Association Prevails in Legislative Battles for Physicians, Patients  

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Cover Story – August 2011


Tex Med. 2011;107(8):16-37.

By Ken Ortolon
Associate Editor

Texas Medical Association leaders knew from the outset that the 2011 session of the Texas Legislature would be difficult for organized medicine.

"The state had an enormous budget deficit, and special interest groups from hospitals to midlevel practitioners to those who wanted to emasculate the Texas Medical Board [TMB] were lined up in droves to take on medicine," said TMA President C. Bruce Malone, MD. "We knew we had an uphill battle and that it was going to be an arduous six months."

But when the 82nd regular legislative session ended on the evening of May 30, TMA had scored "some important wins for you and you patients," Dr. Malone told an audience of about 1,400 physicians who participated in a conference call about the session on June 8.

Indeed, bolstered by hundreds of physicians, medical students, and TMA Alliance members who came to Austin for the highly successful First Tuesdays at the Capitol events throughout the session (see "Medicine's Voice Heard in Austin"), TMA:  

  • Staved off substantial cuts in Medicaid and Children's Health Insurance Program (CHIP) physician fees that could have driven hordes of doctors out of those programs;
  • Stymied efforts by nurse practitioners, podiatrists, optometrists, and other midlevel practitioners to expand their scope of practice;
  • Reformed TMB by ending anonymous complaints and giving physicians due process without endangering the 2003 medical liability reforms;
  • Secured legislation that TMA leaders hailed as first-in-the-nation protections for clinical autonomy and independent medical decision making for physicians employed by hospitals and nonprofit health care corporations.
  • Won a number of victories on the health insurance front, including legislation to ban discretionary clauses in health insurance policies; and
  • Improved public health in Texas by persuading lawmakers to pass bills requiring college students to be vaccinated against meningitis and ensuring that new mothers receive information about pertussis immunizations. (See "Healthy Debate.")               

Not all the news was good, however. Lawmakers made some drastic cuts to medical education funding, particularly graduate medical education (GME). And a statewide ban on smoking in public places failed to pass.

Still, Dr. Malone says much was achieved in a session that looked less than promising from the start.

"With the concerns we had early on that nothing would be discussed except the budget shortfall and redistricting, I think we had a good session," he said. "We have to think that we had some accomplishments in a session that seemed likely it was going to be totally dominated by the budget."


Medicaid/CHIP Payments Saved

At least one political observer jokingly called this year's session a "living hell," but just about every lawmaker, lobbyist, or observer involved says the session was one of the most difficult in recent history. The budget was the primary reason.

"The revenue shortfall and the effort around redistricting really characterized the struggles that are associated with this legislative session," said State Rep. John Zerwas, MD (R-Richmond). "We had an enormous task trying to bring in a budget that, by law, has to be balanced and at the same time take up something that can be as polarizing as redistricting."

Indeed, lawmakers started the session staring at a projected $26 billion deficit for the 2012-13 biennium, plus the need to find more than $3 billion to plug a shortfall in the current budget they wrote in 2009.

Fort Worth pediatrician Gary Floyd, MD, chair of the TMA Council on Legislation, says the budget outlook at the outset was bleak because House and Senate leaders appeared unwilling to consider new taxes or to spend any of the state's "Rainy Day Fund," which had more than $9 billion available.

The initial House budget, unsurprisingly, made sweeping cuts in both health and human services and public and higher education, areas that make up two-thirds of state spending, Dr. Floyd says. "They slashed Medicaid payments to physicians, hospitals, and other providers by 10 percent. They also made deep cuts in trauma funding, the Children With Special Health Care Needs Program, child and adult mental health services, and the tobacco cessation programs," he said.

Harvey Kronberg, publisher of the online political newsletter Quorum Report, says those cuts were the result of the House setting up "false barriers," such as refusing to spend the Rainy Day Fund or to tell state agencies to generate additional revenue through higher fees.

"We had a whole series of false barriers set up on how to 'live within our means,'" Mr. Kronberg said. "Those barriers were not necessary. They were just obstacles thrown in the way for ideological purposes."

The Senate took a slightly less draconian approach to the budget. In fact, the bill that passed the Senate spared physicians from any Medicaid and CHIP fee cuts below current rates. TMA backed the Senate bill, telling Senate Finance Committee Chair Steve Ogden (R-Bryan), "When it comes to improving the health of all Texans, the Senate bill is far from perfect, but it's a far sight better than what the House came up with."

Much of the Senate language made its way into the final budget bill, which appropriated $172.3 billion for the two-year budget cycle. That's a $15 billion reduction from previous spending levels.

"The good news is that the agreed-upon budget includes no cuts to physicians' Medicaid and CHIP payments, no cuts to the state mental health programs, and it mitigated the steep cuts initially proposed for tobacco cessation and many other public health programs" Dr. Floyd said.

The bad news, however, is that "as lawmakers worked to push every available education dollar into the public schools, they pulled money out of higher education," he continued. "As a result, undergraduate and graduate medical education took a huge hit."

In fact, lawmakers cut 31 percent from GME formula funding, slashed 75 percent from family practice residency programs administered by the Texas Higher Education Coordinating Board (THECB), and zeroed out THECB primary care residency and preceptorship programs.

Lawmakers also eliminated one of two physician loan repayment programs and cut the other by 76 percent.            Despite those cuts, State Sen. Jane Nelson (R-Flower Mound), chair of the Senate Health and Human Services Committee, hailed the budget as a health care victory.

"The budget was a significant health care achievement because we were able to maintain current rates for physicians, dentists, nursing homes, community care, rural hospitals, and children's hospitals," said Senator Nelson, who served on the House-Senate conference committee that hammered out the final budget compromise. "We also protected mental health community services and hospitals."

But Representative Zerwas, who also was on the budget conference committee, says the legislature avoided deep health and human services cuts by only funding about 19 months of Medicaid. As passed, the budget makes no provision for caseload growth in that program, he says.

"If we have growth in the Medicaid program like we project that we're going to have, we run out of money devoted to the entitlement program on May 1 [2013]," Representative Zerwas said. "What that means is that doctors, hospitals, and nursing homes stop getting paid at that point."

Representative Zerwas says there is no question that some of the $6 billion remaining in the Rainy Day Fund will have to be used to fill that gap when lawmakers return in January 2013. The only question, he says, is how much.


Clinical Autonomy Defended

While the budget was undoubtedly the dominant issue of the session, a number of other issues of critical importance to organized medicine also were on the table – possibly none more important than the question of whether hospitals would gain carte blanche authority to directly employ physicians.

Working with the Texas Hospital Association (THA), the Texas Organization of Rural & Community Hospitals (TORCH), Senate State Affairs Committee Chair Robert Duncan (R-Lubbock), and other legislative leaders, TMA crafted a compromise on several physician employment bills. They give some hospitals greater latitude to employ doctors, but impose some of the strongest protections in the nation for physicians' clinical autonomy and independent medical decision making.

"The long-standing ban on the corporate practice of medicine was again under attack this session, but TMA was able to preserve the Texas ban on corporate practice of medicine with several carefully controlled expansions for physician employment," said Dallas dermatologist Dan McCoy, MD, immediate past chair of the TMA Council on Legislation. "These include strong protections for clinical autonomy and independent medical judgment."

Over the past several sessions, a number of hospitals – mostly small rural facilities and urban county hospital districts – repeatedly sought legislation to allow them to directly employ physicians.

In 2009, lawmakers passed a compromise bill hammered out by TMA and TORCH to allow hospitals in counties of fewer than 50,000 population, critical access hospitals, and sole community hospitals to employ physicians. Gov. Rick Perry, however, vetoed that bill at TMA's request because of an unrelated medical liability provision added to the measure at the last minute that would have weakened the 2003 Texas medical liability reforms.

This year, a handful of small rural counties introduced bills to allow physician employment, without protections for physicians' clinical autonomy. Again, TMA agreed with TORCH and THA to allow employment by small hospitals, generally in counties of 50,000 or fewer, with strong protections for independent medical judgment and medical staff responsibility for all clinical policies from privileges to credentialing to utilization review.

Dan Finch, director of TMA's Legislative Affairs Department, says this year's compromise was built on the bill Governor Perry vetoed in 2009. But hospitals balked at a provision in the 2009 bill that required hospitals to seek a certificate from TMB to employ doctors. To overcome that issue, TMA, TORCH, and THA agreed to even stronger protections for physician autonomy this year.

"We again drove the supervision of all clinical aspects of medicine to the hospital's medical staff," said Mr. Finch. "They are responsible for all policies related to peer review, utilization review, privileges, and credentialing. We guarantee independent medical judgment. We also protect physicians advocating for patients' medical needs against discipline from the hospital. And, we make sure that independent doctors and employed doctors are treated exactly the same with regard to credentialing and privileges."

The bill also requires the hospital's chief medical officer to report to TMB any instance of administrative interference in clinical or patient care decision making. That means if independent physicians are required to take call to maintain staff privileges, employed physicians also must take call. 

A handful of urban county hospital districts also received approval to employ physicians, with protections for clinical autonomy and independent medical decision making similar to the rural hospital bill. Those hospital districts are in Harris, Tarrant, Bexar, and El Paso counties. Their ability to employ physicians is limited to fulfilling their statutory mission to provide indigent care. Dallas County Hospital District won similar ability in 2009, and its enabling legislation served as the template for the others that passed this year. Local county medical societies were involved in the negotiations.

While those bills expand the ability of hospitals to employ physicians, TMA leaders say they will affect few physicians. The rural hospital bill, for example, applies to fewer than 150 hospitals, so the number of physicians employed under that bill likely will be small.

Legislation that could have much greater positive impact for physicians was Senate Bill 1661 by Senator Duncan and Rep. Todd Hunter (R-Corpus Christi). It provides protections for the thousands of physicians employed by hospital-run nonprofit health care corporations, or 501a corporations. SB 1661 makes the physician board of directors responsible for all clinical matters within these organizations, and gives physicians important liability protections within a 501a.

Dr. McCoy says SB 1661 is the big win in protecting the clinical autonomy of employed physicians because it impacts thousands of doctors who work for 501a corporations.

"In passing Senate Bill 1661 and the rural hospitals bill – even the big urban hospital districts bills – we have enacted in Texas the first statutory protections on clinical autonomy and independent medical decision-making anywhere," he said. "We protected the ban on the corporate practice of medicine by ensuring that those doctors who are employed have protections on their independent medical judgment."  


TMB Improved

Another hard-fought issue in which TMA emerged victorious was the battle over a series of reform bills designed to make TMB's disciplinary processes fairer for physicians, while maintaining the ability of the board to protect the public. (See "TMB Reform," July 2011 Texas Medicine, pages 18-27.)

"Despite the efforts of some of TMB's harshest critics, TMA fought off an effort to strip the medical board of much of its ability to protect patients from really bad doctors," Dr. Malone said. "Instead, we enacted a trio of reform bills that mean physicians will face less bureaucratic hassles from TMB's disciplinary processes. These three bills provide much needed due process protections for physicians without endangering the 2003 medical liability reforms that have meant so much to Texas."

Thanks to TMA's defeat of opponents with anti-TMA and anti-TMB agendas, the bills the legislature passed prohibit the filing of anonymous complaints. But they also: 

  • Require TMB to notify the physician when insurance companies, pharmaceutical companies, or third-party administrators file a complaint; 
  • Increase the time for a physician to respond to a complaint notice from 30 days to 45 days; 
  • Allow physicians to record the proceedings of a TMB informal settlement conference; 
  • Allow TMB to require a remedial action plan rather than impose a fine for a minor administrative violation; 
  • Institute a seven-year statute of limitation on bringing a disciplinary action, mirroring the TMB rule on how long doctors need to keep a patient's medical record; and 
  • Bind TMB to the ruling of an administrative law judge in a proceeding supervised by the State Office of Administrative Hearings (SOAH).   

In mid-June, Governor Perry vetoed SB 191, which contained the SOAH provision stating that he was concerned about overreliance on SOAH in contested care hearings before TMB. Identical language, however, was contained in HB 680, a broader TMB reform bill sponsored by Rep. Charles Schwertner, MD (R-Georgetown). Despite his concerns over the SOAH provision, Governor Perry signed that bill into law. 


Scope Bills Stopped Cold

In just about every session, midlevel practitioners push a number of bills to allow them to practice medicine without a medical school education. This session was no different.

The good news, Dr. Floyd said, "is that not one single scope bill passed this session that would affect you or your patients. To me, that's an amazing feat considering how much energy these groups put behind their lobbying efforts."

Nurse practitioners backed at least three bills that would have allowed them to independently diagnose, prescribe drugs, and order tests. None of them passed.

At the end of the session, Rep. Garnet Coleman (D-Houston) modified his nurse practitioner bill to simply authorize a study of independent practice. That bill went nowhere.

Meanwhile, physical therapists sought direct access to patients without a physician's referral; optometrists wanted authority to perform certain surgeries and prescribe or administer oral and other medications; chiropractors tried to protect their licensing board against lawsuits from other health licensing agencies when their rules intruded on the practice of other health professionals; and podiatrists sought to push their scope of practice beyond the foot.

TMA leaders say the association was willing to work with the podiatrists to allow podiatrists with specific training to work on the ankle. "Ultimately, the podiatrists were not interested in coming to an agreement on that bill," Mr. Finch said.

Meanwhile, TMA was able to strip virtually all of the objectionable provisions from SB 1001, which would have allowed chiropractors to form business partnerships with physicians.


Insurers' Discretion Removed

While physician employment, TMB reform, and scope of practice were all hotly contested, TMA leaders say the health insurance front was strangely quiet this session.

Lawmakers did enact House Bill 3017 by Rep. John Smithee (R-Amarillo) to prohibit discretionary clauses in health insurance policies. Such clauses give discretion to an insurer's interpretation of policy terms and coverage determinations under the policy.

Lawmakers also passed HB 438 by Rep. Senfronia Thompson (D-Houston), which requires health insurers to cover oral anticancer medications on a basis no less favorable than intravenously administered or injected medications. Governor Perry signed the bill.

A major insurance-related bill that did not pass was SB 8 by Senator Nelson. It would have established a statewide plan to improve quality and increase efficiency through performance-based measures, test collaborative models between physicians and other health care providers, and require public reporting of preventable readmissions and complications.

TMA's role in negotiations over that legislation resulted in the addition of three important provisions to SB 8 to protect physicians in a collaborative arrangement:   

  • Physicians would have an equal say and vote in a collaborative arrangement's governing board.  
  • They also would have due process protections and the ability to participate in more than one collaborative arrangement in their community.  
  • The bill also protected Texas' ban on the corporate practice of medicine.    

While SB 8 went down as the regular session expired, it gained new life in the special session. In late June, the legislature passed SB 7, filed by Senator Nelson, which included the language from SB 8, as well as other bills. SB 7 would:  

  • Establish a statewide plan to improve quality and increase efficiency by forming and regulating health care collaboratives;
  • Ensure physicians would have an equal say and vote in a collaborative's governing board, and due process protections and the ability to participate in more than one collaborative arrangement in their community;
  • Create a new Medicaid and Children's Health Insurance Program Quality-Based Payment Advisory Committee and program that would tie a portion of Medicaid HMO premiums to improved health outcomes and quality, and implement copayments in Medicaid to reduce unnecessary emergency department use;
  • Create more than $460 million for Medicaid by placing a premium tax on Medicaid managed care companies that are expanding to the Rio Grande Valley;
  • Protect patients from vaccine-preventable diseases in health care facilities, such as hospitals, by requiring them to implement vaccination policies to immunize their employees;
  • Establish the Texas Emergency and Trauma Care Education Partnership Program to ensure support of the trauma infrastructure in Texas;
  • Allow Texas to participate in a multistate compact to help fund and administer Medicaid and Medicare; and
  • Deny state funding to public hospital districts that perform abortions except in the case of a medical emergency.  

The provisions of SB 7 related to Medicaid spending were critical to balancing the budget that lawmakers passed in the regular session. At press time, SB 7 was awaiting Governor Perry's signature.

  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 email.


SIDEBAR

Medicine's Voice Heard in Austin

Physicians, medical students, and TMA Alliance members played a key role in passing TMA's 2011 legislative agenda by personally lobbying lawmakers during First Tuesdays at the Capitol in February, March, April, and May.           

The white coats that filled the capitol hallways and the House and Senate galleries sent a powerful message to legislators that TMA and physicians, students, and alliance members would be watching as they debated issues that are critical to Texans' health.

TMA thanks all of those who took time away from their practices, their studies, their jobs, and their families to come to Austin to take part in First Tuesdays at the Capitol. For a complete list of participants, log on to the TMA website

In addition to those participants, many physicians also provided their medical expertise and insight as they testified before House and Senate committees on numerous bills that affected physicians and patients during the legislative session, as well as during the interim before this year’s session.

They were:  

Richard Adams, MD, Dallas
Louis Appel, MD, Austin
John Asbury, MD, Temple
Sara Austin, MD, Austin
Susan Rudd Bailey, MD, Fort Worth
Carol Baker, MD, Houston
Judy Boom, MD, Houston
Sue Bornstein, MD, Dallas
Dawn Buckingham, MD, Austin
John Carlo, MD, MSE, Dallas
Kimberly Carter, MD, Austin
Wendy Chung, MD, Dallas
Douglas Curran, MD, Athens
Kimberly Avila Edwards, MD, Austin
Gary Floyd, MD, Fort Worth
Alice Gong, MD, San Antonio
Charleta Guillory, MD, Houston
John Hellerstedt, MD, Austin
John Holcomb, MD, San Antonio
Philip Huang, MD, MPH, Austin
Charles J. Lerner, MD, San Antonio
Asa Lockhart, MD, Tyler
C. Bruce Malone, MD, Austin
Dan McCoy, MD, Dallas
Clifford Moy, MD, Austin
Don Murphey, MD, Fort Worth
Matthew Murray, MD, Austin
Debra Ann Patt, MD, Austin
Stephen Ponder, MD, Odessa
Stephen Pont, MD, Austin
R. Michael Ragain, MD, Lubbock
Janet Realini, MD, San Antonio
Susan Norton Rossmann, MD, PhD, Houston
Leslie Secrest, MD, Dallas
Theodore Spinks, MD, Austin
Dana Sprute, MD, MPH, Austin
Wesley Stafford, MD, Corpus Christi
Susan Strate, MD, Wichita Falls
Erica Swegler, MD, Keller
Jason Terk, MD, Keller
Russell Thomas, DO, Eagle Lake
Paul Tucker, MD, Austin
David Tuescher, MD, Beaumont
Stephen E. Whitney, MD, MBA, Houston

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