Medicaid Fee Update
Children's Medicaid Eligibility
Medicaid Cost Containment and Budget Issues
Other Medicaid Budget Riders
Medicaid Coverage/Scope of Services
Medicaid Rate Setting and Reporting
Medicaid Managed Care Reform
The convergence of several socioeconomic factors - growing
demand for services, rising health insurance premiums and medical
costs, a declining provider base, and chronic underfunding of the
program - compelled the Texas Legislature to spend much of its time
during the 77th session addressing Texas' deteriorating Medicaid
Despite a tight revenue picture and competing demands to fund
other legitimate state needs, such as teacher's health insurance
and state employee pay raises, legislators successfully advocated
for Medicaid reforms targeting three primary issues:
Medicaid provider reimbursement,
Eligibility simplification for children's Medicaid,
Medicaid administrative and managed care reform.
All of these reforms were at the top of medicine's health care
agenda for the 2001 session, resulting in a three-for-three victory
for TMA's Medicaid legislative package. Unfortunately, Gov.
Rick Perry vetoed the omnibus Medicaid bill, SB 1156, which
contained all of the association's Medicaid managed care
administrative simplification measures (described below in
detail). TMA is now working closely with the Health and Human
Services Commission (HHSC) to identify ways to resurrect Medicaid
managed care reform through the regulatory process.
Additionally, the legislature adopted scores of other
Medicaid-related bills designed to improve access to care and
improve care coordination and patient management, including bills
extending coverage to women diagnosed with breast or cervical
cancer, piloting disease management for children's asthma,
expanding the use of and reimbursement for Medicaid telemedicine
services, and establishing a study to examine how to extend
coverage to Texas' migrant children traveling to other states.
Below is a summary of each component of the 2001 Medicaid reform
MEDICAID FEE UPDATE
Responding to mounting concerns about a declining and
insufficient Medicaid provider base, the 77
legislature allocated $197 million in state funds to update
reimbursement rates for physicians, allied health professionals,
dentists, hospitals, and Medicaid health plans.
Earmarked for physicians and allied health practitioners is $50
million in state funds.
Over the biennium, these funds will be matched with another $75.4
million in federal monies, creating a total increase of $125.4
million. HHSC is charged with implementing the fee increase;
however, the appropriations rider establishes specific parameters
for use of the new monies. The monies allocated for physicians and
professional services will be targeted toward the following:
Early Periodic Screening Diagnosis and Treatment (EPSDT)/Texas
HealthSteps, including a "bonus" payment for providers who provide
care within the recommended time frames;
Office-based evaluation and management codes, with the goal of
promoting preventive care and rewarding high-volume Medicaid
Other primary care codes.
In developing parameters for distributing the new monies, the
legislative budget writers consulted with TMA on the best approach
given limited dollars. The legislature and TMA agreed that what was
ultimately adopted is enough to retain existing Medicaid physicians
and other health care providers, but not enough to
new Medicaid providers or those who already have left the program.
That being said, the new monies substantially will improve
reimbursement for selected services, particularly EPSDT/Texas
In determining how to apportion the new monies within the
guidelines established by the appropriations rider, HHSC is
required to consult with the Physician Payment Advisory Committee
(PPAC), a body comprising 11 to 15 physicians chosen from
geographically diverse primary and specialty care practices. TMA
will work closely with HHSC, state specialty and county medical
societies, and the Texas Osteopathic Medical Association to select
qualified candidates for PPAC. The first meeting of PPAC will be
held later this summer. Issues that the PPAC will help determine
include defining a "high-volume" provider, determining the
methodology for bonus payments, and identifying other CPT codes
that should be selectively increased.
Already, HHSC has allocated a portion of the fee increase toward
increasing Texas HealthSteps rates.
Effective on or about Sept. 1, 2001, the new reimbursement rate
for the EPSDT medical screen will be $70, up from $49.
A final implementation date will be set after the Center for
Medicare and Medicaid Services (formerly the Health Care Financing
Administration) approves the change.
As directed by the appropriations rider, Medicaid managed care
plans must pass the fee increase directly on to participating
network physicians and providers. Medicaid managed care plans
received a separate increase of $35 million to augment their
legislature included a specific rider within SB 1 specifying its
intent that monies be targeted to "recognize and reward"
high-volume Medicaid practitioners where "Medicaid funding is vital
to the health care system."
PPAC will be involved in determining the methodology for rewarding
In addition to the rate increase for Medicaid professional
services, the legislature allocated new state monies toward the
$35 million for outpatient hospital services,
$20 million for dentistry,
$35 million for Medicaid HMOs, and
$4.5 million for Medicaid STAR+PLUS (Harris County managed
care pilot for acute and long-term care).
For long-term care services, the legislature allocated $190
million in general revenue for nursing home and hospice rates and
changes in client acuity levels.
CHILDREN'S MEDICAID ELIGIBILITY SIMPLIFICATION
Despite the tremendous success of the Children's Health
Insurance Program (CHIP) in bringing affordable health insurance to
Texas' low-income children, the state lags way behind in covering
children eligible for Medicaid.
An estimated 600,000 Texas children are considered Medicaid
eligible but not enrolled. Recent surveys of low-income Texas
families show that the primary reason parents do not enroll their
children in Medicaid is the hassle: long waits for appointments,
inconvenient office hours, and complicated application and
enrollment forms. CHIP-eligible families do not face these
SB 43, authored by Sen. Judith Zaffirini (D-Laredo) but
sponsored by a bipartisan group of Senate and House members,
streamlines children's Medicaid, mirroring the efforts of 48 other
states. Governor Perry endorsed the bill as did leaders of the
Texas Conservative Coalition, a group of primarily Republican House
The bill directs the HHSC and Department of Human Services to
implement the following:
Establish a consolidated application for Medicaid and
Allow mail-in application and re-certification for
Allow a simplified, self-declared assets test that is the
same as CHIP, with no additional documents or proof
Phase in continuous eligibility for children through age
19, with 6 months continuous eligibility by February 2002 and
12 months continuous eligibility as early as September 2002 and
no later than June 2003;
Direct HHSC to establish a process promoting smooth
transitions from Medicaid to CHIP;
Require "health care orientation" for
Medicaid enrollees; and
Establish policies to ensure that children get their Texas
HealthSteps preventive care services.
In the provision requiring families to undergo a "health care
Medicaid enrollees, the term "health care orientation" is not
defined. The bill specifically states that "health care providers"
may provide the orientation. TMA is working with the state Medicaid
agencies to define what an "orientation" will be and also to devise
reimbursement policies for the new requirement.
SB 43 also establishes policies to ensure that children get
their Texas HealthSteps preventive care services. This too will be
part of the rulemaking process, which TMA already is working on
Additionally, SB 43 includes provisions allowing the state to
"lock in" a Medicaid patient with his or her health plan. During
the first three months of participation in Medicaid managed care,
patients will be able to switch plans for any reason. After the
91st day of participation, HHSC may require that the patient stay
in his or her health plan for the remainder of the year
there is good cause.
To fund simplification, the legislature allocated $122.6 million
in general revenue.
MEDICAID COST CONTAINMENT AND BUDGET ISSUES
Mirroring national health care spending trends, Texas' Medicaid
costs are heading upwards. Rising costs are attributable to
three primary factors - caseload growth, increasing utilization of
services, and medical inflation, including the costs of newer and
better pharmaceuticals. Though the projected growth rate -
less than 8 percent - is well in line with or even below private
sector cost growth and the growth in other public programs (such as
the Employee Retirement System), any increase in Medicaid spending
significantly impacts Texas' budget. Approximately 40 percent of
Texas' Medicaid funding is paid by the state, while the remainder
is paid by federal matching dollars.
In response to the program's escalating costs, in February the
chairs of the Senate Finance and House Appropriations committees
appointed a joint, bipartisan Medicaid workgroup to develop
recommendations to streamline the Medicaid program and improve
Recommendations from the workgroup were included within SB 1156,
which was vetoed by the governor (detailed below). However, SB 1,
the state's appropriations bill for 2002-03, also enumerates
Medicaid cost-saving mechanisms that HHSC
pursue over the next two years. Cost-savings strategies
Statewide expansion of Medicaid managed care for pregnant
women, children, and adults and elimination of the prescription
drug limit. Though not specifically stated in the rider, the
managed care model most likely to be used is primary care case
management (PCCM), which TMA supports (estimated savings $17.9
Mandatory enrollment of disabled Medicaid patients into
Medicaid managed care. Currently, disabled patients may
voluntarily enroll ($6.1 million).
Expanded use of case management services, particularly for
complex, high-cost patients ($3 million).
Selective contracting for hospital inpatient services
"Best pricing" structure for Medicaid drug purchases ($22
Required supplemental rebates in selected therapeutic
categories ($14 million).
Reduced hospital outlier payments ($6.1 million).
Expanded use of the Health Insurance Premium Payment
(HIPP) program. Under HIPP, which is already in limited use in
Texas, a Medicaid-eligible patient with access to employer
health insurance can be enrolled in that plan
it is more cost-effective to the state. The state must pay
out-of-pocket expenses and benefits eligible under Medicaid but
not through the employer's plan ($3.2 million).
Establishment of a sliding-scale copayment for Medicaid
patients. Federal law currently limits the use of patient cost
sharing, so a federal waiver would be needed to require
copayments for all Medicaid patients. Without a waiver,
copayments could only be used for the elderly and disabled
populations ($3 million).
Increased utilization review of pharmaceutical usage
either through a pharmacy benefit manager or in-house function
A pilot of automatic dispensing machines in nursing
facilities ($3.2 million).
Medicaid waiver for psychotropic medications ($5.9
SB 1 also includes a rider authorizing HHSC to contract with a
consultant to identify additional savings within the Medicaid
It also appears that HHSC will proceed with the consolidation of
Medicaid acute care services within the commission.
Currently, the Texas Department of Health oversees the acute care
component of Medicaid. SB 1156, vetoed by the governor,
authorized the consolidation and also required the appointment of a
legislative oversight committee to guide the transition. In vetoing
SB 1156, Governor Perry argued that HHSC already had the authority
to consolidate. While some lawmakers disagree about whether
consolidation can proceed without statutory language, in meetings
with TMA, HHSC has indicated the consolidation plan will move
forward, effective Sept. 1, 2001.
OTHER MEDICAID BUDGET RIDERS
Related to the riders allocating new state monies for Medicaid
provider rate updates (see "Medicaid Fee Update" section above)
were riders directing HHSC to pursue additional federal funds for
border health initiatives and coverage for low-income patients,
including the following directives.
Enhanced Federal Funding for Border Health Care
SB 1 includes a rider directing HHSC to
work with the federal government to develop an "enhanced"
federal matching rate for Medicaid and other federal programs
operated along the Texas-Mexico border.
The federal government currently pays 60 percent of Texas'
Medicaid costs. In recent years, the federal matching portion
has declined, reflecting the state's economic prosperity.
However, Texas' border with Mexico presents challenges with which
few other states must contend, such as high rates of new and old
world diseases; public health threats such as contaminated air,
water, and soil; and health care for large numbers of immigrants
seeking refuge within the state. Enhancing Texas' federal Medicaid
match rate would recognize Texas' unique conditions and much-needed
funding for increased provider reimbursements, health care
infrastructure development, and public health initiatives.
TMA already is collaborating with HHSC and a coalition of other
border states to develop the policy arguments supporting approval
of an enhanced federal match rate.
Waivers to Expand Coverage to Low-Income Patients
SB 1 also directs HHSC to pursue federal waivers allowing the state
to pilot prescription drug coverage for low-income adults with
selected behavioral health disorders or HIV/AIDS. The governor
vetoed the statutory component of the riders, SB 1156. However,
HHSC has sufficient authority to pursue the waivers without
implementation of SB 1156.
Medicaid Managed Care GME Carve-Out
SB 1, the state's appropriations act, directs TDH to enter into a
memorandum of understanding with HHSC to carve out Medicaid
graduate medical education (GME) payments from payments to managed
care organizations. Payments for GME support are to be made
directly to teaching programs based on Medicaid volume and number
of filled positions in accredited medical residency
MEDICAID COVERAGE/SCOPE OF SERVICES
Breast and Cervical Cancer Coverage
SB 532 by Sen. Jane Nelson (R-Flower Mound) and Rep. Glen Maxey
(D-Austin) authorizes Texas to implement the Breast and Cervical
Cancer Treatment Act (BCCTA), which was adopted and funded by
Congress in October 2000. Under current law, low-income,
uninsured women can receive screening exams for breast and cervical
cancer through Texas' Breast and Cervical Cancer Control Program
(BCCCP). However, if a woman is diagnosed with breast or cervical
cancer, funds previously have not been available for treatment.
This gap in service has presented the state with an ethical dilemma
for years. To date, the gap has been overcome through the
generosity of physicians, hospitals, and treatment centers that
have been absorbing the costs to provide BCCCP clients with the
necessary surgery, radiation, or chemotherapy following
BCCTA gives Texas a generous matching rate - 74 percent of the
program's costs will be paid by the federal government. An
estimated 200 Texas women are expected to benefit annually from the
passage of SB 532.
SB 532 authorizes HHSC to provide full Medicaid benefits to
uninsured women under age 65 who are identified through the BCCCP
in Texas and are in need of treatment for breast or cervical
cancer. TMA, along with the American Cancer Society and other
stakeholders and experts, actively supported SB 532.
The bill, which takes effect Sept. 1, 2001, specifies the
Medicaid coverage must be provided for a continuous period
during the course of treatment;
The department must simplify the enrollment process for
Medicaid providers and adopt rules to allow the use of
presumptive eligibility for patients eligible for coverage
under this act;
The state cannot require a face-to-face interview in
determining a person's eligibility for Medicaid.
Medicaid Buy-In Pilot for Disabled Patients
Many disabled patients who are capable of working choose not to do
so because of the risk of earning too much and losing Supplemental
Security Income (SSI) and Medicaid coverage. SB 531, by Sen. Mike
Moncrief (D-Fort Worth), establishes three pilot projects to extend
Medicaid benefits to disabled patients between the ages of 16 and
64. In 1999, Congress adopted the Ticket to Work and Work
Incentives Improvement Act authorizing states to set up buy-in
arrangements for disabled workers. The pilots will be implemented
in one urban area, one rural area, and one area along the
Texas-Mexico border that also have a local workforce development
Additional eligibility guidelines, such as the patient's income,
assets, and resource limitations, will be established by HHSC.
Patients may be required to share in their health care costs by
paying copayments or a portion of their premium.
The bill is effective Sept. 1, 2001. By December 2002, HHSC is
required to report to the legislature findings about the
effectiveness of the three pilots. If the pilots are successful,
HHSC is directed to include a request for funding of the program in
its budget request for 2004-05.
Medicaid Coverage for Adolescent Foster Children
SB 51 by Senator Zaffirini extends Medicaid benefits to foster
children who "age out" of the program. Foster children
currently are eligible for Medicaid benefits. Though Medicaid
covers children up to age 21 through the Medicaid
EPSDT/Comprehensive Care Program, when foster children leave their
foster home or residential facility at age 18, Medicaid benefits
end. Under the federal "Foster Care Independence Act of 1999,"
states are allowed to extend coverage to these children up to age
21. SB 51 requires HHSC to extend Medicaid to independent foster
adolescents as allowed by federal law. The bill becomes effective
Sept. 1, 2001.
Medicaid Case Management
In an effort to curtail Medicaid costs, Rep. Kyle Janek (R-Houston)
passed HB 1516 directing TDH to establish a case management program
for patients with catastrophic illnesses or injuries. TDH will
identify the services to be assigned to a case manager. As part of
the case management program, patients will receive assistance with
making arrangements to receive medical services, travel and lodging
in connection with the care, education of the patient and family
members about the illness or injury, referral to appropriate
support groups, and other services that will result in better,
Migrant Care Network
HB 1537 by Rep. Garnet Coleman (D-Houston) and Sen. Mike Moncrief
(D-Fort Worth) directs HHSC to study the feasibility of contracting
with one or more existing networks to arrange for or provide
out-of-state coverage to Medicaid or CHIP-eligible migrant children
whose parents reside in Texas and intend to return to Texas at the
end of their seasonal employment in another state. Texas is home to
thousands of migrant and seasonal agricultural workers. While many
of these families' children are eligible for Medicaid or CHIP,
while out of state, the children frequently go without health care
coverage because Texas does not have arrangements with other states
to extend Texas Medicaid or CHIP coverage.
HB 1537 also requires that if the results of the study indicate
that a migrant care network is cost-effective, HHSC should proceed
with development of the network, including development of
appropriate eligibility and enrollment standards. HHSC will issue a
report on its findings to the governor and legislature prior to the
2003 legislative session.
Health Insurance Premium Payment (HIPP) Program
Seeking to expand the use of private health insurance in the
Medicaid and CHIP programs, Rep. Carl Isett (R-Lubbock) passed HB
3038. The bill allows the state to expand the use of a
little- known program within TDH that enrolls Medicaid patients
into employer-sponsored health plans. When a Medicaid recipient has
access to employer-sponsored coverage, the HIPP program allows TDH
to require a patient to enroll in the group health benefit plan
rather than Medicaid if it is cost-effective to do so. Just as for
patients enrolled in regular Medicaid, patients enrolled in the
HIPP program do not pay copayments or other cost-sharing
arrangements; plan premiums and cost sharing are paid by the state.
Additionally, Medicaid serves as the secondary insurer, covering
services available in Medicaid but not covered by the employer's
HB 3038 also states that if enrolling a Medicaid patient in a
group health benefit plan also requires the enrollment of a
non-Medicaid eligible parent or other family member, TDH may pay
the family premium, again assuming it is cost-effective for the
state. However, the state will not pay any cost-sharing
requirements for the parent or family member who is not Medicaid
Upon notice from TDH, issuers of group health benefit plans must
enroll Medicaid patients regardless of enrollment period
HB 3038 also applies to CHIP. However, it is not yet clear
whether federal law will allow Texas to implement this program for
CHIP. The state is directed to pursue a federal waiver
allowing use of this approach within CHIP.
HB 3038 also requires TDH to study mechanisms to increase
Medicaid patients' enrollment in group health benefit plans as well
as the feasibility of implementing an income-based, sliding scale
premium for patients receiving transitional Medicaid and who have
access to employer-sponsored health care.
MEDICAID RATE SETTING AND REPORTING
For years, South Texas legislators, policymakers, physicians,
and patients have decried the lack of sufficient health care
providers and resources along the Texas-Mexico border. High
rates of poverty, the uninsured, and old and new world diseases
along with inadequate health care funding have crippled many border
communities' efforts to attract and retain new health care
professionals and to enhance and update aging infrastructure.
Adding insult to injury, a high percentage of South Texas and
border patients qualify for Medicaid or CHIP. While these
programs are vitally important to providing health care coverage to
low-income families and children, inadequate reimbursement for
Medicaid and CHIP services makes it difficult for border physicians
to sustain Medicaid-dominant practices. For some border physician
practices, Medicaid and CHIP patients compose as much as 80 percent
of their entire patient base.
Legislators addressed this situation in two important
ways: (1) implementing a provider rate update (detailed under
"Medicaid Fee Update"
section above) and (2) to keep the spotlight on the issue, adopting
legislation establishing workgroups to examine health care rates
and expenditures along the Texas-Mexico border and other
Advisory Committee on Medicaid and CHIP Rates Along the
SB 1053 by Sen. Eliot Shapleigh (D-El Paso) and Rep. Norma Chavez
requires HHSC to establish an advisory committee charged with
developing recommendations to eliminate health disparities between
the border and other regions of the state.
The nine-member committee will include physicians, hospitals,
patient advocates, Medicaid and CHIP health plans, state agencies,
and civic leaders who live or work along the border and are
knowledgeable about Medicaid and CHIP.
The legislation specifically directs the advisory committee to
examine disparities relating to Medicaid managed care and CHIP
health plan capitation rates and Medicaid and CHIP fee-for-service
per capita expenditures for hospital and professional services
provided to children. The committee is instructed to make
recommendations to HHSC to ameliorate funding disparities
with its first report due January 2002.
With advice from the committee, HHSC is required to ensure
Disparities in CHIP and Medicaid reimbursement rates for
children's services are eliminated as soon as practicable by
increasing rates for health plans and providers along the
Texas-Mexico border. Rate increases are based upon available
funding and, if implemented, must equal the statewide average rates
and expenditures for these programs.
Border physicians providing Medicaid services to children or
participating in CHIP also receive a bonus payment.
SB 1, the appropriations act, did not specifically dedicate
funds for implementation of SB 1053. However, the intent of
the language - to increase Medicaid reimbursement for high-volume,
border providers - is contained within the budget rider for the
Medicaid professional and outpatient hospital rate increase. (See
"Medicaid Fee Update"
SB 1053 also directs HHSC to contract with a university to
measure what impact provider rate increases have on retaining and
attracting new health care providers, expanding patient access to
care, or if rate increases envisioned under the bill were
sufficient to have a measurable effect. The study also must assess
whether rate increases should be extended to services for adults.
The study is required to be submitted to the legislature by
Other provisions of the bill require HHSC to exclude the
Texas-Mexico border region from its calculation of the statewide
average Medicaid and CHIP capitation rates, to consider varying
rates paid to providers according to type of service provided, and
to assure that rate increases are passed directly to providers
participating in Medicaid managed care.
Task Force on Medicaid and CHIP Rate Setting
In addition to SB 1053, Sen. Eddie Lucio (D-Brownsville)
passed SB 1299 directing HHSC to establish an 11-member task
force to examine the way in which Texas sets its reimbursement
rates for Medicaid and CHIP.
Committee members must include health economists; public health
professionals, including at least one epidemiologist; state
agencies officials; CHIP and Medicaid health plans; a consumer
advocate; and health care providers, including physicians,
hospitals, long-term care facilities, dentists, and emergency
The task force is charged with examining the incidence and
prevalence of disease in comparison to utilization of Medicaid and
CHIP services; the number of health care providers participating in
Medicaid and/or CHIP; the number of eligible patients for each
program; the effects of developing incentive payment arrangements,
such as bonuses, to increase provider participation; and Texas'
Medicaid and CHIP expenditures as compared to other large,
Based on its review of pertinent factors
, the task force is asked to submit to the legislature by
December 2002 recommendations on how to improve Texas' Medicaid and
CHIP reimbursement rates.
Medicaid Financial Reporting and Consolidated Budget
To make it easier for the legislature to track all Medicaid funding
and expenditures, SB 832 by Senator Moncrief requires HHSC to
submit a consolidated biennial Medicaid budget report for every
state agency receiving and dispensing Medicaid funds. The report
must describe the Medicaid programs administered by the agency and
a detailed accounting of how the agency disbursed its Medicaid
funds during the period covered by the report.
Additionally, HHSC also must submit a report to the legislature
every quarter describing each agency's Medicaid expenditures by
program type, including the amount spent on each service or
benefit. Quarterly reports also must specify the amount agencies
spend on their Medicaid program's operations, such as eligibility
determination, claims processing, case management, and other
administrative costs. Reports must be shared with the governor,
legislature, state auditor, and comptroller.
Medicaid Encounter Data Reporting
HB 1591 by Rep. Ann Kitchen (D-Austin) prohibits HHSC from using
Medicaid managed care encounter data in developing health plan
premium rates unless the encounter data has been certified to be
complete, accurate, and reliable for the most recent fiscal year
and there is no statistically significant variability in the
encounter data attributable to incompleteness, inaccuracy, or other
data deficiencies. HHSC must appoint a person to certify the
validity and reliability of the encounter data.
The state uses encounter data to evaluate health care
utilization, quality, and cost for patients participating in a
Medicaid health plan. Encounter data include information regarding
the patient's medical history, diagnosis, and treatment. Accurate
data helps the state examine both the under- and over-utilization
of services, particularly services relating to pregnant women and
HB 1591 states HHSC also shall collaborate with Medicaid managed
care plans and Medicaid providers participating in the plans'
networks to develop incentives and mechanisms to encourage
providers to report complete and accurate encounter data on a
Medicaid Near Miss
MEDICAID MANAGED CARE REFORM
On June 17, Governor Perry vetoed SB 1156, the 2001 Omnibus
Medicaid Reform bill. The bill, negotiated by a bipartisan group of
legislators and strongly supported by the association, contained
language consolidating Medicaid acute care services within one
state agency as well as numerous provisions designed to improve
access to care for low-income patients, including women's health
and care for patients with mental illness or HIV/AIDS.
Most important for physicians, the governor's veto sank TMA's
Medicaid managed care reform package, which was included within the
bill. Reforms contained in the bill would have:
Reduced paperwork and standardized utilization management
requirements for physician offices,
Eliminated preauthorization processes for routine
Prohibited the expansion of Medicaid managed care to rural
Limited the number of Medicaid managed care plans in a
service area, and
Established a systematic complaint reporting and
Additionally, the bill contained a TMA recommendation to
simplify the EPSDT/Texas HealthSteps enrollment and reporting
processes for health care providers.
In vetoing the bill, the governor stated that he believed HHSC
already had the authority to achieve many of the provisions in the
bill and that other provisions in the bill, such as pursuing
federal waivers to expand health care coverage for low-income women
and other populations, would distract from the commission's need to
focus on streamlining the Medicaid program.
Other provisions lost through the veto process included language
establishing a Medicaid legislative oversight committee, requiring
HHSC to expand its outreach efforts to Medicaid eligible children,
extending Medicaid coverage to legal immigrants who entered the
country after 1996, and implementing patient cost-sharing, such as
copayments, within Medicaid.
What is most surprising about the governor's veto is that the
legislation scored approximately $200 million in Medicaid savings
over the 2002-03 biennium. Most of the administrative savings
envisioned in the bill also are enumerated within SB 1, the
appropriations act. (See the
"Medicaid Cost Containment and Budget Issues"
section above for details.) However, what is not included in SB 1
is statutory intent as to how the cost-saving measures will be
implemented, including provisions requiring substantial public
input into the development of any cost-saving initiatives.
The association's disappointment regarding the governor's veto
of SB 1156 is mitigated to some degree by TMA's collaborative and
constructive relationship with HHSC and TDH. In the coming months,
TMA will work closely with the Medicaid agencies to try to revive
through the regulatory process the Medicaid managed care reform
package and other measures contained in the bill.
Medicaid TMA Staff Contacts
Helen Kent Davis, Director, Office of Governmental
Affairs, (512) 370-1401
Rich Johnson, Director, Division of Medical Economics,
Searching for innovative and cost-effective mechanisms to expand
health care access to underserved communities, legislators
sponsored a plethora of telemedicine-related bills during the 2001
legislative session. The concepts for the bills emerged after an
extensive public hearing process during the 1999 to 2001
legislative interim. Both the House and Senate health committees
included telemedicine as a topic in their legislative interim
deliberations as did HHSC and the Statewide Health Care
Coordinating Council. TMA and the Texas Academy of Family
Physicians spearheaded organized medicine's research and testimony
regarding the telemedicine legislation, coordinating efforts with
other medical specialties and county medical societies and TMA
councils and committees.
Policy goals of organized medicine were to protect existing
medical relationships and the fragile rural health infrastructure
while allowing for expansion of quality telemedicine medical
services and reimbursement of services based on clinical
Other stakeholders involved in developing the legislation were
the health science centers, particularly Texas Tech and The
University of Texas Medical Branch at Galveston; the Texas Hospital
Association; the Texas Organization of Rural and Community
Hospitals; and various consumer advocacy organizations.
SB 789 by Senator Moncrief and Representative Maxey
emerged from the debate as the primary telemedicine legislative
vehicle. A host of smaller, but equally important, telemedicine
bills also was debated, relating to border telemedicine pilots and
grant monies to help providers underwrite the cost of expanding
telemedicine services. An analysis of each of the telemedicine
bills is provided below.
A critical component of telemedicine legislative implementation
will be the rulemaking process, whereby stakeholders will flesh out
important details involving supervisory standards, reimbursement
policies, and coverage and quality of care issues. To assure
continued coordinated stakeholder input on these issues, the
legislature directed HHSC to form a Telemedicine Advisory Committee
(detailed below). TMA and component county medical and specialty
societies will be integral members of the committee, which will be
appointed later this year.
Omnibus Telemedicine Legislation
SB 789 establishes the framework for regulating and reimbursing
telemedicine medical services in Texas, including expanding the
availability and funding for telemedicine within the Medicaid
program and lifting restrictions on who can present and consult on
telemedicine medical services.
A key component of the legislation is its definition of
"telemedicine medical services," which is defined as a
physician-directed medical act that can be carried out only by a
physician or by a licensed health care professional under the
direction of a physician.
The bill establishes quality-of-care safeguards, including
rulemaking authority to establish appropriate physician supervisory
requirements and face-to-face follow-up visits. To make
telemedicine services more widely available to physicians, the bill
also allows the Telecommunications Infrastructure Board to develop
a grant program for physicians and other health care providers.
Specific provisions of SB 789 include the following:
Ensures that telemedicine medical services by law must be
physician directed and delegated;
Instills model definitions of "telemedicine medical
service" and "telehealth service" across multiple codes in
- "Telemedicine Medical Service" is a health care service
initiated by a physician or a health professional acting
under the delegation and supervision of a physician. These
services include patient assessment, diagnosis, or
consultation by a physician; treatment; or the transfer of
medical data through advanced telecommunications
- "Telehealth Service" is a health service other than a
telemedicine medical service provided by a health
professional acting within his or her scope of practice. An
example would be services provided by a dietician.
Charges the Board of Medical Examiners (BME) to set
quality of care and supervisory standards by establishing
supervisory requirements for a service delegated to and
performed by an individual who is not a physician and by
defining situations when a face-to-face consultation is
Calls for coordination of services with existing health
care systems and relationships and gives the HHSC and BME the
authority to ensure compliance by any means of enforcement,
including a corrective action plan;
Creates parameters for development of a reimbursement
system based on clinical evidence defining appropriate service
delivery under Medicaid by requiring HHSC to consult with TDH
and the newly created telemedicine advisory committee to review
clinical efficacy of the delivery of health care services using
Expands opportunities for physician participation in
telemedicine medical services by removing the reimbursement
requirement to be affiliated with a medical school, teaching
hospital, or selected rural facilities. Currently, for purposes
of reimbursement under Medicaid, providers must be tethered to
an academic health center and their services provided to rural
Pilot projects in telemedicine medical services and telehealth
services are authorized under the bill as well. HHSC is required to
report to the legislature on the impact of telemedicine medical
services on the state Medicaid program. More specifically, HHSC is
required to report on the effects of telemedicine on the
The number of Medicaid physicians and health care
professionals using telemedicine;
The geographic and demographic disposition of physicians
and health care professionals using telemedicine; and
The number and types of services being provided and the
cost of utilization.
SB 789 also requires HHSC and the Telecommunications
Infrastructure Fund Board to establish minimum telemedicine
technology standards. SB 789 takes effect on Sept. 1,
The legislature allocated $3.5 million over the next two years
to implement SB 789. Another $212,000 was appropriated to
fund telemedicine pilots in one rural and one urban location.
The pilots will focus on providing prenatal and related services to
Border Telemedicine Pilot Program
To improve health care access and patient health status along the
HB 2700 by Representative Chavez and Sen. Robert Duncan (R-Lubbock)
requires HHSC to establish Medicaid telemedicine pilots within
150 miles of the Texas-Mexico border.
The pilots are to be implemented before Jan. 1, 2003. Before
establishing the pilots, HHSC must obtain support from the local
medical community and government officials.
Telemedicine TMA Staff Contacts
Helen Kent Davis, Director, Office of Governmental
Affairs, (512) 370-1401
Rich Johnson, Director, Division of Medical Economics,
Medicaid Disease Management for Children's Asthma
SB 616 by Sen. Leticia Van de Putte (D-San Antonio) requires
development and implementation of a Medicaid disease management
pilot program for children's asthma in counties with a high
incidence of children's asthma and high rate of hospital emergency
room care for the treatment of children's asthma. The bill directs
HHSC to develop the pilot program by rule and directs TDH to
administer the program. The pilots must be initiated by
Nov. 1, 2001.
The pilot program will provide continuous care, case management,
and asthma education to Medicaid recipients younger than 19 years
of age who have been hospitalized or received emergency care
services for asthma. Health care provider education will be another
component. HHSC is also to consider the disease management pilot
programs for Medicaid recipients with asthma operated in Virginia
(community-based program) and Florida (vendor-based program). In
implementing the program, HHSC and TDH are to use services of local
health care professionals to the extent possible.
It is assumed that only children already meeting current
Medicaid eligibility requirements will participate, thereby
avoiding new client services costs, and that TDH can absorb any new
administrative expenses within existing resources. Another bill
requirement is a report due to the lieutenant governor and the
speaker of the House of Representatives no later than December 2004
on the effectiveness and costs of the program.
In addition to SB 616, the legislature also passed HB 342
directing TDH to establish a pilot study to compare preventative
disease management methods with traditional methods of treating
children's asthma. Rep. Ruth McClendon (D-San Antonio) and Senator
Van de Putte sponsored the legislation. SB 616 and HB 342 are
similar in intent, though vary in terms of where and how the asthma
pilots should be established as well as what outcomes should be
Under HB 342, TDH will implement pilots in six areas of the
state, both urban and rural. Disease management techniques that are
transferable to private practice and to other geographical areas of
the state are to be used. Outcomes measures that will be examined
include school absenteeism, hospitalization, frequency of asthma
symptoms, impact of the disease on the family, and economic effects
of the disease. An interim written report containing the findings
of the pilot study is to be submitted to the legislature no later
than November 2002, and the final report containing TDH's
recommendations is due November 2003.
HB 342 also replicates the language in SB 616 that establishes
an Asthma and Allergy Research Advisory Committee. The only
additional item is the charge to this committee to advise HHSC in
conducting the children's asthma disease management pilot
As stated above, SB 616 has a provision establishing an Asthma
and Allergy Research Advisory Committee. Reps. Diane Delisi
(R-Temple) and Jaime Capelo (D-Corpus Christi) sponsored the
provision. The advisory committee will include nine members
selected by the governor. The committee's charge is to develop a
plan to research asthma and allergy and associated medical
conditions in Texas, assess resources in Texas as possible sites
for research opportunities, analyze the impact of asthma and
allergy on the economy of the state and on the health of residents,
and make recommendations to the legislature and governor concerning
research programs and funding alternatives. The bill requires the
committee to be abolished by January 2003.
The Texas Asthma Coalition, recently created through the efforts
of TDH, the American Lung Association, and other professional
organizations, was involved with the successful passage of this
Medicaid Managed Care Disease Management
SB 283 by Senator Nelson mandates that HHSC ensure that Medicaid
managed care plans develop and implement special disease management
programs to address chronic health conditions, including asthma and
diabetes, and to use outcomes measures to assess the programs. HHSC
will study the benefits and costs of applying disease management
principles in the delivery of Medicaid managed care to recipients
with chronic health conditions. The hope is that long-term health
care costs will be reduced; patient care improved, including
coordination of that care; and utilization patterns improved.
TMA opposed the bill because it mandates the inclusion of
disease management within Medicaid managed care rather than
allowing it on a voluntary basis. TMA asked that the state
resolve outstanding administrative issues with Medicaid managed
care before implementing additional requirements.
Disease Management TMA Staff Contacts
Barbara James, RN, Director, Science and Quality
Department, (512) 370-1400
Helen Kent Davis, Director, Office of Governmental
Affairs, (512) 370-1401
Rich Johnson, Director, Division of Medical Economics,
Health Care Funding
Long-Term Care and End-of-Life
Market Fairness/Managed Care
Medical Licensure and
Public Health and Science
Scope of Practice
Tort Reform/Medical Liability