TMA, State Leaders Look to Shape Health System Reform in Texas

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Legislative Affairs Feature - July 2010



Tex Med.  2010;106(7):33-36.

By  Ken Ortolon
Senior Editor

When President Barack Obama signed the health system reform bill into law in March, work on reinventing the American health care system did not end. Far from it.

Many experts say the real work - writing the rules and regulations necessary for implementing the law - is just beginning. Provisions of the law will be phased in incrementally over the next decade, and the U.S. Department of Health and Human Services is charged with drafting rules to govern most, if not all, of those provisions.

Dallas dermatologist Dan McCoy, MD, chair of Texas Medical Association's Council on Legislation, estimates the nearly 3,000-page reform law could result in more than 30,000 pages of federal regulations once the entire law is implemented over the next 10 years.

Meanwhile, Texas officials say the shape of health system reform in each state ultimately will depend on how state legislatures and regulators react to the new law. Texas lawmakers, insurance regulators, and health and human services officials are trying to determine what new laws and regulations will be needed to implement health system reform here.

"The bill, as written, leaves a lot of vagueness in terms of how we actually comply and implement its provisions," said state Rep. John Zerwas, MD (R-Richmond), who chairs a special House committee looking at how the law affects Texas. "This bill, probably more than any other that we've ever seen, is going to be defined by the yet-to-be-written regulations and rules around it. And a great deal of that is vested within the secretary of Health and Human Services at the federal level."

And, because so much is riding on how the law is implemented at the federal and state levels, TMA is gearing up to advocate for physicians and patients in both venues.

"Clearly, this bill is going to generate a significant and almost overwhelming amount of federal rulemaking," Dr. McCoy said. "The challenge for Texas physicians is twofold: one, to be able to influence the rulemaking in Washington as well as the legislation and rulemaking in Texas, and, two, to help our doctors and their patients understand the important changes that are rapidly coming down the road and to ensure that we protect the sanctity of the patient-physician relationship and the ability of physicians to practice medicine in this changing environment," he said.  



Assessing the Impact

Texas officials began assessing what they will need to do to implement the reforms immediately after President Obama signed the bill.

In late March, a joint hearing of the Senate Health and Human Services and State Affairs committees heard testimony from state insurance and health and human services officials on what Texas must do to comply with the new law. Representative Zerwas' panel, the House Select Committee on Federal Legislation, held a similar hearing in late April.

At the select committee hearing, Texas Insurance Commissioner Mike Geeslin and Dianne Longley, director of research and analysis at the Texas Department of Insurance (TDI), told lawmakers that the law's "aggressive timeline" for having insurance market reforms in place by Sept. 23 means Texas must act quickly to comply.

According to a TDI summary, legislative changes, new rulemaking, and additional funding likely are needed for state insurance regulations to comply with such insurance reforms as the bans on policy rescissions, preexisting conditions for children, and lifetime benefit limits.

The two insurance officials said TDI must prepare for new regulatory responsibilities, such as premium rate reviews.

Representative Zerwas says analysis of the law by TDI and Texas Health and Human Services Commission (HHSC) staff gives lawmakers a "deep, deep understanding of the prescriptive changes" they will need to have in place to comply with the law.

"My sense is that one of the most important things we need to look at providing is the so-called health insurance exchange," Representative Zerwas said. "That seems to be a pretty definitive part of the bill."

The law requires each state to establish health benefit exchanges by January 2014. States must be able to demonstrate by Jan. 1, 2013, that they will have an exchange operational by the required date.

Representative Zerwas says that puts a lot of pressure on the Texas Legislature in its 2011 session because it won't meet again until 2013.

"The provision on approval of the exchange is in 2013, so that would be when we're just convening again," Representative Zerwas said. "We feel you need to pilot any kind of insurance exchange to make sure it does what it's supposed to do. We think that needs to be happening in 2012, so that behooves us in 2011 to define what this thing is going to look like."

Lawmakers will have to determine who will run the exchanges. A TDI spokesman says that agency, HHSC, and other state entities are working closely "to consider the full range of options for the health insurance exchanges."

Under the law, an exchange must be administered by a governmental agency or nonprofit organization. TDI, however, would likely be charged with certifying that any plan sold in the exchange meets minimum federal benefit standards.



Growing Medicaid

State officials also are looking closely at how the reform law impacts the state's Medicaid program. Experts estimate that nearly half of the 32 million Americans expected to be covered by the law will end up in the Medicaid program because of provisions setting Medicaid eligibility for both parents and childless adults to 133 percent of the federal poverty level.  

At both the House and Senate committee hearings, HHSC Executive Commissioner Tom Suehs predicted that Texas Medicaid rolls could swell from about 3.5 million today to nearly 6 million when the Medicaid expansion takes effect in 2014.

That increased caseload, along with a mandate that states raise Medicaid payments to Medicare levels for certain primary care services, and increased administrative expenses to handle the anticipated caseload could cost the state as much as $27 billion between 2014 and 2023.

State Rep. Garnet Coleman (D-Houston), vice chair of the House select committee, took issue with Commissioner Suehs' estimate, calling it "political number crunching." He said the commissioner's projections make a number of assumptions beyond 2019 that won't necessarily happen.

The U.S. Congressional Budget Office estimates the cost to Texas to be about $1.5 billion over 10 years. Unlike Commissioner Suehs' projections, that estimate is based on a 10-year period beginning in 2010. Much of the increased spending required in the bill, however, won't begin until 2014.

State Sen. Robert Deuell, MD (R-Greenville), who serves on both the Senate State Affairs and Health and Human Services committees, says he believes Commissioner Suehs' projections likely are accurate.

"I don't see any red flags jumping out of his numbers that might be just way off," Senator Deuell said. "Having said that, some of my Democratic colleagues questioned his numbers and felt that he was trying to impose sticker shock on people and perhaps using that as a way to swing public opinion against the Obamacare package."

How Texas will pay those increased costs is anybody's guess at this time.

"The only way you come up with more money is either your revenue goes up under the current system or you raise taxes," Senator Deuell said. He says Texas already is faced with a multibillion-dollar budget deficit going into the next legislative session and increased entitlement requests because of the sluggish economy. (See " Texas Budget Shortfall Widens to $18 Billion .")

"We don't have many options," he added.



Setting the Benchmark

Commissioner Suehs also testified that lawmakers and regulators must examine several other policy considerations. They include the need to create a benchmark Medicaid benefit package for newly eligible enrollees that meets certain federal standards.

HHSC officials say the benchmark plans do not have to provide the full set of Medicaid benefits. They must, however, be actuarially equivalent to plans offered by the Federal Employees Health Benefit Plan to state employees, the Texas HMO plan with the largest non-Medicaid enrollment, or any other plan approved by the HHS secretary.

Commissioner Suehs says the state also must decide whether to participate in a number of pilot and demonstration projects authorized by the new law. Those include a Medicaid bundled payment demonstration beginning in January 2012; a global capitated, bundled payment pilot for large safety-net hospitals; accountable care organization pilots for pediatric care; and more.

Commissioner Suehs has said his agency will aggressively pursue federal approval to participate in those pilot programs.


Getting Proactive

While state officials grapple with how to implement health system reform, TMA is preparing to ensure that physicians have a say in how the law will be implemented at both the state and federal levels.

Dr. McCoy says TMA will closely follow federal rulemaking and may hire someone in Washington, D.C., to help advocate for physicians and patients during the rulemaking process.

He also says there will be opportunities to influence legislative changes over the next several years as lawmakers and regulators assess how the reforms are playing out.

"We have a fairly significant period of time - the next decade - that we're going to be dealing with rulemaking from this bill," he said. "Every session of Congress, they'll be tweaking and making revisions to the legislation just like they've done with Medicare and Medicaid."

TMA also is helping physicians understand the law's impact on doctors and patients. In addition to a statewide telephone town hall meeting in May, TMA established the  Health System Reform Action Center  on its website. And, because the reform bill did not fix the Medicare physician fee schedule that threatens cuts every year, TMA enlisted all other state medical associations and many specialty societies in a drive to secure 1 million signatures on a  petition  demanding that Congress establish a stable Medicare funding system.

TMA also will keep close tabs on state implementation efforts. TMA has been involved already with stakeholder groups that TDI has convened to provide technical guidance on specific aspects of the law. The association also will participate in formal stakeholder meetings TDI is expected to hold over the next several months and will follow HHSC actions to implement the expanded Medicaid coverage.

TMA President Susan Rudd Bailey, MD, sees opportunities for physicians to change the law as implementation progresses. But physicians must begin now to exert that influence, she says.

TMA Board of Trustees member Douglas Curran, MD, who chaired a TMA select committee that developed a set of guiding principles for evaluating health reform plans, agrees.

"I see TMA being really proactive," he said. "We're in the game, and we're thinking about what we can do to make this better, how we can modify it, how we can support candidates that really get our ideas, and how important it is to our patients to get the right kind of health care and the right environment so that physicians' practices can survive and do a good job for our patients."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at  Ken Ortolon .




Texas Budget Shortfall Widens to $18 Billion

Texas' budget likely will be deeper in the hole than previously predicted when lawmakers reconvene in January.

House Appropriations Committee Chair Jim Pitts (R-Waxahachie) told members of his committee in May that the projected budget deficit could be as high as $18 billion by the start of the next legislative session in January 2011. Previous estimates had put the projected deficit at anywhere from $11 billion to $16 billion.

Meanwhile, House Speaker Joe Straus (R-San Antonio) warned committee members that a 5-percent budget cut already imposed on state agencies was "just the beginning."

Speaker Straus urged lawmakers to look at all available ways to cut spending in the next biennial budget and to reject the option of raising or creating new taxes. "Every cost-savings idea should be on the table," he said.

Lt. Gov. David Dewhurst added his voice against any tax increase, saying he will not support higher taxes to ease the budget crisis. "I do not want to see taxes raised, and I don't believe that they're going to be necessary," he said in an interview with the Texas Tribune . "I believe we have enough tools in our toolbox to be able to balance our budget."

State Sen. Robert Deuell, MD (R-Greenville), says finding additional budget cuts likely could be painful.

"We've been cutting the budget, picking off the low-hanging fruit since I came into office in 2003," he said. Senator Deuell says there is $8 billion in the so-called Rainy Day Fund that could be used to offset the deficit, but he questioned the wisdom of spending all of those funds.

Speaker Straus suggested that lawmakers consider unpaid furloughs for state employees, a four-day workweek, a freeze on top-level state salaries, and a moratorium on new programs.

Representative Pitts also has said lawmakers will examine revenue-raising options such as expanding gambling, increasing fees, and eliminating some tax exemptions. Expansion of gambling, however, already has drawn opposition from Gov. Rick Perry.


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January 27, 2016