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The Committee met to hear testimony on Article II of the budget – Health and Human Services Agencies. This report focuses on discussion of the Health and Human Services Commission and the Department of State Health Services.
 
Health and Human Services Commission
 
Christy Havel, LBB

  • Recommendations total $55.8 billion in all funds for HHSC
    • 8.4% increase
    • $22.4 billion in GR
  • Supplemental need for Medicaid shortfall  is estimated to be $313.5 million in all funds
  • Recommendations include Medicaid funding totaling $51.2 billion in all funds
    • $21.1 billion in GR
    • Cost is held to 2015 average cost except for Medicare expenditures
    • Recommendations do not include estimated $1.6 billion in cost growth
  • Lower FMAP creates an additional need; increase of $655 million in GR
  • Caseload is projected to continue to grow; recommendations fully fund caseload growth at average 2015 cost; much increase attributable to children moving from CHIP to Medicaid
    • Recommendations estimate around 300,000 clients will transfer next year; $220.5 million all funds increase to Medicaid; higher cost to serve children due to more generous benefits
  • There are multiple expansions of managed care
    • Nursing, behavioral health, medical transportation and dual eligible project integrations into managed care; cost of $3.9 billion in all funds, $1.7 billion in GR
  • 1115 waiver is up for renewal; recommendations assume renewal
  • Disproportionate share supplemental payments; Rider 86 from last session’s budget provided that HHSC may spend up to $300 million over the 14-15 biennium for the non-federal portion of DSH; the rider also ensures those funds are not used for DSH payments past 2015
  • Recommendations assume continuation of cost containment initiatives implemented during or up to last biennium
  • PCP rates; ACA required  a rate increase up to Medicare rates for PCPs performing certain services for 2013-14; rate increase was fully federally funded; recommendations do not assume those rate increases; if rate increases were continued they would be funded at the regular Medicaid matching rate for the applicable population
  • Health insurance providers fee; SB 2 does not include funding to pay that fee or its associated tax
  • Network access improvement program; recommendations do not assume increase in funding related to this program
  • Recommendations include $1.7 billion in all funds for CHIP
    • $141 million in GR
  • Caseload is projected to decrease because of transition to Medicaid
  • TANF; caseloads declined in FY13-14 and are projected to increase slightly this year; recommendations continue $62 million
  • OIG; fraud case management program is not funded in the introduced bill
  • Medicaid management information system; HHSC ended Xerox contract and entered into contract with Accenture; SB 2 includes an increase in capital budget authority of $103.2 million in all funds due to Accenture not making capital expenditures related to updated the MMIS
  • 91% of agency’s federal funds are for Medicaid
  • Sen. Charles Schwertner asked about caseload growth; what are latest numbers for the next biennium
    • Projecting an average of about 4.3 million over the biennium; current enrollment is about 4.1 million
  • Sen. Royce West asked if the supplemental budget will need around $313 million for Medicaid
    • Yes
  • West asked if LBB and the agency are on the same wavelength in terms of caseload growth
    • Estimates are fairly close
  • West asked if that amount is less than the supplemental amount from last session for Medicaid
    • Significantly less
  • Chairman Jane Nelson noted that is also separate from the amount of the shortfall for the entire HHSC enterprise
  • Sen. Paul Bettencourt asked about health insurance providers fee and income tax associated with the fee; an astonishing amount of money; for 2015 close to $193 million all funds; for the next biennium $593 million all funds; CHIP increases that; grand total of $822.6 million for the three years
  • Sen. Kirk Watson noted Texas provides for the mandatory population in Medicaid to receive federal funds
    • Texas covers mandatory populations only, aside from pregnant women; Texas provides for a higher income level for that population
  • Watson asked when the last time Texas changed policy related to eligibility
    • Believe it was 2009 when eligibility was reduced for pregnant women; it was restored in the same biennium
  • Watson asked about caseload growth; CHIP to Medicaid transfer, for example, is a large portion; would like to know what populations are growing within Medicaid
    • With the level of data LBB gets it is hard to identify beyond the CHIP to Medicaid transfer
  • Watson asked about cost growth; there has been an increase in cost
    • Yes; average 2015 cost levels were used which are higher than 2014 levels
  • Watson asked about DSH payments; providing in the current budget $300 million to help draw down federal funds for hospitals; locals will still have responsibility to use their funds to draw down federal money for 1115 waiver; why did the rider prevent money from going to the next biennium to draw down funds
    • Was a decision that was up to the legislature; rider requires the agency to devise a plan to find funds aside from GR
  • Schwertner noted nursing home eligibility income level is also above the mandatory eligibility levels
    • Not sure if that is optional or mandatory
  • Schwertner believes 220% of FPL is significantly higher than the mandatory federal level; there are other levers the legislature can use aside from eligibility such as benefits
  • Schwertner noted the healthcare insurance providers fee is one of the taxes and fees put in place through the ACA; highlights the ramifications the ACA has on the state budget; for DSH Rider 86 is a transitional rider; was supposed to create a glide path to eliminate DSH fusing from GR; hospitals need to come to the table and come to an agreement to find a way to receive these payments
  • Sen. Lois Kolkhorst noted the 1115 waiver funds do not flow through the budget; the reason there was intergovernmental transfer (IGT) money was to get a better return on investment; as DSH is discussed and the committee looks at uncompensated care, must consider it is not completely indigent care; based on bills versus what is actually recovered by hospitals; if Medicaid expansion is not considered DSH should be left out there and hospitals should be pushed to come up with a solution
  • West noted most local hospitals have urged the legislature to pull down those federal funds with a Texas solution; need to come up with something to deal with the issues currently under discussion; SB 58 from last session, does LBB have any data to show it has produced better care or savings (behavioral health integration)
    • Do not have any data on that but the agency may have some preliminary findings
  • Sen. Chuy Hinojosa asked about uncompensated care payments; there have been instances where hospitals have come up with a system to use local funds to get 1115 money  that may not be permissible by CMS; will ask the agency later when they come up
  • Watson noted that in addition to state DSH funds, local hospital districts are putting up IGT to draw down federal funds;  whatever agreement is being discussed needs to consider that 6 large counties are putting up a lot of money and an additional large burden may be put on local districts that are already doing a lot with 1115; also, need to consider that additional costs to Medicaid can arise when benefits are cut due to certain preventative and other services are not being offered
  • Kolkhorst noted when a local hospital puts up IGT money and draws down federal funds and it is used for DSH, they are being reimbursed so they don’t lose money they actually get more money back in some instances
  • Watson noted sometimes counties do not own hospitals and reimbursement is done differently for them; just need to be sure some are not penalized; what is being pushed on Central Health right now would cost them money as opposed to what could be done with DSH
  • Kolkhorst noted Travis County is an outlier; 1115 funds are being used to provide for a medical school which is extraordinary; the incentive is that when money is used outside of the county, people do not have to come into the county to receive care and create costs
  • Schwertner noted some public hospitals do better through the 1115 mechanism and some privates do better with DSH program; hospitals are now looking to the legislature to bail them out because they failed to come up with a solution in which GR is not used to fund them

 
Kyle McKay, LBB

  • GEER Report – Substance use disorder benefit; optional benefit; idea was that provision of the benefit would result in a cost savings to the state; there was a rider in the budget to prevent the benefit from being provided if it resulted in a cost increase
  • Were unable to definitively determine the benefit; procedure codes are different between each MCO and between managed care and FFS
  • Quality of data is improving over time
  • Recommending to require HHSC to conduct an additional investigation and provide reports to the legislature
  • The amount of people diagnosed with a substance use disorder is high compared to the population receiving services
  • Recommending HHSC perform outreach to bring in additional populations
  • Recommendation to evaluate benefit caps that may reduce the number of people receiving the benefit

 
Norma Herrera, LBB

  • GEER report – Evaluate pay for quality measures in the Texas Medicaid program
  • Texas Medicaid adopted federal Medicaid program’s policy of partially denying claims related to HAI and PAE
  • Pay for quality program bases a percentage of payments to MCOs based on patient safety and PAE
  • Pay for performance initiatives may improve outcomes based on some aspects but more information is need
  • Recommend directing HHSC to evaluate how providers are using existing pay for quality measures to improve delivery

 
Kyle Janek, Executive Commissioner, HHSC

  • Vast majority of dollars in the enterprise reside in HHSC and the vast majority of that is for Medicaid and CHIP
  • Vast majority of FTE dollars are in HHSC yet FTEs are divided up more evenly; most of HHSC FTEs work in the eligibility system
  • Had a terrible rate of timely processed applications
    • Only 58% of SNAP and 73% of Medicaid applications were processed on time and there was a 7% error rate in SNAP in 2009
    • Now there is a 96% rate of applications processed timely and less than 1% error rate
  • Have developed a network access improvement program that allows medical school and public hospitals to take existing appropriation and leverage it into federal funds in a way that projects are developed with MCOs in their region to receive enhanced funding
  • There are additional funding needs for Medicaid of $573.3 million this biennium and $29 million for CPS; there are currently available funds of $115 million so the supplemental need should be around $487 million
  • Caseload growth is largely included in SB 2; LBB estimate does not include higher utilization, medical inflation or higher acuity levels
  • Things driving caseload growth include: ACA provision for modified adjusted gross income use, 12 month certification is a part of this; CHIP to Medicaid transfer
  • Administrative and support operations are generally held to FY14-15 levels
  • Had a large number of exceptional item requests; encouraged agencies to cut items from the list and they did; only items agencies feel are necessary remain
  • Sen. John Whitmire asked how the committee can have confidence of Janek’s oversight of the agencies; tuition payment, unbid contracts, 21CT
  • Whitmire noted some of the better paid employees received tuition reimbursement when many employees barely make a living wage
    • Casey Haney was a dedicated state employee who likes to work for the state; he was making very good money and noted the agency had a tuition reimbursement program; after discussions Janek noted he should have asked what the entire state policy was; did not know the agency would pay the costs up front; it is not the policy nor was it the way it should have been done; for the rest of employees they must take the courses and show satisfactory completion then they are reimbursed for the tuition; Janek takes full responsibility
  • Whitmire noted the amount itself should have sounded an alarm; that is just one of many issues
    • Didn’t know Jack Stick or Erica Stick before she came to work for the enterprise; she came to work as a senior policy advisory; then when Judge Specia came he took Janek’s chief of staff so he replaced that person with Erica Stick; when the existing general counsel left there was a need to replace that person as well so he replaced him with Jack Stick
  • Whitmire noted Janek should have been monitoring the activities of these high level employees; that was a judgment call; it should have been a pretty obvious conflict
    • For the 21Ct contract, Janek noted that he was the one who asked the SAO to come in and look at the contract
  • Whitmire noted he beat Janek to that and brought up the issue first; it was also interesting that the agency spokesperson spun the conflict issue as being normal for husband and wife teams to work within the agency
    • Doug Wilson was inspector general when Janek took the job; his wife worked on the executive management team at DFPS when Janek took the job
  • Whitmire noted Janek could have fixed that and he enhanced the problem by putting the Sticks on his team
    • Janek noted he would not come in and fire the inspector general’s wife who was doing a good job just because she was married to the inspector general
  • Whitmire noted Janek shouldn’t hang his hat on that example when the Sticks were a much bigger issue; what about the no bid contract, surely Janek knew Stick was promoting 21CT
    • The contract came from DIR whether it was competitively bid or not before Janek was in office; not saying it wasn’t his fault, just wants the committee to understand that the entire process took place prior to Janek taking office; flaws in the agency are well documented in the Sunset report; the agency completely agrees with the Sunset report; Janek noted he is helping to expose some of those things; he asked for the audit on the telecommunications contract that started at $47 million and grew to $105 million; Janek noted he signed the contract extension for two years that grew the contract from $80 million to $105 million and put it out for reprocurement; Janek referred the conflict to the inspector general and reassigned the person with the perceived conflict; SAO is correct in saying that the agency does not have a level of sophistication necessary to estimate procurement amounts
  • Whitmire does not believe things are well in the HHSC enterprise; cannot imagine the level of disturbance within the agency from employees who barely can pay their bills
  • Hinojosa noted there have been problems with the OIG for quite some time; believes Janek trusted some of those people too much when he is where the buck stops
  • Sen. Joan Huffman  noted the Casey Haney issue is troubling and many people know of Haney’s history with Janek
    • Haney came to work for Janek in 2005 when he joined the Senate
  • Huffman noted when Janek left the Senate he continued to pay Haney out of his campaign account
    • When Janek left the Senate he made the determination that the money was not his and he didn’t use it for lobbying; Haney went to work for a political consultant and a PAC
  • Huffman noted Janek funded that PAC to the tune of $300,000
    • Janek asked consultants to find a good candidate to replace him so he sent some money to the PAC; Haney went to work for that consultant
  • Huffman noted Haney did oppositional research for that group
    • Janek noted he told that candidate to resign when he found out about some of the false statements the campaign was making about Huffman
  • Nelson made the point that if Sunset had not found out about issues in the agency it may have been quite some time before they came to light
    •  Janek noted there was an issue in the OIG that he called in the Texas Rangers for; he isn’t covering anything up
  • Nelson noted she is very disappointed in all this; some was human error, some was structural, there are ongoing investigations and individuals who erred in judgment are going to be held accountable
  • West asked about the conflict of interest on the telecommunications contract; has there been an internal investigation
    • There has been an OIG investigation which has not concluded yet
  • West asked if any indication has been given regarding when it will be concluded
    • Not yet
  • West asked about a whistleblower in the agency who was fired
    • Would characterize it differently; had been undergoing procurement for the Enterprise Data Warehouse, the RFP went out and there were a number of respondents; a recommendation was made after evaluations were done; there was a meeting where Janek discussed particulars of the funding aspect of the contract; the very next day a lobbyist called Janek who worked for the vendor and they recited very precise pieces of the discussion; somebody from the meeting had called the vendor; the person stepped forward and identified themselves and then lost their job
  • Kolkhorst asked about the populations growing in Medicaid being some of the most expensive populations; need to consider that as discussions continue
  • Schwertner asked about the TMHP contract; is this funding in the exceptional item in addition to their current contract
    • Lisa Subia, CFO of HHSC noted this is in addition to the current contract
  • Schwertner noted this is for a claims administrator contract and 85% of services are now through MCOs; you would think the state would be getting out of the claims administrator business; why is this increasing
    • Janek replied it is because it isn’t just for claims administration; also includes the MMIS piece to provide data on claims, determining and pursuing third-party liability, fee-for-service claims, pharmacy claims and  rebates, provider enrollment
  • Schwertner asked if this is the largest contract besides MCO contracts
    • Yes
  • Schwertner asked if OIG still has the ability to handle fraud and case management
    • The executive commissioner of HHSC  isn’t allowed to run the OIG; Quinton Arnold was sent to the OIG to determine what is still standing; basically back in the procurement stage
  • Schwertner asked about the enterprise data warehouse; is there still a purpose for pursuing that and where are we in relation to that
    • HHSC has an immense amount of data; currently no trends or projections can be made with data resources the enterprise currently has; Sunset report makes the same point
  • Schwertner asked about minimum federal efforts for Medicaid eligibility; is there flexibility in the long term support eligibility levels
    • For adults, the ACA provisions that froze eligibility levels expired in 2014
    • It is different between long term services and acute care
  • Schwertner asked when the level was set at 220% for long term
    • Not sure; quite some time ago before he was in the legislature
  • Sen. Robert Nichols asked about outsourcing core state functions; at no time was there a discussion about contracting out services at one of the big state hospitals; typically that would be planned with the legislature; less than two months after session an RFP went out to privatize a hospital
    • There had been guidance from the previous legislature to evaluate the possibility and one bid was received; the Rider required it be done with 10% less money which was one of the reasons only one bid came back
  • Nichols noted the evaluation Rider was from 2011; in 2013 there were no hearings where there was direction given to the agency to privatize the hospital; once the contract is executed it is a long term commitment; Nichols expressed his concern then and is expressing his concern now that before a 1,000 employee facility is privatized there needs to be direction from the legislature
    • There is not a signed contract
  • Nichols asked if it is Janek’s intent to sign the contract
    • No; not without a full discussion with the legislature
  • Nichols noted his issue is that if the contract is entered into and the private entity begins services then decides they no longer want to do it for that amount of money it is hard to put the puzzle back together
  • Watson asked how many women are eligible for the Texas Women’s Health program and how many are actually enrolled
    • It is hard to determine how many are eligible
    • Leslie French, Women’s Health Coordinator, HHSC; approximately 3 million women are between the age of 18-44; about ten percent of eligible women have the opportunity to access the program; 115,000 are being served just within TWHP; the way eligibility is structured there are three different programs; women are served within the other two programs as well
  • Watson asked how that number compares to before the cuts were made
    • In FY10 approximately 107,000 were served; in FY11 117,000 were served
  • Watson asked how provider capacity is going
    • Going well; working hard to address that ; have around 4,012 providers
  • Watson sked if the tiering program has affected the agency’s ability to get providers
    • When the program was created it did have an impact and there was a drop
  • Watson asked about the Sunset recommendation to consolidate the programs
    • Janek noted there are three programs that serve the same population; watch has its own eligibility, focus and array of services
  • Watson asked if there is any concern regarding fee-for-service versus managed care
    • Some services provided may be infrequent enough that it could be problematic to use FFS because there aren’t incentives for providers
  • Watson asked about the exceptional item for recruitment and retention for community and attendant care
    • Based on a 5% wage increase
  • Watson noted that is only $0.40 on top of the current wage; both the Governor and the agency have asked for an increase in this area; need to do more
  • Nelson asked if there are more providers today in TWHP than there were in the federal program
    • Yes
  • Nelson asked if the federal government stopped sending Title 10 dollars to the state prior to this session
    • Yes; that money flows to private entities
  • Nelson noted a better coordination of services is needed in that area so it is easier for clients to connect with the services; need to have services that emphasize family planning and need to serve the greatest number of women possible
  • Watson noted it is important to make sure the legislature knows what population is being dealt with first
  • Janek noted there are a lot of women between the ages of 18-26 who will be covered under their parents’ insurance because of ACA provisions
  • Whitmire noted there was never any reason for Janek to believe Haney needed additional benefits to stay with the state and Janek smoothed it over by spinning it as retention efforts; did either individual receiving tuition grants ever express that they knew it was wrong
    • Employee retention needs to be a discussion
  • Whitmire discussed and asked questions about who signed off on the tuition grant
    • Signed off on by the chief of staff
  • Whitmire asked if she had that authority
    • Nobody had that authority
  • Whitmire asked if she was fired
    • No; sometimes people make mistakes
  • Whitmire noted Janek’s answers are not credible; all of the tuition grants need to be returned dollar for dollar
    • That is what is being done
  • Schwertner noted case workers in CPS need retention as well; why is that not part of this item
    • Not sure what DFPS has in their request but they do need to be paid better
  • Schwertner noted a lot needs to be changed regarding that agency especially pay and retention
    • The experience needs to be changed from the outset
  • Sen. Carlos Uresti noted paying them more does not fix the problem

 
Department of State Health Services
 
Shannon Sabayan, LBB

  • The introduced bill contains $6.1 billion in all funds for DSHS
    • A decrease of $404.4 million
    • $3.3 billion in GR
  • $300 million of the decrease is due to a one-time expenditure of trauma funds used to pay Medicaid expenses at HHSC
  • Recommendations include $115 million over the biennium for trauma care provided by designated facilities and facilities pursuing designation
  • Bill includes $28 million in all funds for home and community based services waiver
  • Base aligns funding for NorthSTAR with LBB Medicaid caseload forecast; appropriations are decreased because of Dallas County dropping out of program
  • Bill includes $19.1 million in GRD from earnings on tobacco settlement accounts; about $15 million lower than last session
  • Recommendations continue $37.8 million GR for family planning
  • All mental health funding was continued from 14-15 except for one-time funding for facilities
  • 25 riders have been recommended for deletion because requirements have been fulfilled or they have duplicative interests
  • Nichols asked about new Rider 77 mental health program allocation; what is it
    • Just to get the conversation started on the equity issues between mental health facilities
  • West asked about NorthSTAR; does the recommendation involve the un-blending of money NorthSTAR has out forwarded in the Sunset report
    • The recommendation is due to a misallocation of funding in the agencies sub-strategies
    • Melitta Berger, LBB noted it also includes the impact of the health insurance providers fee for NorthSTAR MCO

 
Norma Hererra, LBB

  • GEER Report – Early elective deliveries of newborns
  • It is difficult for the state to evaluate efforts to reduce these types of deliveries
  • Recommend requiring DSHS to use data in THCIC in combination with birth certificate data to better track the rate of these deliveries
  • Recommend requiring DSHS to annually report the state estimated rate of these deliveries
  • Recommend HHSC conduct audits on claims for Medicaid early deliveries coded as medically necessary
  • Recommend HHSC and DSHS to evaluate strategies to decrease these deliveries using improved data

 
Kirk Cole, Interim Commissioner, DSHS

  • Base bill funding for DSHS is 40% GR, 24% GRD and 36% federal
  • Immunization rates are continuing to increase; have seen drops in infant mortality rates and rates of HAIs
  • Last session the legislature invested a lot in DSHS programs; expanding primary health care for women – $100 million; increased capacity for substance abuse treatments; mental health services – $300 million
  • Working to increase availability of health data as an agency
  • $12 million was funded in SB 2 for 1915(i) home and community based services
  • Preparedness activities funded with $4.8 million
  • Crisis services funded at $18.8 million
  • Funding of $14.5 million was added for projected mental health wait lists
  • Exceptional item to maintain services at today’s levels for state hospitals for tobacco, vehicles, and NorthSTAR
  • Exceptional item for state hospital system; modernization, life and safety issues, patient transition into communities, electronic medical records
  • Exceptional item for preparedness, infectious disease and disaster response
  • Exceptional item for women’s health servicers
  • Exceptional item for enhanced substance abuse services
  • Exceptional item for increased focus on community mental health services
  • Exceptional item to fund waiting lists
  • Exceptional item for STD prevention and treatment
  • Exceptional item for improved prevention of chronic disease
  • Exceptional item for improved mobile technology for epidemiology and disease investigators
  • Schwertner asked about a Rider last session for state hospital renovations that would cost $2.5 million – assume the additional rider is in response to the first stage of that; any idea of where the agency is on that
    • Have a lot of options; report showed additional beds would need to be purchased – about $70 million of the request; also included about $24 million for prep costs; one option is to work with universities and private sector to get these services provided; new facilities is also an option
  • Schwertner asked about increased emergency response and infectious disease preparedness; this is important and it will take some money
    • Identified a number of challenges during the West explosion and the Ebola outbreak; processes can be improved, testing capacity, equipment, training, response teams, communication coordination; federal dollars will arrive eventually to help offset some of the needed funds
  • Nelson asked how much the report for the State Hospital System Long Term Plan cost
    • $1 million
  • Nelson noted her disappointment in the product; the recommendation is basically to tear down five and build five more
  • Watson asked about the same report; recommends one acre for every ten to twelve beds; is there any plan for surplus property on any existing property
    • There is varying value to some of the land that is there; DSHS doesn’t have any specific plan
  • Watson asked about breast and cervical cancer services; how many instances have been detected through the program
    • For 2014, 413 breast cancer were detected; 2,836 cervical cancers were detected
  • Watson asked if there is information on whether those clients received treatment for the diagnoses
    • Do not have that available
  • Watson asked about how Texas compares to other states for those cancers
    • Texas has about 1.43% occurrence for women screened; not sure about the incidence rate for the state overall
  • Bettencourt asked about utilization data on beds; would like to have that data forwarded to the committee