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Texas Legislative Update. Healthcare Landscape 2013 John Hawkins Texas Hospital Association. Still implementing changes from 2011:. Medicaid Managed Care Statewide = no more UPL funding Medicaid Transformation Waiver transitions UPL to new regional payment arrangement
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Texas Legislative Update Healthcare Landscape 2013 John Hawkins Texas Hospital Association
Still implementing changes from 2011: • Medicaid Managed Care Statewide = no more UPL funding • Medicaid Transformation Waiver transitions UPL to new regional payment arrangement • 10% rate cut plus transition to inpatient statewide rate (SDA) with add-on for high cost services (trauma, teaching and wage adjustment) • Diagnoses codes expanded and implemented (MS-DRG to APR-DRG) • Outpatient cuts, including 40% cut for non-emergent patients in the ED • Medicaid & Medicare Dual Eligible cuts • Maternity and NICU changes include no payment for elective deliveries before 39 weeks, and NICU accreditation coming soon • Potentially Preventable Readmission reductions 9/1/2012 (now delayed to Spring 2013)
Regional Healthcare Partnerships • All 20 RHP plans were timely submitted to HHSC • Some 1,341 Category 1 and Category 2 projects were proposed in the 20 plans. • Most common issues are the failure to demonstrate patient benefit and insufficient information to justify the claimed valuation • HHSC will be conducting two reviews: a technical review and a valuation review
January 8, 2013 83rd Texas LegislatureConvenes
The Upcoming Session • Historic Turnover in the Texas Capitol • Texas Senate • 4 new senators of 31 • New Finance & Education committee chairs • Texas House • Speaker Straus retains gavel? • 40 new members of the House (150 total) • Tea Party Effect • Limited growth and revenue options
State Budget Situation • For 2014-15, the state can expect to have $101.4 B in funds available for general-purpose spending • This represents a 12.4 percent increase from the corresponding amount of funds available for 2012-13 • State has an $8.8 B surplus compared to a $27 B shortfall last session • Strong sales tax collections and oil and gas severance fees
House Bill 1 • The bill appropriates $89.1 B in General Revenue, and a total of $187.7 B in All Funds • Assumes the passage of a $6.8 billion supplemental bill in the coming weeks • Represents a $2.2 billion decrease from 2012-13 levels and spends $3.7 billion less than allowed by the Constitutional Spending Limit and $5.5 billion less than is available under the Comptroller’s Biennial Revenue Estimate
Priority Budget Issues for THA • How to Fund Medicaid • State Share for the Transformational Waiver • State Share for Medicaid DSH • Acute Care Provider Rates • Outpatient Provider Rates • Graduate Medical Education • Physician Rates and Participation • Workforce (nursing shortage, allied health) • Mental Health • Trauma Fund Maintained, Fully Allocated
LBB GEER Report • Allowing Medicaid expansion permitted under ACA to be enacted at a county-by-county level • Funding, in part, the Texas Medicaid DSH program by placing an assessment fee on non-public hospitals • Increasing state-owned hospital participation in drawing down payments made under the Transformational Waiver’s Uncompensated Care Pool • Increasing oversight of Medicaid managed care organizations by HHSC • Requiring that Medicaid services provided by advanced practice nurses and physician assistants be reimbursed at a rate lower than the physician rate • Identifying and limiting “unnecessary” diagnostic ancillary services and adopting cost-effective strategies to ensure appropriate use of these services in the Texas Medicaid program • Maximizing the capacity of nursing education programs to reduce the shortage of nurses in Texas
Seeking a Solution for DSH Funding • THA is working with the Legislature to secure additional funding for Medicaid DSH • It is expected that FY 2013 DSH payments, in the aggregate, will be funded at about 80-85 percent of FY 2012 amounts • FY 2013 “state share” DSH funding is estimated to be $418 million ($318M transferring public hospitals + $100M state funds), compared with $502 million provided by intergovernmental transfer in FY 2012
HHSC NICU Council Annual Report • THHSC, DSHS and a proposed task force should collaborate to develop a process for the designation of maternal and neonatal levels of care for hospitals performing deliveries and/or caring for neonates: • Allowing individual facilities to have different levels of maternal and neonatal care; and • Limiting Medicaid program payments to designated facilities. • The Task Force should be made up of representatives from the NICU Council plus one general hospital representative (current constituency = 12 doctors, 1 children’s hospital CEO, and 1 children’s hospital representative) • The levels of neonatal care and maternal care should be based on the current American Academy of Pediatrics standards and current Guidelines for Perinatal Care publication
SCOTUS Ruling on PPACA • March 2010, the Patient Protection and Affordable Care Act was signed into law • Challenged by 26 states and NFIB • June 28, 2012, Supreme Court rules: • Individual Mandate is constitutional • Medicaid Expansion is optional for states • July 16, 2012, Gov. Perry says Texas won’t expand its Medicaid program or create a state insurance exchange, leaving it up to the feds
AHA & THA Background on ACA • Hospitals agreed to $155B in cuts in Medicare and Medicaid over 10 years • In return for more insured patients: • Insurance Exchanges w/ Subsidies for Affordability • Medicaid expansion to 133% of FPL, which equates to $30,657 for a family of 4. • Insurance Mandate • Insurance Reforms (lifetime limits, preexisting conditions, medical loss ratios, etc.) • Movement to a Quality-Based Payment System • Full expansion was financed by $500B in cuts to hospitals, home health, nursing homes and Medicare advantage plans
We’re Number One • More than 6B uninsured in Texas today (#1) • If Medicaid expanded to 133% FPL ($30,657 family of 4): • Moderate Expectations = 3M more covered in TX • 50% private coverage, 50% Medicaid • 11.6% of Texans remain uninsured • With no Medicaid expansion and only increase in private insurance coverage = 4.4M still uninsured
Budgetary Considerations of Expansion • Texas cost estimate to fully expand ACA Medicaid = $15.5B over 10 years • Includes the “Woodwork Effect” of those eligible today • 100% federal for 3 years, 90% for remainder • Federal matching funds = $100.1B over 10 years • Net gain to Texas = $85B + more insured Texans • Doughnut hole created for 1 million Texans • Over 100% FPL can go into exchange w/ subsidy • Under 100% not eligible for exchange so remain uninsured because priced out of market
Medicaid Expansion Considerations • Cost • EMTALA -1986 in Budget Reconciliation bill • TX Hospitals already providing $5B/year in UC. • Cost Shift from the Uninsured • Private insurance now $1,800/year to cover the 1 in 4 Texans who are uninsured. • http://www.americanprogressaction.org/wp-content/uploads/issues/2009/03/pdf/cost_shift.pdf • Increased Medicaid Coverage will reduce mortality among adults • Esp. ages 35 – 64, minorities, impoverished areas • http://www.nejm.org/doi/full/10.1056/NEJMsa1202099
Economic Benefit of Expansion • Perryman Report on Economic Activity of Expansion: • Medicaid expenditures lead to substantial economic activity, federal funds inflow, reduction in costs for uncompensated care and insurance, and enhanced productivity from a healthier population. • When these outcomes and the related multiplier effects are considered, every $1 spent by the State returns $1.29 in dynamic State GR over the first 10 years of the expansion. • Over the first 10 years of implementation, economic gains (even when fully adjusted for the diversion of State funding for other purposes) include an estimated $255.8 billion (2012 dollars) in output (real gross product) and 3,031,400 person-years of employment (an average of over 300,000 per year). • http://www.perrymangroup.com/reports/MedicaidExpansionwithTables12_1003.pdf
Debate Entering 2013 Session • Is Medicaid “broken” and how to fix it? • Desire for more flexibility for states in admin of Medicaid. • Value of Medicaid: • Non-disabled children are 66% of Medicaid caseload, 32% of cost. • Aged and disabled are 25% of Medicaid caseload, 58% of cost. • How to expand coverage to adults under 100% of FPL ($30k) and address the doughnut hole. • Can we rely on DSH to continue to cover the cost of the uninsured and Medicaid shortfall? • Growth of HHS portion of the budget. • 32% is HHS; 42% on Education
Bottom Line for Hospitals • Hospitals cannot sustain 25% uninsured rates or additional payment cuts in 2013 without meaningful coverage expansion • Viable options must be found • Hospitals need financial stability to be able to reform the system to lower cost and increase quality: • Continued focus on payment cuts and reforms • Delivery system reform (ACOs, EHRs, etc.)
Questions? John Hawkins Senior Vice President Government Relations 512/465-1505 jhawkins@tha.org www.THA.org