TMA Testifies on SB 7: Special Session Health Care Omnibus Bill

Testimony: Senate Bill 7 (82nd-1)

Written Testimony to House Appropriations Committee

By: Asa Lockhart, MD

June 2, 2011

Chairman Pitts and members of the committee, my name is Asa Lockhart, and I am an anesthesiologist from Tyler. I am testifying before you today as the chair of the Texas Medical Association’s (TMA) Ad Hoc Committee on Accountable Care Organizations (ACOs) and TMA’s nearly 45,000 physicians and medical student members. The majority of my testimony will focus on Article 4, Health Care Collaboratives. TMA continues to support the concept of health care collaboratives as provided in Senate Bill 7 due to some very important changes. If Article 4 is implemented thoughtfully, it will permit patients and employers to better predict their costs as they relate to health care.


The following areas continue to remain paramount to TMA’s continued support and potential for physician participation in a collaborative as the bill moves through the process once again. Primarily the preservation of:

  1. Active attorney general (AG) approval/Texas Department of Insurance (TDI) certification and oversight,
  2. Equal and shared governance structure,
  3. Prohibition on the use of covenants not to compete, and
  4. Strong due process procedures.

1.  Active Attorney General Approval/Texas Department of Insurance Certification and Oversight

  • TMA supports bill language that lays out an attorney general review and concurrence with the TDI assessment to issue a collaborative license. Also, we support bill language that ensures TDI continues to undertake its usual oversight and regulatory tasks in regard to a collaborative. TMA consistently raised concerns regarding AG oversight during discussions about the establishment of collaboratives. 
  • TMA appreciates the antitrust protections found in Sec. 848.059 and Sec. 848.060 that permit AG review and concurrence with TDI’s judgment to issue a license. Without this important active state oversight, no other exception currently provides physicians and other health care practitioners the peace of mind that their participation will not run afoul of antitrust laws. 
  • The AG approval interjects a careful balance and serves both those who are in the collaborative as well as those who choose NOT to participate. The surrounding health care marketplace may be harmed by the presence of an overly large collaborative — and create a monopoly especially in small or midsize markets.
  • More importantly, AG concurrence provides a state answer for those who choose not to get their arrangements approved by the federal government.
  • The federal government is more concerned about implementing ACOs for federal programs. Texas should focus on a structure for implementing collaboratives in our local communities for patients who are not in a federal program. In order to address specific health challenges in our communities, health care collaboratives must be local — not statewide.

2.  The Preservation of Equal and Shared Governance — The Medical Model

  • If the future of health care delivery involves consolidation, then TMA believes a medical model is the best approach to that consolidation. Language found in Sec. 848.052 provides a governance structure that will support the ultimate goal of keeping patient care and needs front and center. TMA supports language in the bill that provides for the following governance structure:
    • The governing board has equal and shared governance between physicians and nonphysicians with a local community member tie-breaking vote.
    • The governing board may be any size so long as the representation is equal AND shared.
    • The bill allows for at least three ex-officio nonvoting members who represent the community.
  • The engine that will make a collaborative work is the professional component of any health care service.  That is the heart of the medical model, and the success of any health care collaborative is dependent upon it. 
  • Patients MUST receive the right care at the right time, in the least expensive places of service — physician offices and other nonhospital-based health care provider locations. Hospital care is only a limited component — albeit an expensive one — of the continuum of care that a patient receives.
  • The way to ensure that physicians are integral in patient-care decisionmaking is to provide them an equal voice within the collaborative’s governing structure on all important matters, including operations and payment. The bill language before you as written in Sec. 848.052 achieves that goal.

3.  Prohibition on the Use of Covenants Not to Compete by Collaboratives

  • TMA supports the bill language before you in Sec. 848.101(c) that prohibits the use of covenants not to compete when used by a collaborative itself. The primary purpose of a collaborative is NOT to recruit but to bring together independent individuals, hospitals, and other health care providers already established in the community to form a more efficient delivery model. 
  • Covenants not to compete are contrary to the purpose of a collaborative, which is to promote access.  Covenants not to compete decrease access and act as disincentives for physicians and other providers to participate in a collaborative. 

4. The Preservation of Strong Due Process Procedures

  • TMA supports language found in Sec. 848.110 that addresses the rights of physicians who have had complaints filed with the collaborative or who are being told to leave the collaborative. 
  • The opportunity to have a fair and interactive opportunity to address a complaint serves the fundamental purpose of ensuring that physicians always have an unencumbered role in patient advocacy.  
  • A wrongful complaint should not be used as a method to silence a physician who delivered or advocated for appropriate necessary care that perhaps that did not completely adhere to generalized collaborative protocols. 
  • The bill language before you on due process should not be changed. It provides the protections necessary for fairness when reviewing a physician’s participation in a collaborative and is similar to the requirements of the Health Care Quality Improvement Act.

Role of the Collaborative

  • The collaborative’s role should be to improve care, measure against certain quality benchmarks, report on the cost of care, and coordinate activities. The bill takes a step in that direction.
  • A long-term perspective on collaboratives is to encourage health and not just intervene in disease.  Embracing this concept is necessary to achieve success and any anticipated cost savings. 
  • Whether an organization embraces this concept, which is necessary for success, enables us to distinguish between those organizations that wish to bring about better-coordinated delivery of health care vs. those that will leverage the collaborative model for short-term, anticompetitive gains.  


  • TMA supports language within the bill before you that encompasses provisions from SB 7 and SB 23 from the regular legislative session.
  • Sec. 536.002 formally establishes a Quality-Based Payment Advisory Committee within the Texas Health and Human Services Commission (HHSC) to provide input on the state’s efforts to devise innovative payment and delivery systems that promote better-quality care for Medicaid and Children’s Health Insurance Program (CHIP) patients. 
  • TMA supports the inclusion of physicians on the committee to help HHSC devise strategies for reducing potentially preventable hospitalizations and readmissions.
  • These preventable hospitalizations are significant cost-drivers in Medicaid, and mechanisms that promote greater use of the medical home model will reduce those costs attributable to hospital readmissions. 
  • We support incentive programs for physicians in Sec. 531.0861 that improve health outcomes for their patients and the evaluation of incentives that reward physicians for curbing nonemergent use of hospital emergency rooms.
  • Regarding former SB 23 provisions, over the past several months we have worked collaboratively with HHSC and members of the legislature to find practical ways to achieve cost savings. TMA supports provisions that help stretch limited resources without unduly interfering with physicians’ ability to provide high-quality, timely health care to their Medicaid and CHIP patients. 


  • TMA supports Article 8 of the bill, which requires facilities to adopt a health care worker vaccine policy for preventable diseases. Studies show that when health care workers are immunized, patient mortality is reduced almost by half.
  • Preventing influenza reduces patient hospitalizations from heart, chronic lung and kidney disease, and diabetes. 
  • Physicians and other health care workers have an ethical and moral obligation to protect their patients. Vaccination of all health care workers is a cornerstone of a strong patient safety program.  


Thank you again for the opportunity to testify before you today.  I am happy to answer any questions you may have.

82nd Texas Legislature Testimonies