The Texas Senate Committee on Finance met on June 14 to hear invited and public testimony on several interim charges, including long-term care funding and Medicaid in Texas. The Committee examined state investments in the long-term care system, and also discussed issues relating to low worker pay and ongoing worker shortages. The Committee also investigated the financial impacts of the 1115 Medicaid waiver and other supplemental funding streams for Texas. An archive of this hearing can be found here.


This report is intended to give you an overview and highlight of the various topics taken up. It is not a verbatim transcript of the discussions but 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.


Opening Remarks:

  • Chair Huffman – Commemorates Senator Nelson’s service to the state of Texas and the Senate Finance Committee


Interim Charge 1: Long-term care funding

Claire Stieg, Legislative Budget Board

  • Provides an overview of Medicaid service delivery models in Texas, managed care organizations, and funding for nursing facilities
  • Huffman – Is self-reporting completely voluntary?
    • HHSC has the authority to add those requirements for providers, but I am not sure if they have added those
  • Perry – Regarding the COVID-19 add on rate for nursing facilities, $772 M has been distributed, correct?
    • Yes
  • Perry – And we received $378M in federal funds, none of that has been distributed from HHSC?
    • Has distributed $75,000 for nursing facilities, currently working on application process for nursing facilities
  • Perry – Can you speak on our long-term care system and what that consists of? Does LBB have conversations about where that funding goes to in regard to continuum care?
    • Better question for the agency
  • Kolkhorst – Page 14 is the federal funding that was pushed out in the CARES act, correct?
    • This reporting should include all federal funding, it does not include source of federal funding but includes all
  • Kolkhorst – What is the compliance on Rider 143 and SB 809?
    • There are currently around 1200 Medicaid providers across the state, hospital reporting is around 60%
  • Huffman – It seems like nursing providers have received an extra 1.7B dollars?
    • This does not include all reporting, but at least $1.7B
  • Schwertner – The add on rate is per individual in the nursing home, correct? Are the provider relief funds based on individual? Is the PPP directly to the staff in the facility?
    • Yes, yes, and I do not have that information
  • Schwertner – Potential issue with nursing home funding and decline in nursing home patients, how much funding is actually going to patients? How many patients are in nursing homes?
    • Grady – 1963 temporary add on does follow the patient, and that is a per day add on
    • For federal funding pieces, there are requirements for providers, PPP loans require 60% to be spent on payroll for example
    • Occupancy estimates for nursing homes were 78,919 in FY 2020, 81,310 in FY 2022, but decreased from FY 2019 from ~92,000, funding is at an all-time high


Victoria Grady, Health and Human Services Commission

  • Provides overview of reimbursement for long term care providers in Texas
  • In the case of dynamic market shifts, the data regarding cost-based rates takes a while to catch up, inflationary factors are used but they take a while to be reflected in the rate
  • HHSC is considering a switch from the Resource Utilization Grouping (RUG) model to PDPM, a more client-based model
  • QIPP helps with cost of care, but also improves quality
  • Huffman – You do use inflationary factors when determining cost of care models?
    • Inflationary factors are used to determine cost of care, purchase data comes through the Comptroller’s office
  • Hinojosa – Can we get a more detailed explanation on how you add up funding for nursing homes?
    • Looking at the total effective paid rate includes all funding sources; Quality Incentive Payment Program uses a combination of federal funds and state and local funds
  • Hinojosa – So, nursing facilities are not using their own private money to draw down ITT?
    • There are several hundred publicly owned nursing homes, they can use public funds for ITT, private nursing facilities cannot
  • Kolkhorst – Do LPPFs qualify as public moneys?
    • Yes, they do, but they have limited use purposes in Texas mostly required to hospitals, not nursing homes
  • Kolkhorst – You mentioned QIPP has over $1B in funding, and roughly 40% is public money?
    • Yes
  • Nelson – Inquires about funding from SB 8 and data in presentation, numbers not adding up
    • We did not identify funding for acute health services in this presentation
  • Perry – Have MCOs seen funding in their monthly revenues?
    • Those funds are currently being implemented as rate increases, MCOs are required to make coding system updates and providers must agree to terms, a number of providers have not complied with HHSC’s terms
  • Perry – Has anyone got the FMAP enhancements? What are the barriers?
    • Nursing facilities were not eligible, don’t have number but can get information to you
  • Perry – Is the $110m awarded by grants going to the same population who had relief already? Or is it to nursing homes and home health workers?
    • SB 8 appropriated money specifically for nursing homes
  • Perry – Raises concerns with federal money that has been appropriated and not distributed after two years into the COVID-19 pandemic, and with Texas nursing homes in dire need
  • Kolkhorst – When looking at total nursing home funding, is provider relief in there? PPP?
    • Yes, yes
  • Nelson – Provider relief funds bypassed the state government and went directly to providers, I would like to hear from LBB about the $9.3B sent to Texas providers, and see the breakdowns of where that money went
  • Huffman – Does HHSC think the national health emergency declaration will end in October? When will the federal money stop?
    • We will get a 60-day notice from the federal government; our best information is that it will be extended one more time in October and end in December 2022
  • Huffman – Is it safe to say facilities have gotten used to this $20 per day extra funding per patient?
    • Yes
  • Huffman – How many community attendant workers are there?
    • We do not know a specific number, many CAW’s work for multiple providers, we only have total number of hours worked
  • Huffman – Are nursing homes having hiring issues?
    • Providers are reporting they are experiencing workforce challenges, but also reported challenges prior to public health emergency, attributed to reimbursement rate but also the physical nature of the job
  • Perry – Are we under paying community attendant workers compared statewide and nationally?
    • According to federal labor data, $8.11 (CAW minimum wage) is significantly under the national norm, $12 is the Texas average
  • Perry – Is it fair to say this would be a significant cost to the Medicaid system, if it not for community-based care?
    • Nursing facility services are necessary, but we are prioritizing community care for elderly populations
  • Kolkhorst – Can you explain the difference between CDS and non-CDS?
    • Consumer directed services is where client is providing direction for their own services, act as the employer and select their own attendant, do not have access to the community rate enhancement program, really limited to the minimum wage (due to lack of appropriations)
    • In non-consumer directed services, client receives services from another provider, and that provider is the employer, more traditional model
  • Kolkhorst – When looking at the 10-year waiver and the budget neutrality, the current $19.63, included in PHE, is that included in budget neutrality currently?
    • The terms negotiated for the waiver included no terms for budget neutrality, probable that budget neutrality not affected
  • Hinojosa – Is there a shortage of community attendants?
    • Yes
  • Hinojosa – The $8.11 minimum wage isn’t even a living wage, major issue we need to focus on this upcoming session


Stephanie Stephens, Chief Medicaid and CHIP Services Officer, HHSC

  • Provides overview of quality assurance programs for nursing home services in Medicaid
  • Quality components of QIPP have evolved over past five years, including performance improvement projects and performance benchmarks
  • Huffman – What happens when someone doesn’t meet the benchmark or measurements for performance?
    • They do not receive the funding when it comes to that component
  • Determine risk levels for nursing facilities, high risk nursing facilities have HHSC rapid respond staff do quality visits
  • Many more quality measures in the STAR+ program
  • Kolkhorst – Looking at QIPP funding creeping above $1B, is that a result of number of facilities or inflationary and other factors?
    • There was an increase of the number of facilities participating, and also an increase in rates of services, can get information broken down to provide more detail
  • Kolkhorst – Will QIPP will grow with inflationary pressures? Or is a finite amount of money?
    • They will remain relatively the same, majority of nursing facilities are participating right now so probably will not grow much more, rate adjustments need a lot of data to happen
  • Huffman – Have facilities actually improved due to QIPP?
    • In the first two years of the program (2018-2019), QIPP facilities performed higher than non QIPP facilities
  • Kolkhorst – Does the $1.1B include the $400M in local money? Does the local money get paid back to local entity with an enhanced rate?
    • Yes; local entities are putting up funding for all providers, so the return of the dollars will not be 100%
  • Stephens – HB 2658 (87R) required HHSC to adopt rules for standards, HHSC is currently in process and will be in effect in January 2023
  • Perry – On the FMAP enhancements, do you know if the rate assessments have been passed through all providers, especially assisted home health care folks?
    • My understanding is that the enhancements have begun, but are not complete
  • Perry – Are MCOs totally in control of getting reforms done? What oversight is over the MCOs?
    • HHSC has been clear to MCOs that this money will go to providers, and that CMS will audit most likely in the future; Payments are going out in a phased process
  • Perry – Is there a way to get a timeline to providers over these phases?
    • HHSC had a stakeholder meeting recently to share information, and will continue to do so
  • Kolkhorst – I have been told by nursing facilities they have not received the initial $75,000; How much COVID funding did HHSC get for the HCBS programs? Has it been distributed?
    • Not an exact amount, HHSC created a discretionary funding plan and received approval in February of 2022, mix of one-time payments and technological changes
  • Kolkhorst – So did community attendants receive bonuses or any of this money?
    • I believe some did receive bonuses, requirement is money cannot go towards permanent salaries
  • Kolkhorst – How much are we talking? For all projects?
    • $650M right now, but would have to double check, will provide a list of projects to Committee


Michelle Dionne-Vahalik, Associate Commissioner of Regulatory Care

  • Provides overview over regularity care requirements for nursing and assisted care facilities in Texas
  • Legislature report to be finalized by November 1


Kevin Warren, Texas Healthcare Association

  • Provides summary of cost and funding information for nursing homes and assisted care facilities in Texas
  • 40% of facilities of facilities would have negative operating margins if Medicaid and other funding decreases, state funding lifeline for healthcare providers due to insufficient federal funding
  • Kolkhorst – When did the Medicaid base rate change?
    • Changed once in FY2014 and FY2015, otherwise not since 2010
  • Kolkhorst – Are federal direct payments disallowed from cost reporting?
    • We use Medicare cost reports over state cost reports because it shows the total cost
  • Kolkhorst – Is the QIPP growth number annual? Will QIPP grow?
    • Yes, that is the available capacity of the program on an annual basis but may not have been adjusted with census data
    • There is no indication of a growth factor for QIPP
  • Kolkhorst – How much of that $1.1B goes to facilities vs consultant’s vs other groups?
    • That’s a HHSC question, but 40% of that $1.1B is a down payment expense
  • Huffman – How do we guarantee that state funding goes directly to staffing?
    • The regulatory process ensures that facilities are meeting government standards; violations come up in complaints and reports
    • Facilities are directing as much as they can to staffing, but all other components have gone up as well


Mira Ryner, Coalition of Independent Nursing Home Providers

  • Provides overview of the effect of Covid-19, inflation, and gas prices on nursing home and assisted care facilities in Texas
  • Industry workforce at a 15-year low and not recovering like other industries


Eddie Parades, Stonegate Senior Living

  • Requests $475m biannually to keep facilities operating
  • Since the last QIPP increase, 15% more facilities entered; less money per facility
  • Facilities currently operating in a $32 a day payment deficit
  • Kolkhorst – What was the QIPP increase two years ago?
    • QIPP 6 has a 15% facility increase since QIPP 4, but it is capped so there is not more money
  • Kolkhorst – Are the providers not participating in QIPP less Medicaid reliant?
    • Yes, the majority are privately paid; all but 3 eligible facilities enrolled
  • Kolkhorst – What are your feelings on staff enhancement being rolled into the base rate?
    • I agree with it, the staff enhancement plan is an inefficient model that benefits Medicare and privately paid buildings
  • Kolkhorst – How has this affected your business?
    • I’ve had to decrease the number of patients, apply for loans, and get innovative about funding
  • Kolkhorst – Do you think you’ll ever get back up to your old numbers?
    • We are growing 0.1-0.2% a week nationally
    • With more baby boomers entering, there will be more growth
  • Perry – What will go into perpetuity?
    • CDC and CMS have 100 pages of new regulations
    • Ryner – An example is that unvaccinated patients entering facilities must be quarantined
  • Perry – Do you have a waiting list at facilities?
    • Ryner – No
  • Perry – If you don’t receive the $162m are you going to close facilities?
    • To stay open, I would have to look at staffing, all expenses, and potentially closing
    • The main reason for closing would be an inability to keep up with the labor market
  • Perry – The labor market will recover; people need to go back to work
    • We work in a business that cares for lives; we don’t have time to wait


Alyse Meyer, Leading Age Texas

  • Provides information regarding funding gap for nursing facilities in Texas
  • Recommends legislature evaluate a solution to close funding gap, strengthen staff enhancement program, and direct recoup funds to nursing facilities
  • Requests a student loan repayment program to attract nurses to nursing facilities
  • Kolkhorst – When talking about the recouping money, should it be included in the base rate?
    • We would like the program to be fully funded
  • Kolkhorst – How would the recouping work?
    • Because of appropriation, the program is limited every year
  • Campbell – Student repayment program? What is their obligation to stay?
    • Was a bill last two sessions that would have created a student loan repayment program for RNs, LBNs, and APRNs
    • Did not prescribe how long they needed to stay; nationally amount of time committed is three to five years


Amanda Frederickson, AARP Texas

  • Provides background on staffing shortages in Texas long term care facilities, including multiple examples of the effects of not enough staff in nursing homes
  • Advocates for transparent funding sources and greater accountability regarding long term care facilities
  • Recommendations:
    • Improve transparency – report all data, including parent company data
    • Ensure majority of public dollars are going to direct care
    • Dedicate any new funds to staffing, and ensure the funds are tracked
  • Kolkhorst – So, you don’t think our cost reporting is robust enough?
    • It is the cost reporting, but also the ownership and change of ownership processes we have in Texas
    • Medical lost ratio – requirement to spend a certain amount of taxpayer dollars on resident care, not possible in Texas because we do not know how money is being spent in our facilities
  • Schwertner – You mentioned private equity becoming a larger player in nursing homes, do you know how many are tied to PE?
    • Not sure, question for agency
  • Schwertner – When an entity applies to be a nursing home provider, how is that filled out on the form? Is the corporation or ownership of the nursing home needed?
    • We will go down a few layers to try to find the actual ownership, can see the breakdown in data, can see change of ownership data as well
  • Schwertner – Regarding change of ownership in nursing homes, does HHSC follow the three strikes rule? Do you track this?
    • Yes, we do track; We try to drill down and determine if there is any common ownership between different entities
    • But once a new owner obtains a new license, the strikes go away and start over
  • Hughes – How do we fix this? To have strikes follow on permits, regardless of ownership?
    • Legislation would have to be passed


Interim Charge 2: Medicaid


Stephanie Stephens, Health and Human Services

  • Provides update of the status of the 1115 waiver, which provides the authority for the Medicaid managed care model
  • Currently under January waiver approval
  • Hinojosa – The 1115 waiver is extended for another 10 years as approved?
    • Yes, the approval we are under is what they originally approved in January

Trey Wood, Health and Human Services

  • Provides overview of funding for the 1115 waiver and budget neutrality
  • Main reason for the extension of waiver was for budget neutrality
  • Huffman – In October of 2022, is that when they rebase budget neutrality?
    • CMS will be reconfiguring their data, so it might not be ready until session
  • Huffman – What is the worst thing that could happen?
    • $3.1b is the worst-case scenario; will re-base in 2026
  • Huffman – How can budget neutrality affect rate increases in these new rules?
    • May be limited to do increases until we build up to budget neutrality; would have room during future re-basing
  • Kolkhorst – What are the provider types whose rates fall outside of the 1115 waiver?
    • The providers whose rates are not affected are providers who are not carved into managed care, many providers for intellectual disabilities, and also providers for foster youth
  • Kolkhorst – If the MCOs rates go up, and they are rebasing, is that eroding the budget neutrality?
    • Yes, there must be a provider actuary sound rate


Steve Wohleb, Texas Hospital Association

  • Since the beginning of the 1115 waiver, it has played a central part in healthcare in Texas
  • Hospitals occur tremendous costs seeing patients which were not reimbursed, almost $4B a year
  • Medicaid expansion would not eliminate the need for this waiver, 3M Texans would still be left without healthcare coverage
  • Rural communities were disproportionately affected by loss of revenue when directed payment program was in dispute
  • Advocates for Texas approving a 12-month post-partum extension in Medicaid program
  • Kolkhorst – Why have only 60% of hospitals reported under SB 809?
    • Number of reasons, cannot name specific circumstances
  • Kolkhorst – Do you think it would be appropriate to punish hospitals who do not report?
    • I believe that is already in SB 809, Legislature needs to determine that, best first step is to try to understand why hospitals are not in compliance
  • Kolkhorst – What other states have a 1115 waiver the size of ours?
    • We are not aware of any others
  • Kolkhorst – Of the $9.3B in funding that went to surge staff, do you know the percentage that went to hospitals?
    • I do not, but this was very beneficial to hospitals at the time
  • Nelson – What would be the impacts of non-renewal for our hospitals?
    • Uncompensated care would be the major thing, many billions of dollars hospitals would have to provide


Jared Chanski, Preferred Management & Texas Association of Rural Hospitals  

  • 1115 waiver extension has been a lifeline to rural hospitals
  • Advocating for HHSC to allow rural hospitals to choose whether they want to use the S10 worksheet or current methodology spread HHSC is using
  • Also advocates for allowing rural hospitals to be exempt from application fee


Public Testimony:

Interim Charge 1: Long-term care funding


Zachary Hobbs, Self

  • Advocating for an increase of wages for long term care facilities and at home care aides


Leslie Campbell, COO of Touchstone Communities

  • Advocating for greater funding for nursing home and long-term care facilities
  • Staffing shortages are making operating difficult, not sustainable without additional funding to address the workforce crisis


Derek Prince, CEO of HMG Healthcare

  • COVID-19 has exacerbated costs for everything, but staffing in particular
  • Advocating for greater funding and increased Medicaid funding, not sustainable without more


Jessica Lukefar, Self

  • Advocating for an increase of wages for community attendants to $15/hour


Anthony Laflen, PointClickCare

  • Advocating for a funding approach for post-acute care
  • Kolkhorst – What are you saying the state should do?
    • Other state agencies have asked PointClickCare to build a tool for data storage, can connect dots between hospital and the post-acute care provider


Ron Cransten, ADAPT OF TEXAS and Texas Attendant Project (PACT)

  • Advocating for increasing appropriations for community attendants and long-term care workers


Louis LaCross, Self

  • Advocating for continuation of the 1963 stipend add on


Terry Carager, Self

  • Advocating for an increase of wages for community care attendants


Chase Bearden, Coalition of Texans with Disabilities

  • The demand for community care attendants is only going up
  • $3.9b needed to successfully fund community care attendants, wage should be increased to $17/hour
  • Advocating for an increase of wages for community care attendants


Tina Render, Self

  • Cannot afford for the 1963 stipend to go away, with rising costs of staff and products
  • Advocating for continued extension


Hunter Atkins, Self

  • Advocating for an increase of wages for community care attendants


Aaron Hargett, Buckner Retirement Services

  • Advocating for continuation of the 1963 stipend, due to rising costs of products and staff


Katherine Crasten, Self

  • Advocating for an increase of wages for community care attendants to $15/hour
  • Kolkhorst – Why would you not qualify for the bonus?
    • My employer keeps the funding from the bonus
    • HHS Staff – There is bonus funding for CDS and non-CDS employees, if attendant is employed by a corporation, they would receive the bonus, but it must be used towards staffing needs, however not required to be a bonus


Patrick Crump, Morningside Ministries

  • Advocating for increased funding to address staffing shortages


Greg Moore, CareDay Healthcare

  • Advocating for increased funding to address staffing shortages


Nancy Crawther, Self

  • Advocating for an increase of wages for community care attendants
  • Advocating for spouses to receive pay for acting as a community care attendant


Carrie Warner, Self

  • Advocating for an increase of wages for community care attendants


Belinda Carlton, Texas Council for Developmental Disabilities

  • Advocating for an increase of wages for community care attendants


Mary Naranjo, Pineywoods Home Healthcare

  • Advocating for an increase of wages for community care attendants
  • HHSC has not told her how she would get funds, how much funds she would get, very unclear guidance from agency and confusion in forms


Jeff Hamburg, Accent Care

  • Advocating for modernizing the state’s financing strategy for long term care facilities


Rachel Hamon, Texas Association for Home Care and Hospice

  • Advocating for more investment in home care to lower healthcare costs in Texas
  • Advocating for an increase of wages for community care attendants


Hannah Meyda, Protect Texas Fragile Kids

  • Advocating for an increase of wages for community care attendants


Linda Litzinger, Texas Parent to Parent

  • Advocating for an increase of wages for community care attendants


Chris Weidman, Self

  • Advocating for an increase of wages for community care attendants


Interim Charge 2: Medicaid

Angela Ott, Hogg Foundation for Mental Health

  • Advocating for expanding the 1115 waiver to mental health care
  • Advocating for expanding Medicaid so less Texans are uninsured


Adrian Trigg, Texas Medical Equipment Providers Association

  • Informs Committee of medical supply shortages and rise in costs of equipment and supplies
  • Advocating for more funding for emergency acute services, especially towards network adequacy


Nathan Roth, Self

  • College student; advocating for an increase of wages for community care attendants
  • Huffman and Roth discuss UT’s accomodations


Adrian Lloyd, Children’s Defense Fund

  • Emphasizes that funding is critical, but to not forget about the coverage gap and those who are uninsured
  • Advocating for Texas to expand Medicaid under the ACA
  • Are inconsistencies and lack of uniformities with MCOs including their grievance process
    • Sometimes is a 50% difference with what is going back to the MCO and the provider
  • Kolkhorst – MCOs come in different shapes and sizes; is one better than another? Do community health do better than for-profits?
    • Yes; is a big difference where the money goes, is no transparency
  • Kolkhorst – Having trouble with specialty provider label?
    • In DME there are many facets and is a barrier many times
    • Own medical supply company and have been denied; have contacted HHSC many times with no answer
    • Kolkhorst – Will work with you on that


Rodney Rueter, Lutheran Sunset Ministries

  • Advocating for increasing Medicaid rate to address rising labor costs and ongoing labor shortages
  • Kolkhorst – Are in QUIPP? Got expedited payments from CMS during COVID?
    • Yes; were paid back for things incurred and received last federal money in January 2021


Ann Dunkelberg, Every Texan

  • Advocating for Texas to expand Medicaid under the ACA
  • Concerned about the lack of transparency in DPPs; could bring federal scrutiny
    • Need to set up uniform reimbursement rates across the state
  • Kolkhorst – Previously argued about patient revenue and LPPFs when you go back to MFAR; 100% of FPL and below have issues entering the marketplace? What about those above?
    • Correct; do not have a lot of data, but has been record number of those looking in the marketplace
  • Kolkhorst – Want to push people into the marketplace because you get better reimbursement rates; if we did Medicaid expansion the undocumented would qualify?
    • They would not; Emergency Medicaid mirrors US citizen and legal resident requirements
  • Kolkhorst – With very open borders need to look at this with a microscope; will discuss with you offline on other things
  • Kolkhorst – Advocate for a statewide LPPF?
    • Have been told that there is a uniform program with rate enhancements; if the legislature is all in on improving rates, we should look at statewide provider participation funds
  • Kolkhorst – How do you think FQHCs are doing in their role as primary care? Know Nichols advocated for more incubator funds
    • A huge fan of FQHCs but are not disbursed equally around the state
    • Will not speak for the Association of Community Health Centers
  • Nelson – What percentage of our budget is Medicaid related? When I came in it was only 11% of the budget
  • Kolkhorst – If you consider All Funds, it would take over Article III not including the 1115 wavier
  • Kolkhorst – If 1115s were included it would be above public and higher education combined
    • All state’s main source of federal funds is Medicaid
  • Kolkhorst – Regan said we should block grant it to the states and let them figure it out
  • Nelson – Are programs that fell under Medicaid expansions that we funded with GR like women’s health and mental health; did it the Texas way
  • Huffman – Takes up 20% of the GR budget


Ellen Bonnen, Self

  • Need to be paying attendants more; need to give hiring bonuses to our attendants
  • Notes difficulties with MCOs, reimbursements, and the HHSC appeal process