Texas hospitals knock heads over Medicaid

Posted Saturday, Mar. 30, 2013  comments  Print Reprints

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If you want to know what's being done to reform healthcare delivery in Texas -- reform that's not a part of the Affordable Care Act (Obamacare) -- it helps if you can read the state budget.

Forget that, you say? Here's the short version: Programs are already in place to streamline delivery of state/federal healthcare for the poor under Medicaid, but public and private hospitals are fighting about how to pay for them.

The evidence is right there in the 2014-15 budget approved by the House Appropriations Committee and awaiting floor debate.

Look at Rider 70 under Article II's breakdown of the spending plan for the Health and Human Services Commission.

OK, so nobody's really going to do that. Here's what it says:

"It is the intent of the Legislature that the Health and Human Services Commission prioritizes Medicaid supplemental payments in a manner that maintains the full funding of the Disproportionate Share Hospital program and that equitably allocates uncompensated care payments for public hospital and private hospital groups based on the ratio of uncompensated care provided by each group."

That sounds anything but controversial, but controversial it is.

It's the front line of the battle between public hospitals like the JPS Health Network in Tarrant County and private hospitals in cities and in rural areas.

It's important to note that if you have cousins who live in rural Texas, chances are that their first option for hospital care is in one of the state's private facilities.

Nine public hospital systems put up their own taxpayer dollars under what's called the Disproportional Share Hospital program so the entire state can draw down extra Medicaid money (called upper payment limit funding) to pay for indigent care.

Robert Earley, president and CEO at JPS, says those public systems in only four counties -- Tarrant, Dallas, Harris (Houston) and Bexar (San Antonio) -- account for 87 percent of the "intergovernmental transfers" sent to the state for this purpose.

For every 87 cents the state puts up for DSH indigent care, the federal Medicaid program delivers $1, Earley says. Texas has been able to draw down more than $1.4 billion a year.

But that's for traditional Medicaid services, under which doctors and hospitals are paid based on how many procedures they perform. In 2011, the Legislature decided there's a better way.

Lawmakers approved switching to a managed-care model, under which payments are based on performance, actually improving patient health or preventing patients from ending up in the hospital in the first place.

The switch required approval from federal Medicaid officials under what's called an 1115 waiver, named after the section of the law under which it is issued.

It took a year to get the waiver, but now a whole new system is in place.

Texas has been divided into 20 regions, with one "anchor entity" coordinating planning and transition to managed care services in each region.

JPS heads Region 10, which is Tarrant, Ellis, Erath, Hood, Johnson, Navarro, Parker, Somervell and Wise counties.

Under managed care, the regions can draw down $1 in Medicaid money by investing just 42 cents, Earley says.

But the state can't have it both ways. Federal officials say Texas has to pick either the Disproportional Share Hospital upper payment limit program or managed care.

And that's the reason for Rider 70. Private hospitals have lined up behind upper payment limit, and they want the budget written that way. The large public hospital systems are behind managed care.

There's nothing comparable to Rider 70 in the budget passed by the Senate. If the House approves a budget with the rider, a conference committee will have to work out a final plan. It will all play out before the Legislature adjourns May 27.

Texans tend to knock heads when the Legislature is at work, even when the subject is taking care of each other.

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