Setting the 2003 Agenda

Texas Physicians Gird for Difficult Legislative Session

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Legislative Affairs Feature -- January 2002

By  Ken Ortolon
Senior editor

The next session of the Texas Legislature is still a year away, but Texas physicians already are hard at work identifying their legislative priorities for 2003. And leaders of the Texas Medical Association predict the 78th Texas Legislature will be a tough session for all concerned.

"This is going to be one of the most difficult legislative session that I've ever been involved in, and I've been working with TMA in the legislative arena now for 15 years or more," said Waco internist Joe H. Cunningham, MD, chair of TMA's Council on Legislation.

Dr. Cunningham says many forces are coming together this year to create "the perfect storm scenario."

First, lawmakers likely will return to Austin next January facing a substantial budget shortfall. As early as last June, state Comptroller Carole Keeton Rylander predicted legislators would start budget deliberations in 2003 as much as $5 billion in the hole. That was based on the fact that lawmakers underfunded the new state teacher health insurance plan and Medicaid in the current budget to the tune of $1.4 billion. Plus, that budget includes $2.9 billion in surplus funds left over from the previous biennium, and utilizes $800 million in funds from one-time measures that will not be available next year, the comptroller said.

Second is a weakening economy. The comptroller's projection did not take into account the huge corporate layoffs or the dramatic economic consequences following the Sept. 11 terrorist attacks. That likely will drive up eligibility and, therefore, demand for Medicaid and other social services. While it is too early to determine what tax revenues will look like for the next biennium, there is concern that revenues will be down as a result of the deteriorating economy.

Lastly, a significant drain of political experience and institutional memory is likely to result from the reshuffling of legislative districts in the redistricting process and the game of political musical chairs that followed U.S. Sen. Phil Gramm's announcement that he would not seek re-election.

Predictions are that there could be a 30-percent or larger turnover in the legislature. Several key legislative leaders, including the chairs of the House Appropriations, Public Health, and several other committees, already have announced that they will not seek re-election. Added to that is the fact that all statewide offices, as well as six of nine Texas Supreme Court seats, are up for grabs.

"So we're going to have a large population of freshman legislators who do not understand health care, do not understand our issues, do not know the history of how the legislature works, and really are just learning their jobs," Dr. Cunningham said. "When you add that to not enough money and sprinkle in an increasingly partisan tilt to the legislature that we've not seen in recent years, it really is going to be a very difficult legislative session," he said.

Prompt Pay Déjà Vu

It is against this backdrop that Texas physicians will have to establish their legislative priorities and work to enact them, thus the Council on Legislation began focusing on those priorities almost immediately after the last legislative session ended.

The council established three subcommittees to begin looking at key issues, and it is working with the Texas Medical Association Political Action Committee (TEXPAC) board to ensure that physicians are engaged in political campaigns of lawmakers who are likely to be key players on medicine's issues next year.

What has emerged is a set of key issues similar to TMA's priorities in 2001 -- fair market practices in managed care, Medicaid, scope-of-practice issues, and professional liability reform -- with one important new issue added to the mix: taxes.

Dr. Cunningham says many other issues will receive TMA's attention during the session; public health is an area of particular concern. But these five issue areas are topics upon which TMA needs to develop new strategies to ensure that the interests of patients and physicians are protected, he says.

Without a doubt, medicine's leading issues in 2003 will be fair practices in managed care and medical liability reform. In 2001,TMA worked hard to pass tough new legislation requiring managed care companies to pay clean claims within 45 days or face stiff monetary penalties, only to see that bill vetoed by Gov. Rick Perry. (See "Prompt Pay Deja Vu," December 2001 Texas Medicine .)

"We're obviously going to go back and revisit the issue of prompt pay," Dr. Cunningham said.

Hopes of reviving the issue were bolstered this fall when Lt. Gov. Bill Ratliff appointed a special interim committee to look at physician payment problems. Plus, the vetoed bill, House Bill 1862, passed with overwhelming support in both houses of the legislature, and Governor Perry's only voiced objection was to a narrow provision dealing with binding arbitration. So there is hope that the issue can be resolved and the measure finally enacted.

TMA also will revisit the issue of standardized contracts. Legislation to create a standard physician-managed care contract that would allow only limited amendments or addenda by the health plans passed the Senate in 2001 but stalled in the House Calendars Committee. It finally was set on the House calendar on the last day of the session, but it was too late to push it through.

TMA lobbyist Connie Barron says TMA will push that issue hard next year because of the support it received during the last session. "I think we can get that done," Ms. Barron told a group of physicians and TMA Alliance members who attended a TEXPAC retreat in October.

Also on the agenda will be another whack at joint physician negotiations. The current physician negotiation law expires in 2003, so lawmakers must pass legislation to preserve it. At the same time, TMA hopes to modify the law to make it easier for physicians to gain approval for joint negotiations. So far, only one physician group has made it through the process of being certified for negotiations by the state attorney general and, in that case, the health plan involved refused to come to the negotiating table.

Liability Crisis Returns

After a period of relative stability, Texas' medical liability climate has gone south, Dr. Cunningham says. With medical loss ratios climbing precipitously, carriers are stunning physicians with double-digit premium hikes, lowered coverage, and, increasingly, nonrenewing some policies.

The crisis is most severe in several of Texas' "war zones," including the Rio Grande Valley, Laredo, and Beaumont, where access to care has already been demonstrably compromised. TMA has persuaded the House Committee on Insurance to investigate the underlying causes and take specific recommendations to the 78th Legislature.

In addition, TEXPAC is coordinating support with targeted county medical societies to endorse candidates in local district court races. The PAC is also working with a coalition of health care professionals and defense attorneys to develop policy options for the next session in conjunction with the legislative interim study efforts.

"Texas Medical Association intends to aggressively lead the push for effective medical tort reform," added Dr. Cunningham. "We will work with all other interested parties in the state, including the Texas Civil Justice League and others."

Among tort issues that lawmakers may be asked to address in 2003 are limiting the amount of noneconomic damages that can be awarded, imposing a more reasonable limit on when a minor can bring an action, greater enforcement of the existing cost bond and expert report requirements and frivolous lawsuit sanctions, and imposing a sliding scale on lawyer contingency fees.

The Medicaid Dilemma

Despite enactment of the first significant fee update in a decade and legislation streamlining the Medicaid enrollment process in 2001, the state's health care program for the poor again will face major issues in 2003.

The last legislative session provided $50 million in new state funds for professional fees, but Medicaid reimbursements still lag far behind both Medicare and private health plans.

To keep tabs on the implementation of the fee updates and simplification measures, as well as develop policy for the upcoming session, TMA Council on Socioeconomics Chair Robert T. Gunby Jr., MD, of Dallas, appointed an Ad Hoc Committee on Medicaid. The committee will monitor the implementation of the recently enacted Medicaid legislation and appropriations, develop recommendations to simplify the administration and management of traditional Medicaid and Medicaid managed care, monitor the activities of Medicaid-related interim legislative studies, and identify and develop TMA Medicaid policy recommendations for the 2003 legislative session.

San Antonio pulmonologist John Holcomb, MD, chairs the committee. He says the legislature has its work cut out for it.

"We have a seriously underfunded program with no clear direction about how we're going to assign priorities for the few dollars that we do have," Dr. Holcomb said. "That means we have to make tough decisions rather than easy decisions, like funding only 23 months of care instead of 24 months. The legislature's gaming of the system like that is what has gotten us where we are today."

Dr. Holcomb says medical professionals may have to "step up to the plate" and make some difficult recommendations on how money should be prioritized to make sure patients have access to medical care.

"Should we be paying for transplant services when we can't pay for immunizations?" Dr. Holcomb asked. "Those are the kinds of decisions that it is time to make in this state."

Helen Kent Davis, director of TMA's Office of Governmental Affairs, says that in addition to maintaining current services and benefits, one TMA priority likely will involve specialty care. The 2001 Medicaid fee update primarily benefited primary care physicians. However, data seem to indicate that access to some specialty care, particularly pediatric subspecialties, and particularly along the Texas-Mexico border, is a problem because of low reimbursement rates.

"We are seeing in our surveys, as well as anecdotally, that it is increasingly difficult to retain pediatric subspecialists in the Medicaid program," Ms. Davis said. "So that's an area where we may want to target additional increases."

Dr. Holcomb says that issue may be a tough sell. "We're facing a horrendous budget shortfall, and I don't think TMA wants to find itself defending what might be perceived as a pocketbook issue when there are patients not getting appropriate access to primary care services," he said. "On the other hand, some of these recipients are fragile and they clearly need access to specialty care. For the first time in my experience we are seeing specialists refusing to see new Medicaid patients because they either can't get paid or get paid so poorly they can't keep their doors open."

TMA also will push again for simplifying and streamlining Medicaid managed care. TMA backed legislation passed last year directing Medicaid health maintenance organizations to simplify prior authorization processes and to standardize paperwork and reporting requirements. The bill was vetoed by the governor, who said the state could accomplish many of these measures without statute.

Putting a Hold on PCCM

Another issue that looms large is the recent decision of the Health and Human Services Commission (HHSC) to freeze the legislatively mandated rollout of the primary care case management (PCCM) model in areas of the state that do not already have Medicaid managed care. That rollout was expected to save $18 million over the biennium, but the Texas Hospital Association (THA) raised concerns about whether the PCCM would work for rural and border facilities.

HHSC has delayed implementation to give THA time to develop alternatives that would achieve the same $18 million in cost savings. TMA will keep a close watch on those recommendations to make sure there are no adverse impacts for patients or physicians, Ms. Davis says.

Meanwhile, several other measures enacted by the legislature that were expected to save $205 million in Medicaid spending also have not been implemented, which only increases concern over the budget and the projected shortfall next year.

"The state has not yet implemented any significant portion of the cost saving initiatives," Ms. Davis said. "The longer we wait, the harder it is to make up those dollars."

The Never-Ending Battle

Certain legislative issues are similar to perennial flowers -- you plant the seeds and they keep coming up year after year after year. That has been the case with allied health professionals' scope-of-practice issues. Each legislative session one or more health professional groups invariably seek to expand their ability to diagnose, treat, or prescribe without benefit of medical school education. That almost certainly will be the case again in 2003.

"The advanced nurse practitioners, nurse midwives, nurse anesthetists, and other allied health professionals always are interested in what they would say is 'utilizing their training and experience to the max,'" said Austin anesthesiologist James McMichael, MD. "Most physicians understand and believe that midlevel practitioners, allied health practitioners, have a reasonable place at the table and, in fact in some situations, a very necessary place at the table. But most physicians also feel that, from a patient safety-quality of care standpoint, these practitioners should have adequate physician oversight."

While no specific scope-of-practice issues have surfaced yet for the 2003 session, TMA will work diligently to ensure that the legislature restricts allied health professionals to services that are within the scope of their training and education. That will include continuing to work closely with the Ad Hoc Committee on Collaborative Practice created several sessions ago.

The committee includes representatives of five medical specialties, the various advanced nurse practitioner groups, and physician assistants. Dr. McMichael, immediate past president of the Texas Society of Anesthesiologists, is not a member of the ad hoc committee but has attended its meetings and has been involved in the process. He says the committee has been very successful in settling both scope-of-practice and allied health professional payment issues. And, it has helped the legislature avoid hard-fought battles that could force lawmakers to choose sides between political friends.

"The ad hoc committee gives those groups a forum in which to meet to try to discuss, and hopefully, work out issues," Dr. McMichael said. "There are some times when those groups do agree, and we can go hand in hand to the legislature with an agreement."

Regardless of how cooperative medicine and the allied health professions are in 2003, Dr. McMichael says he does not believe lawmakers -- particularly the freshman lawmakers -- will have much appetite for a scope of practice fight or fights.

"Members who will be new to the legislature are unlikely to want to take on something that has the potential for being as confusing and divisive as scope of practice can be," he said.

Tax and Tax Again

Finally, the serious budget situation in which lawmakers could find themselves in 2003 almost certainly will force some kind of tax debate. While House Appropriations Committee Chair Rob Junell (D-San Angelo) refuses to characterize the dire budget forecasts as a "budget crisis," lawmakers already have initiated an interim study on the school finance system. Representative Junell says any overhaul of school finance, which is now based on local property taxes, will impact all other tax areas.

During the tenure of then-Gov. George W. Bush, lawmakers looked at a tax overhaul that could have added physicians and other partnerships and sole proprietorships to the state franchise tax. In 2001, lawmakers also debated a Medicaid provider tax on nursing homes. That could surface again, only with physicians added into the mix.

TMA opposes taxes of any kind on health care services and will work to make sure the legislature recognizes physicians' limited ability to pass along taxes as a cost of doing business.

With private pay fees largely dictated by health plans, and Medicare and Medicaid reimbursement set by the government -- some times below the cost of providing care -- any tax on physicians could be devastating not only to physician practices but also to patient access to care, Dr. Cunningham says.

"A lot of physicians in some of the border areas and especially physicians who have a very high Medicaid population already are having to borrow money to meet their payroll," Dr. Cunningham said. "That's before the adverse impact of any additional taxes. That would simply drive these physicians out of practice and leave their patients without access to our health care system."

Ken Ortolon can be reached at (800) 880-1300, ext. 1392, or (512) 370-1392; or by email at Ken Ortolon.

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