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County Affairs Holds Hearing on Health Care Reform

By Rick Thompson
TAC Legislative Staff

On Sept. 15, the House Committee on County Affairs heard invited testimony on the progress of a state initiative to expand managed care programs to new counties across the state. The testimony included representatives from the Health and Human Services Commission (HHSC), teaching hospitals, hospital districts, mental health advocates, rural and community hospital associations and the County Judges and Commissioners Association.

The 82nd Legislature directed the HHSC to expand managed care statewide to achieve state budget savings and preserve hospital access to funding consistent with Upper Payment Limit funds (UPL). In order to achieve this, HHSC submitted a proposal to the federal Centers for Medicare and Medicaid Services (CMS) in July creating a Section 1115 Demonstration Waiver.

According to testimony provided by Billy Millwee, associate commissioner for Medicaid and CHIP, the proposal includes plans for statewide expansion of Medicaid managed care, while protecting federal supplemental hospital payment funds, creation of Regional Healthcare Partnerships (RHPs), transition to quality-based payment systems for managed care and hospitals and diversion of savings generated by the proposed changes into a pool to cover uncompensated care costs for hospitals and other providers.

The purpose of the waiver is to protect hospital supplemental payments (i.e. UPL), expand allowed reimbursement for uncompensated care, incentivize delivery system improvements and improve access and system coordination and allow RHPs, which will be partnerships anchored by public hospitals in coordination with local governments and other stakeholders.

During Millwee’s testimony, House Committee on County Affairs Chairman Garnet Coleman asked several questions regarding county involvement, including whether the plan will turn into a system where counties are operating in place of the state in the Medicaid program.

Millwee responded, “No, this (waiver) does not fundamentally change the structure of the Medicaid program or impose any unfunded mandates on counties. All it does is take those UPL dollars and put them into the Opportunity Pool so if a county wants to participate and has the Intergovernmental Transfer (IGT) to participate and draw down those dollars, [it can].”

Millwee said he couldn’t see a situation where he would require the counties to provide the IGT, since it’s a voluntary program.

Coleman also asked if counties would be liable for new clients eligible under the Patient Protection and Affordable Care Act. Millwee replied the state responsibility to fund Medicaid has not changed and it’s not mandated in the waiver for counties to pick up that cost.

“Stranger things have happened,” Coleman said. “I’m just trying to make sure counties are not on the hook for funding the Medicaid program in perpetuity and when the dollars actually drop, somebody doesn’t turn and say 'y’all have to come up with those dollars with your ad valorem tax.'”

Millwee replied that those requirements are not in the waiver.

Jim Allison, general counsel to the County Judges and Commissioners Association of Texas, offered testimony to the committee. After outlining the county healthcare structures in place, Allison warned to be careful moving forward because of the issues that could impact counties, including intergovernmental transfers, which are local government taxes commonly set by the commissioners court that maintain a county’s ability to contract with providers.

TAC will continue to monitor and report on the progress of the waiver, which is expected to be approved in early October. As one person testified, “this is an airplane being built while we are flying it.”

Supporting Documents:
Presentation to House County Affairs Committee on Texas Healthcare Transformation and Quality Improvement Program 1115 Waiver
1115 Waiver Proposal and Information
County Affairs Hearing Video