided written testimony
  • Children’s hospitals are very reliant on Medicaid
    • 50-80% of children seen are covered by Medicaid
  • Do not have Medicare to supplement funding
  • Any changes made to Medicaid will disproportionately affect children’s hospitals
  • 70% of Medicaid enrollees are children
  • Elimination of Medicaid shortfall in UC calculations
    • Reduction of between 40%-60% of UC funding would shift toward other programs doing more charity care focusing on low-income adults
    • Texas has done a good job prioritizing children’s care in the past
    • Current uninsured rate in Texas children is 9% and we need to keep it that low
  • Expecting DSH cuts
    • Will impact children’s hospitals same with UC cuts
  • DSRIP reductions and future elimination impacts on pediatric measures is unknown at this point
    • Commission has done a good job in the next version of DSRIP for children
  • The UHRIP Program
    • Challenged CMS rule of capping how much children’s hospitals could get
    • Federal judge ruled that CMS had violated federal Medicaid law
    • Commission can go back and review UHRIP bans- currently set at between 0-3%
    • Rate increases would not be as substantial compared to private hospitals (as much as 22-60% rate increases depending on service area
  • Medicaid reform proposals
    • Need to get the baseline right
    • Need to ensure the inflator is correct
    • Some proposals showed an inflator that was not keeping up with cost
  • Texas has done a really great job with Medicaid and kids
    • When kinds are insured they have lower mortality rates, higher educational achievement, higher economic ability and higher health outcomes
    • Need to be sure that kids getting preventative care and developmentally appropriate care remain to be mandated benefits
    • A block grant may give Texas the flexibility to continue those benefits, we want to be sure they are retained
    • Need to be sure that medically complex children are outside the per-capita cap because their needs are so different
  • Need to be sure that cost-sharing measures are not barriers to children getting access to care

 

Anne Dunkelberg, Center for Public Policy Priorities (CPPP)

  • Block grant and per capita are seen to give budget certainty
  • 74% of Americans have a positive view of Medicaid
  • Concern about the use of UHRIP with different levels of funding across the state as opposed to cost of the provider
  • 1115 waivers
    • Would support adult coverage programs
    • States that have adopted work requirements also expect to drive down eligibility
  • Davis: how does the work requirements look like in Texas?
    • Does not believe it makes sense to add work requirement to the Texas population
    • Texas is collecting a lot of information on those who are in poverty and working
    • Over 2.8 million Texas workers are uninsured, the correlation is difficult to make

 

Deane Waldman, Texas Public Policy Foundation (TPPF)

  • Medicaid is failing despite best efforts
  • Davis: is Medicaid or managed care failing?
    • Medicaid has been failing for a long time
  • Davis: why do you think the costs have grown so much?
    • Caseload growth has doubled
    • Cost of bureaucracy
    • Eligibility requirements have not been changed
  • Problems with per capita include the desire to sign up more people for more funding
  • The more Texas controls Medicaid the better it will function
    • Could opt out of Medicaid and completely control- not advocating that specifically
  • Discussed Medicaid waivers
    • 1332-  unless guidelines change, would not be that beneficial
    • 1915- small piece of the puzzle
  • Wu: what does Texas leading in Medicaid mean?
    • Means that Texas should create a new waiver request for things like cost-sharing and work requirements that cannot be done as long as all mandates are being followed
  • Wu: your proposal is to do the things we like and don’t do the things we don’t like?
    • More that we have a plan to do it better
  • The political environment has changed such that a waiver may be viewed more favorably
    • Discussed possible waiver items including work requirements, cost sharing, etc.
  • Davis: does your analysis take into consideration what the Texas Medicaid population consists of?
    • Yes, with a large portion goes into eldercare specific to Texas
  • Simplification of the bureaucracy will reduce costs
  • Difficult to get expenditure data from Texas
    • Much of the information is considered proprietary information
  • Should restructure costs of long-term care
  • Davis: you are advocating for specific actions, who would be doing that?
    • HHSC by way of governor recommendation
    • Will provide copies of testimony and recommendations

 

 

 

Gretta Rymel, Health and Human Services Commission

  • We identified and implemented cost savings that total about $411 million for the biennium in general revenue.
  • Have identified $337 million in their cost containment plan that they estimate for the biennium
  • We expect savings to grow in the current year.
  • In FY19 we expect a mature program where the rates reflect the savings that will occur.
  • Our rate setting methodology always reflects what is going on.
  • We’re currently in the process of identifying firms to review our rate setting methodology.
  • We primarily use external actuaries to develop our rates.
  • The state has historically paid rural hospitals more favorably than urban hospitals, excluding children’s hospitals.
  • Detailed hospital billings per biennium
  • Discussed efforts to reduce fraud
  • Davis: Does your agency decide what is ‘medically necessary’?
    • The inspector general’s office reviews the records of the patient to determine if those indicate necessity.

 

Victoria Grady, Health and Human Services Commission

  • Provides an overview of nursing facility rate methodology.
  • We collect cost reports from nursing facilities on an annual basis.
  • Base rates have been in place since 2014 and have not been adjusted since then. We can only adjust them when we have sufficient appropriations.
  • Explained add-on programs available for nursing facilities
  • Detailed private pay in residential care.

 

Amanda Fredrickson, AARP

  • It is important to recognize that our Medicaid system still acts like ‘fee-for-service’.
  • This creates for missed opportunities. Particularly in improving the quality of nursing homes and growing assisted living.
  • HHSC’s latest regulatory services report demonstrates how quickly assisted living programs are growing.
  • Nursing homes are also growing, albeit at a slower rate.
  • Medicaid is a huge payer on the nursing home side.
  • Occupancy rates for these facilities demonstrate plenty of capacity. Occupancy rates are declining.
  • This decline reflects the legislatures investment in home and community-based services.
  • Consumer choice also demonstrates that people prefer to be in their own homes. This bears out in options people choose.
  • We have the highest percentage of 1-star nursing homes in all states when you look at the Medicare 5-star rating.
    • 1 in 4 nursing homes have multiple violations
    • Many challenges
  • Do not know nearly as much about assisted living
  • Opportunity to grow assisted living in Medicaid, but more information is needed to make smart decisions
  • Davis: written testimony shows 328 facilities have had serious violations, but the state collected fines from only 22 facilities, why is that?
    • Nursing homes are governed by both state and federal regulations and Texas has a law that if there is a violation of both regulations there can only be one assessed penalty and typically that is collected at the federal level
  • Davis: fines are being collected, just not by the state?
    • That is correct
    • In addition, the law of the “right to correct” meant that though there were violations, the facilities were able to correct the action before a penalty was assessed
  • Discussed QUIP- not a good long-term strategy if Texas wants to be inclusive with Medicaid
  • STAR+PLUS- MCOs are driving policies
    • They should be held accountable for getting Medicaid services to those who need it
    • Nothing in the system holds them accountable at present
    • Data shows that a large portion of people could be served in a less restrictive situation, and not doing enough to encourage MCOs to come up with solutions to take advantage of that opportunity
  • Not opposed to a rate increase, but it needs to be tied to quality
  • State should be looking to establish financial incentives to hold the MCOs accountable for nursing homes
  • Biennial survey funded to HHSC for nursing homes that could be moved to survey assisted living
  • Wu: You said MCOs need incentives to provide high-quality care, would any incentive program be adequate to offset the low reimbursement rates?
    • There’s no doubt that the Medicaid rates are low, but there are still providers fighting to get Medicaid beds
  • Wu: are those new providers “high Quality” providers?
    • Unknown for new providers without a track record.
    • Preferential treatment is given for accessing Medicaid beds if you are high quality.

 

Kevin Warren, Texas Healthcare Association

  • Caseload growth has remained static.
  • Discharge to community metric is going up. This metric is based on whether residents come into the facility for skilled services and then whether they go home as opposed to staying long-term.
  • Increase in residents with dementia diagnoses.
  • There are good providers that have decided to no longer participate or mitigate their participation in Medicaid.
  • By 2020, the population over 75 in Texas is expected to increase by over 100,000 residents.
  • Difference between allowable Medicaid cost and revenue is growing.
  • Discussed national Medicaid rates and their ranges.
  • QUIP is only available to 40% of providers. There needs to be a method of finance to fund this program. No alternative methods of finance with exception of QUIP for nursing facilities in TX.
  • The most significant issue this industry faces is the workforce and staff turnover.
  • Effectively caring for residents with cognitive impairments is another significant issue. Current reimbursement does not address this patient population.

 

George Linial, LeadingAge Texas

  • Representative Wu asked how much providers are losing on the Medicaid program. We have had 3 members who have either closed or sold in the last four months. They are losing 50 to over 100 dollars a day per resident. Rather than staff at a lower level, they decide to either lower the level of Medicaid residents or get out of the market.
  • The base rate was supposed to be a minimum rate, but it has served as the primary rate. We think the threshold needs to be eliminated.
  • 42% of licensed nursing facilities use QUIP and it has been effective. We recommend exploring options to expand the QUIP program. Inclusion of direct care staff into this program will improve quality of care.
  • We also recommend increasing the number of dollars for QUIP program.
  • The Direct Care Staff Enhancement Program is the only program which directly ties staff with payment. More funding to this program will be positive.
  • Discussed value-based contracting arrangements for nursing facilities.
  • We recommend support of testing fulltime advanced practice nurses (APN) in nursing homes.
  • Discussed affordable senior housing communities as a means of health and long-term support since renting is not a good option for seniors
  • Discussed long-term care in terms of all insurance markets
  • Long-term care is limited in availability and generally priced too high. The legislature should promote this market and incentivize individuals to invest in long-term coverage.

 

Diana Martinez, Texas Assisted Living Association

  • Explained variety of assisted living communities.
  • Population in assisted living compares well with the national average.
  • Explained conditions of residents in assisted living and services they require, with examples of Alzheimer’s patients or dementia residents
  • In Texas, there are roughly 1,900 assisted living communities, which serve over 70,000 residents.
  • By 2035, a percentage of people 65 and older will be greater than those 18 and under.
  • We worry that affordability will not meet the need to come.
  • Assisted living residents are predominantly private pay. Nationally, 83% pay from personal finances.
  • Explained demographics of those using Medicaid for assisted living.
  • Because of rising demand for assisted living, few of our providers want to take Medicaid assistance.
  • Medicaid will not pay for room and board for assisted living. It only covers certain activities.
  • Our members cite the low reimbursement rate as the reason why they do not wish to participate in Medicaid.
  • Illinois has targeted Medicaid assisted living support for low-income seniors. Encouraged legislature to review and learn from Illinois’ assisted living program.

 

Blake Daniels, Texas Organization of Residential Care Homes

  • Since the transition to STAR+PLUS program for assisted living, there have been many struggles for providers in my organization.
  • It costs the state twice as much to have a resident in a nursing home rather than in assisted living.
  • Providers do not want to open new facilities because there is little ROI.
  • A rate level freeze scares me because it does not address the residents who require extra care.
  • Having HHSC take over the Medicaid program is something we are very interested in. The current system does not provide good quality of life to our residents.
  • HHSC wants us to encourage providers to open new facilities, but they’re scared to do so.
  • More oversight over MCOs to ensure they’re paying assisted living facilities what they deserve is needed.

 

Stacey Pogue, Center for Public Policy Priorities

  • The waiver introduced in charge 11 is not a Medicaid waiver. The ACA allowed for flexibility in commercial health provisions.
  • Discussed health insurance marketplace that was created with ACA.
  • States can and should look at ensuring the individual market is competitive and robust.
  • 1332 waiver allows states to pursue federal funding for high-risk premium pool.
  • States can use 1332 waivers to drive down premiums and make the market more stable.

 

Will Francis, National Association of Social Workers Texas

  • Medicaid is separate from Welfare. Addressing it as such does not solve its problems.
  • 1/3 of all non-working, non-elderly, adult, Medicaid enrollees not receiving SSI report that they are unable to work due to a disability.

 

Aurora Harris, Young Invincibles

  • Loss of individual mandate has made a future higher uninsured rate of people a predictable reality.
  • This has the potential to create uncertainty about the future of marketplace.
  • Praised funding for ACA assistance programs and views them as a critical health equity issue.
  • Texas has options to protect consumers,
    • Ban short-term plans that don’t comply with ACA consumer protections,
    • Restore 3-month limit so they are truly short term,
    • Increase oversight of these plans.

 

Bee Moorhead, Texas Impact

  • Texas Impact does not generally favor a block grant, but we believe the legislature’s job is to defend Texas’ interest. This could include preparing for block grants.
  • Gave a history of block grants and Fair Share Formula in the state of Texas.
  • A similar break up of the plan, as experienced by the Fair Share Formula, would likely happen again if a block grant were instated.
  • The legislature has an obligation to pick this fight and prepare so we are not disadvantaged if the federal government decides to implement a block grant.
  • One way to prepare is to increase our base spending by expanding Medicaid.
  • We support Medicaid expansion and have issued reports on it.
  • This is the sensible solution, however politically inexpedient.

 

Laura Geurra-Cardus, Children’s Defense Fund

  • Our desire to expand Medicaid to adult population stems from the belief that children deserve the best environment possible.
  • As parent’s health coverage becomes more secure, the children benefit.
  • In Oregon, they found that gaining healthcare insurance led to a 30% decline in depression.
  • States that have expanded Medicaid have 6-16 times more funding to deal with the substance abuse crisis.
  • Infant mortality decreases in states which expand Medicaid.
  • Exports in infant mortality agree that expanding coverage for adults benefits the children.
  • We cannot protect our children if we do not support our families.
  • Medicaid is one of the most effective anti-poverty tools we have in Texas.
  • Davis: When you’re advocating for Medicaid expansion I understand your reasoning. Earlier we heard that we will be losing federal funding. It seems, because of the federal government, we are not heading anywhere near the expansion of Medicaid.
    • We are counting on major negative consequences at the federal level. ACA was repealed four times just this past year and multiple stories of people losing coverage prevented that. The Medicaid stories will be far more numerous.
  • Davis: Do you believe HHSC will agree with you on that?
    • Whether or not they agree, Texas would be in a better position if we doubled down on Medicaid.
  • Davis: I understand that if we’re going to move to block grants you want the highest level of spending now. My concern is the feds wanting to move away from dolling out state dollars. Do we want to expand Medicaid, and then the feds give less money and were unable to continue with our expansion?
    • There is an important difference. The longer arc of the story is that the feds are disappointed Texas has so many uninsured people. It doesn’t sit well with local communities to say that we’ll have to work it out in the future. I think some of those uninsured people would gladly take a couple of years of getting to go to the doctor even if they might not be able to in the future. It would be worth it to you as legislators to see what this would do to the economy. All we have ever seen is that Texas is the worst. Its hard to come back each session and hear we just can’t when we know we could.

 

Dennis Borel, Coalition of Texans with Disabilities

  • I see where you’re coming from, it doesn’t look like we’ll have more resources. But, it is best to keep people as healthy as possible instead of letting them get worse and worse. It’s best to pursue preventive care than have people end up in the emergency room.
  • Davis: Are you saying that people in Medicaid do not have access to medical benefits?
    • Kids do, adults do not. Then when the adults need emergency care, since they did not get preventive care, they wind up getting opioids.
  • Nursing homes have the same Medicaid population now that they did 20 years ago. This proves we can control costs if we do these things.
  • Our network of state-supported living centers is a big waste of the state’s money.
  • If we go into a block grant, that will mean a permanent baseline that is lower than every state in the country.
  • Kids that don’t get therapy don’t do well in school and don’t subsequently succeed in the workforce. This means we would end up with more spending, not less.
  • The aging population is increasing. The community attendant workforce is the fastest growing occupation in Texas and the pay is decreasing.

 

Adriana Kohler, Texans Care for Children

  • Medicaid is critical for Texas kids and is not failing.
  • We hear stories all the time about how Medicaid is helping kids and families.
  • The vast majority of children are seeing their doctor and receiving preventive care within the first year of life.
  • We are dedicated to reducing the number of uninsured. Achieving this will require investment into Medicaid program.
  • Cutting Medicaid will ultimately harm kids and pregnant women.
  • Greater focus on case management and care coordinators is the best way to save costs in the long run.

 

Marcus Hull, Riverside Nursing and Rehab

  • When you tour our facility, you will see our staff work diligently to provide high levels of quality care for our residents.
  • 80% of our residents are Medicaid recipients.
  • Senior care is currently receiving more than a $25 per day shortfall.
  • The shortfall will continue to be an issue if no legislative acts are made concerning this topic.
  • The pressures felt by the current system are a detriment to patient care. My building had 70% turnover last year.
  • Should legislation decide to act, that will allow us to invest in our patients.
  • Wu: Throughout the day, testimony has sounded identical to testimony we’ve heard concerning CPS. They couldn’t retain workers because the legislature didn’t put up enough money. I heard before that when we put out more funding, CPS said money wasn’t the problem. We have the same fight every time.

 

Rev. Bill Coventes, Texas Impact

  • You have the facts and figures about what will be needed.
  • The huge turnover rate tells more of the story concerning what is wrong with the system.
  • The worst impact of the turnover is on the people they care for.
  • Having a stable caregiver is important for the patient to be able to trust their caregiver.
  • If the gap between people who need care and those caring for them continues to grow, we will not be able to put out enough funding to fix the problem.
  • Texas is a wealthy state. We cannot afford morally to treat those who do the jobs we do not want as second-class people.

 

Phil Wang, Texas Medical Association

  • Considering the recent influenza season and how it affected our senior community, we believe our elderly population should be prioritized.
  • Some of our most vulnerable Texans reside in these facilities
  • Risk to the residents increases due to the number of visitors coming to these facilities.
  • Collaboration between long-term care and state facilities is key.
  • Support strong local public health monitoring of communicable diseases.
  • Reduce the threat of the spread of drug-resistant organisms between facilities by requiring greater cooperation between long-term care facilities.
  • Support preparedness planning for the ageing population in emergency situations.
  • Emphasize strong policies to support immunization.
  • Prevention through the actions mentioned can save Texas millions of dollars.