The House Committee on County Affairs, which I chair, has held two oversight hearings this interim on the Texas Healthcare Transformation and Quality Improvement 1115 waiver approved by the Obama administration. This 1115 waiver preserves supplemental hospital payments, expands reimbursement for uncompensated care provided by public hospitals, and incentivizes innovations in care delivery. Over the life of this five year waiver, a total of $29 billion in federal funding is available to participating Texas hospitals, and distributed through Regional Healthcare Partnerships (RHP) currently being created. More importantly, the 1115 waiver allows flexibility to provide services outside of hospital care and encourages prevention, intervention, and the management of chronic illnesses including HIV/AIDS, mental illness, and diabetes.

With a budget passed by the Legislature that does not account for enrollment growth in Medicaid, it is crucial that we utilize available federal funds to provide healthcare to our most needy. The 1115 waiver is our opportunity to transform healthcare delivery in Texas and ensure that quality healthcare is accessible by our most vulnerable populations through innovative ways that efficiently use county, state, and federal funds.

I will continue to update you throughout the implementation of the 1115 waiver. Below is a Houston Chronicle article that discusses some of the complexities involved and your weekly healthcare clips.

State rules for health care complicates lives, industry
By Patricia Kilday Hart

What could be scarier than government health care, where bureaucrats controlling huge pots of money create rules that affect both patient access and the ability of providers to make money? Thank goodness we live in Texas, where our state leaders would embrace secession before letting government paper-pushers dictate how private health care entities do business. It would rain flying pigs first, right?

Better check that weather report. When Gov. Rick Perry signed the new state budget last summer, he set in motion a little matter called the “Texas Healthcare Transformation and Quality Program Medicaid 1115 Waiver,” an administrative action that revolutionizes how hospitals and other health care organizations will earn money from the federal government.

No longer will the current – and complicated – lump-sum payments be issued for hospitals treating Medicaid patients.

Instead, the waiver empowers the state’s local hospital districts to create new (and probably more complicated) plans dictating how providers get paid for treating the poor. That strange reverberation you’ve noticed across the city isn’t your imagination, it’s the racing heartbeat of Texas health care executives, whose business models could be thoroughly upended in the next six months.

In Houston, Harris County Hospital District CEO David Lopez maintains a cool outward appearance, but his words convey the magnitude of being tasked with “transforming” Texas health care: “We’re being asked to do something that’s never been done before.” At the state level, Health and Human Services Commissioner Tom Suehs has called it the biggest transformation of Medicaid – the federal health care program for the poor – in his career.

How did we get here?

What has everyone’s blood pressure rising is this: One, nobody understands how it’s going to work; and, two, it’s already in place. Also, the state could win some $14 billion in additional medical dollars – or lose an equal amount by not managing the program correctly. Lopez compares his task to flying an airplane as he builds it.

How did we get here? Faced with a budget crisis, Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus asked all state agencies in 2010 to find ways to trim their budgets. At HHSC, Suehs quickly targeted extending the state’s managed care system for Medicaid to the Rio Grande Valley, which for political reasons had escaped the additional scrutiny. That would save the state an additional $400 million in real money, except it had an unpleasant effect of costing the state $1.9 billion in a complicated (no, I really can’t use that word too much in this story) federal matching formula that pays hospitals for charity care.

So Suehs and legislative leaders decided to ask the federal government for a “waiver” that would allow them to literally reinvent how Medicaid dollars will be disbursed over the next five years.

Under the new plan, the state’s hospital districts are in charge of creating “regional partnerships” with health care providers in a multi-county era, based on a survey of local needs. Providers will be reimbursed, based on their true costs of delivering health care to the indigent, and also have an opportunity to win reimbursement for delivering health care in creative new programs if they meet certain metrics. Which will be determined in lots of meetings over the next few months.

Going to get stormy

“Change makes people nervous,” acknowledged Rep. Garnet Coleman, D-Houston. “This turns the whole thing upside down.” Nonetheless, he’s a proponent of the waiver. The old, lump-sum payments to hospitals were inefficient, he says, and some providers made a lot of money off what should have provided more health care to the poor.

Both Lopez and Coleman believe that a new funding scheme can reduce public health care costs by cutting down on over-utilization of expensive services – like the emergency room. Putting more money into primary care and mental health services will reduce ER use. That in turn, will help Texas prepare for the implementation of the federal health care reform law, which will add significant numbers to the Medicaid rolls in 2014.

How did such a revolutionary idea get adopted by the Legislature with so little public debate? “Tom Suehs is a good salesman, and the governor didn’t get in the way,” Coleman told me. Conservatives were assured that the waiver would not expand Medicaid.

“It can be a very good thing for Texas,” said Coleman, chairman of a legislative committee overseeing the issue. “But we need to build trust.” That will involve winning over such disparate interests as county elected officials, medical school presidents, hospital CEOs and doctor organizations. There’s a Nobel Peace Prize in this for someone.

Recreating a government program that underpins much of the state’s economy will create winners and losers. As one observer told me, the “fundamental financials” will change for everyone delivering health care. The weather ahead may not produce flying pigs, but it’s likely to get stormy. A little rain is going to fall.

This Week’s Health Clips

Kaiser Health News: Important New Understanding About Essential Benefits? Not Everyone Thinks So
The Department of Health and Human Services released a document intended to preview the kinds of benefits most health plans must offer starting in 2014. The federal government in December gave states significant leeway to decide what “essential benefits” must be included in coverage sold to individuals or small businesses under the 2010 health law.

Los Angeles Times: Health law delivers $2.1 billion in savings on drugs for seniors
In the first full year of the new healthcare law, 3.6 million people in the government Medicare program saved $2.1 billion on prescription drugs in 2011, the Obama administration announced Thursday. The savings are one of the first tangible benefits of the sweeping overhaul that the president signed in March 2010.

The Washington Post: White House, Religious Groups in Fight Over Doctrine, Re
ligious Freedom and Contraception

The Obama administration’s decision requiring church-affiliated employers to cover birth control was bound to cause an uproar among Roman Catholics and members of other faiths, no matter their beliefs on contraception.
The regulation, finalized a week ago, raises a complex and sensitive legal question: Which institutions qualify as religious and can be exempt from the mandate?

The New York Times: Apologizing, Cancer Group Reverses Planned Parenthood Decision

The nation’s pre-eminent breast cancer advocacy group, the Susan G. Komen for the Cure foundation, apologized on Friday for its decision to cut most of its financing to Planned Parenthood for breast cancer screening and said it would again make Planned Parenthood eligible for those grants.

Huffington Post: Susan G. Komen Reverses Planned Parenthood Decision, Pledges to Continue Funding
Following a massive public backlash over its decision to pull funding for breast cancer screenings from Planned Parenthood, Susan G. Komen for the Cure founder Nancy Brinker apologized to the family planning organization on Friday and said Komen will preserve its eligibility for future grants.

Politico: Justice Dept. to SCOTUS: Don’t overturn entire law
Last week, the Obama administration told the Supreme Court that if the justices rule that the health reform law’s mandate is unconstitutional, they don’t need to get rid of the entire law. “Other provisions can operate independently and would still advance Congress’s core goals of expanding coverage, improving public health and controlling costs even if the minimum coverage provision were held unconstitutional,” Justice Department lawyers wrote.

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