Health & Human Services Reorganization and the Integrated Eligibility Initiative

1. 900 Lydia Street - Austin, Texas 78702 Phone (512) 320-0222 – fax (512) 320-0227 - www.cppp.org Health & Human Services Reorganization and the Integrated Eligibility Initiative One Voice: A Collaborative for Health and Human Services September 30, 2004 Celia Hagert, Senior Policy Analyst (hagert@cppp.org)

2. Overview • Reorganization/Consolidation of HHS Agencies • Proposal to Use Call Centers for Eligibility Determination • Close local offices and replace with up to three call centers and an Internet application • Significant new role for private providers and their volunteers • Outsourcing of State Agency Functions and Jobs

3. Major Concerns • Health and human services cuts that accompanied reorganization shift responsibility to local governments/private providers who do not have the resources to replace services • As a result, 83 counties, 10 cities, and three public health districts, and three chambers of commerce have passed resolutions against the new law • Proposal to Use Call Centers for Eligibility Determination • Loss of local offices/jobs • Unreasonable expectations from local nonprofit providers who do not have the resources to make up for loss of state workers • Could lead to less access to federal/state services, more dollar loss • Outsourcing of State Agency Functions and Jobs • State/regional/local job loss • Raises concerns about accountability, ability of state to monitor contractors, performance, openness Center for Public Policy Priorities

4. Reorganization/Consolidation of HHS Agencies • Consolidated eleven HHS agencies into four and placed them under the oversight of the Texas Health and Human Services Commission (HHSC). • Consolidated policy/rulemaking authority under HHSC executive commissioner • Uniform organizational structure for HHS agencies • Stripped individual agency directors of policy/rulemaking responsibilities. • Replaced agency governing boards with advisory councils—with no rulemaking authority. • Abolished most advisory committees.

5. Reorganization/Consolidation of HHS Agencies • Consolidated all administrative functions (legal services, human resources, etc.) for HHS agencies at HHSC. • Created new Office of Inspector General at HHSC; consolidated fraud/abuse functions (detection activities) for HHS agencies at HHSC. • Changes in agency structure/functions will occur at state, regional and local levels

6. The Health and Human Services Enterprise New powers & responsibilities of the Health and Human Services Commission: • HHS program/policy • HHS rate setting • All administrative functions for HHS agencies: legal, HR, contracting, procurement, purchasing, etc. • Medicaid • CHIP • Vendor Drug Program • Eligibility services (Food Stamps, TANF, Medicaid, including integrated eligibility project, TIERS) • Family violence • Child Nutrition • OIG • Ombudsman Center for Public Policy Priorities

7. The Health and Human Services Enterprise New agencies and responsibilities: • Dept. of State Health Services, DSHS (health and mental health services—includes state hospitals & community services, alcohol and drug abuse) • Dept. of Aging & Disability Services, DADS (mental retardation services—includes state hospitals & community services, community care, nursing homes, aging services) • Dept. of Assistive & Rehabilitative Services, DARS (rehabilitation services, services for the blind/visually impaired, services for the deaf/hard-of-hearing, early childhood intervention) • Dept. of Family & Protective Services, DFPS (child/adult protective services, child care regulation) Center for Public Policy Priorities

8. The Health and Human Services Enterprise Agencies that were abolished: • Interagency Council on Early Childhood Intervention • Texas Commission for the Blind • Texas Commission for the Deaf and Hard of Hearing • Texas Commission on Alcohol and Drug Abuse • Texas Department of Health • Texas Department of Human Services • Texas Department of Mental Health and Mental Retardation • Texas Department on Aging • Texas Health Care Information Council • Texas Rehabilitation Commission Note: Cancer Council became independent entity, no longer an HHS agency; moved to Article 1 of the budget (Gen. Govt.) Center for Public Policy Priorities

9. Governor The ConsolidatedTexas Health and Human Services System as directed by HB 2292, 78th Legislature • HHS Transition • Legislative Oversight Committee • 2 Senate members • 2 House members • 3 Public members • HHSC Commissioner, ex-officio Office of Inspector General Health and Human Services Commission Executive Commissioner • HHS Centralized Administrative Services • Medicaid • HHS Rate Setting • HHS Program Policy • Vendor Drug Program • CHIP • TANF • Eligibility Determination • Nutritional Services • Family Violence Services • HHS Ombudsman • Interagency Initiatives Health & Human Services Council HHSC DHS Assistive & Rehabilitative Services Council Aging & Disability Services Council State Health Services Council Family & Protective Services Council • Department of Aging and Disability Services • Commissioner • Mental Retardation Services • State Schools • Community Services • Community Care Services • Nursing Home Services • Aging Services • Department of State Health Services • Commissioner • Health Services • Mental Health Services • State Hospitals • Community Services • Alcohol & Drug Abuse Services • Department of Family and Protective Services • Commissioner • Child Protective Services • Adult Protective Services • Child Care Regulatory Services • Department of Assistive and Rehabilitative Services • Commissioner • Rehabilitation Services • Blind and Visually Impaired Services • Deaf and Hard of Hearing Services • Early Childhood Intervention Services MHMR TCADA TDH THCIC ECI TCB TCDHH TRC DHS MHMR TDoA PRS Center for Public Policy Priorities Agencies formerly providing programs 7/30/03

10. Agency Councils • New 9-member agency councils will replace governing boards. • Councils do not vote; instead make recommendations to their agency commissioner/HHSC commissioner. • Must reflect ethnic and geographic diversity of the state. • Meet quarterly • Draft of council roles/responsibilities and new rulemaking process on HHSC’s website at www.hhsc.state.tx.us/Consolidation/Councils/ Center for Public Policy Priorities

11. Status of the Reorganization • HB 2292 policy changes were effective on September1, 2003, or January 1, 2004. • New agency commissioners appointed December 18, 2003. • Organizational structure for new agencies approved. • DFPS began operations on Feb. 1, 2004; DARS on March 1, 2004. • Call center “business case” released on March 25, 2004 • DADS and DSHS began operations on September 1, 2004. • Many contracts awarded to manage reorganization/implement privatization provisions Center for Public Policy Priorities

12. New Web Sites and Numbers • www.hhs.state.tx.us — The commission's main site provides information about all of the state’s HHS programs. • www.dshs.state.tx.us — The Department of State Health Services site. • www.dads.state.tx.us — The Department of Aging and Disability Services site. • www.dars.state.tx.us – The Department of Assistive and Rehabilitative Services site. • www.dfps.state.tx.us – The Department of Family and Protective Services site. • HHSC also has a new hot line, (877) 787-8999 – a centralized referral about health and human services programs in Texas. Center for Public Policy Priorities

13. Major Concerns with Reorganization • Massive centralization of power at HHSCraises concern that HHS policy decisions will • become less open to the public, in particular, the advocates who look out for the interests of the people these programs serve; • more subject to the exclusive priorities of the governor, over those of the legislature, and therefore more susceptible to political considerations • Such a large agency (HHSC) will lead to • more bureaucracy, • confusion among stakeholders and the public over whom to contact for a specific programs, and • Bottlenecks in the rulemaking process

14. Major Concerns with Reorganization • Massive centralization of power at HHSCraises concern that HHS policy decisions will • become less open to the public, in particular, the advocates who look out for the interests of the people these programs serve; • more subject to the exclusive priorities of the governor, over those of the legislature, and therefore more susceptible to political considerations • Such a large agency (HHSC) will lead to • more bureaucracy, • confusion among stakeholders and the public over whom to contact for a specific programs, and • Bottlenecks in the rulemaking process

15. Major Concerns with Reorganization • Loss of specialized HHS agencies will mean • less specialized attention and care for clients • A lack of responsiveness to the advocates and stakeholders who represent these clients • New agency councils have no authority over policy direction or rulemaking at their respective agencies: • New rulemaking process reduces councils to a superficial advisory body with no real opportunity to affect the debate

16. Call Centers & Proposed Integrated Eligibility Model • State’s proposal would move most eligibility functions for TANF, Food Stamps, and Medicaid to three call centers. • Total eligibility staff would be reduced by 57%, from 7,864 workers to 3,377 • 57% of local offices would be closed (from 381 to 164); offices would become “Benefit Issuance Centers.” • Internet application • TIERS - New computerized eligibility determination system and database (currently under pilot) would support system • Use of 211 I&R network as gateway to call centers • Private, community-based organizations expected to DONATE 600 volunteers & 1 million hours to help clients navigate the new system.

17. Call Centers & Proposed Integrated Eligibility Model • Estimated savings of $389 million in state and federal funds over five years, 46% of which is state dollars. • Original timeline proposed implementation in September 2004 with overhaul complete by 2006 • Timeline revised in July with start-up date of May 1, 2005.

18. Call Centers & Proposed Integrated Eligibility Model • Request for Proposal (RFP) released in July for 1) call centers; 2) Operation and maintenance of TIERS (new computerized eligibility determination system and database); and 3) Health plan enrollment and EPSDT screening • Outsourcing of call centers would mean an even greater loss of state jobs, although small workforce of state staff retained to make eligibility decisions. See http://www.hhsc.state.tx.us/Consolidation/Contracting/52904334/rfp_home.html for more information about RFP

19. Key Concerns with Call Center Proposal • Good ideas that should be implemented as enhancements, not replacement • Too many untested assumptions: --211 capacity --Resources/ability/desire of CBOs --Reliability of TIERS and other technology --Ability of clients to use Internet/apply by phone • Timeline is overly aggressive with no real pilot phase. • Drastic/immediate reduction in staff without testing could lead to less access or general system failure • Could reduce access for special needs clients; raises concerns over potential ADA/civil rights violations. • Could jeopardize the billions of dollars in federal funding for these programs. Over $17 billion in benefits, state and federal, issued in 2004.

20. The “Non-Profit Tax:” Concerns over Proposed Role for CBOs • Staffing levels in proposed model are dependent on CBOs assisting clients navigate the new system; yet no formal enrollment process • Calls for unpaid volunteers, who may not be a reliable workforce • No money for staff or the constant training that will be needed • Unclear what will be expected of CBOs: Will they take applications? • No formal contracting process envisioned; decisions are left up to private companies who bid on RFP • No discussion of the need for monitoring CBO performance or penalties if CBOs fail to fulfill responsible assigned to them. • Raises questions about CBO liability or risks to CBOs of taking on this role. No discussion of CBOs’ ability to: • Meet statutory or regulatory requirements, such as a client’s “right to apply without delay” • Comply with application processing timeliness • Maintain required records and comply with privacy laws

21. Key Concerns Over Proposed Staff Levels • DHS offices are badly understaffed now; local offices and staff in a constant struggle to do more for less. • Eligibility staff at local DHS offices reduced 41% since ’97 • Caseload per worker increased 101% • Inadequate staff levels at DHS eligibility offices have led to • Poor customer service, • Lawsuits, and • Most recently, disruptions in services to Medicaid clients as a result of a backlog in the processing of renewals. • New approach could jeopardize program integrity

22. Staffing Shortages at DHS Offices SOURCES: DHS Regional Information and Performance Report, August 14, 1997; DHS Regional Summary Report, July 2003; DHS Program Budget and Statistics, November 2003.

23. Staffing Levels & Average Workload in Region 6

24. Staffing Levels & Average Workload in Region 6 Staff Workload

25. Recommendations on Integrated Eligibility Initiative • New tools should be implemented as an enhancement, not a replacement, to the current model. • New approach and tools should be thoroughly tested before local offices are closed or staff reduced significantly. • New model should begin with an analysis of how many staff are needed to run system smoothly • Business case and proposed model should be revised with full input from state eligibility workers, advocates, industry, and other stakeholders. See our full analysis at www.cppp.org/products/policyanalysis/brf-businesscase42604.html

26. New Privatization Provisions • Provides for privatization of certain administrative functions for HHS agencies, e.g., purchasing, human resources • HR contract awarded to Convergys in June • RFP for purchasing released in July. • Expansion of Medicaid Managed Care will double the population served under managed care contractors (from current 1 million to more than 2 million)

27. New Privatization Provisions • Privatization of certain mental health/mental retardation services: MR Intermediate Care Facilities (ICF-MR), state schools, state hospital Note: One bid received to operate state school that was deemed inadequate; No bids received to operate state hospital • Medicaid finger imaging pilot (see http://www.hhsc.state.tx.us/OIE/MIP/032004_Update.html) • Prescription drug contracts • Call center privatization, if cost-effective See: www.hhsc.state.tx.us/Consolidation/ICO/ico_TOR.html for more information about these contracts and the procurement process.

28. Major Concerns with Privatization of Service Delivery • Access - A more automated, impersonal eligibility system with low-skilled and untrained staff could lead to less access • Jobs - Loss of state employee jobs, particularly in rural areas • Accountability - Will state be able to protect client rights & hold private companies accountable for their performance in operating these programs? • Taxpayer dollars – Do private companies always offer the best value when their bottom line is profit? • Long-Term Impact – What is the cost to the state if things go wrong? 28

29. Recommendations for a Sound HHS Outsourcing Process • Create privatization review board (with legislative and public members) with authority over major HHS outsourcing contracts • Strengthen role of Transition Legislative Oversight Committee created by HB 2292 • Develop objectives for outsourcing related to achieving savings, improving service delivery, increasing program integrity, and local impact that will govern outsourcing decisions • Require an independent cost-benefit analysis be done prior to awarding a major contract to confirm that these objectives will be met

30. Recommendations for a Sound HHS Outsourcing Process • Develop a standard testing and roll-out process for new service delivery models that include • real pilots, • thorough evaluation, and • solid fall-back option and safeguards if new system fails • Develop a process similar to the state agency rulemaking process for gathering public input before major outsourcing decisions are considered or made