1999 Legislative Compendium: Medicaid

[ Medicaid Managed Care  |  Medicaid Reimbursement  |  Medicaid Eligibility  |  Medicaid Outreach  |  Medicaid Participation Requirements  |  Medicaid Program Integrity ]

Medicaid Managed Care 

Over the past four years, Medicaid managed care has proliferated across the state. Yet questions persist about the effect of the program on Medicaid costs, patient access to services, and health care quality. Limited studies have been performed to evaluate the program, including studies to assess patient and physician satisfaction. However, it remains unclear whether the goals of Medicaid managed care - to improve patient access, enhance quality, and control costs - have been achieved. 

To get a better picture of how well Medicaid managed care works, lawmakers enacted HB 2896 by Rep. Garnet Coleman (D-Houston) and Sen. Mike Moncrief (D-Fort Worth). The bill, which became effective in June, specifically directs the Texas Health and Human Services Commission to evaluate the efficacy of Medicaid managed care and to make recommendations for improving the program. Issues to be evaluated include: impact of the program on access to care, including access for recipients with special health care needs; quality of care; utilization of services; Medicaid costs; and the level of administrative complexity for providers, patients, and health plans.

To ensure that all physicians, patients, and health plans are actively involved in the evaluation process, TMA advocacy resulted in establishment of a statewide Medicaid Advisory Committee. The committee will provide input into the study design as well as help the state identify Medicaid managed care "best practices" that can be replicated in other parts of the state.

A TMA-backed moratorium on future Medicaid managed care rollouts also was included in the bill. The moratorium will affect service areas scheduled to be initiated after the implementation of Dallas and El Paso service areas on July 1, 1999 and Dec. 1, 1999, respectively.

TMA also defeated some HMO efforts to abolish the Primary Care Case Management model in El Paso. The model, widely popular among patients and physicians, allows broader access to specialists and is administratively less cumbersome than many HMOs. During the interim, TMA will continue to vigorously advocate for continuation of the PCCM in all existing service areas as well as any new ones.

Building on Medicaid reforms enacted in 1995 and 1997, HB 2896 gave state agencies additional technical guidance on the program's operation and administration. Specifically, HB 2896:

  • Extends the Medicaid provider re-enrollment deadline from Sept. 1, 1999 to March 31, 2000, unless an electronic re-enrollment form is established, which would extend the deadline until Sept. 1, 2000. HB 2896 also would give the HHSC commissioner the authority to further extend the re-enrollment deadline if a significant number of providers do not re-enroll.
  • Promotes the use of electronic claims processing by Medicaid managed care plans.
  • Directs HHSC to develop and implement an expedited process for determining eligibility for and enrolling pregnant women and newborns in managed care plans. Additionally, requires that the state ensure pregnant women and newborns immediate access to prenatal care and well-baby exams. Pregnant women must be able to make an appointment for obstetrical care within 30 days of applying for Medicaid.
  • Requires newborns within the Medicaid program to be assigned to the fee-for-service program for 60 days or until their Medicaid eligibility is determined, whichever is earliest (the intent of this language is to ameliorate continuing payment problems for newborns).
  • Designates specialized pediatric laboratories, including those within children's hospitals, as significant traditional providers. Those providers must be included within Medicaid health plan networks so long as they agree to the plans' contractual requirements.
  • Directs HHSC to evaluate and report on the contractual performance and costs of the state's Medicaid managed care administrative entities, including the claims payer, enrollment broker, external quality review organization, and primary care case management administrator.
  • Adds The University of Texas Medical Branch at Galveston to the list of mandatory Medicaid managed care plans. This provision applies only to the counties where UTMB is licensed as an HMO as of Sept. 1, 1999, excluding the Harris county service area. (In 1997, legislation passed requiring the state to include hospital-district based HMOs within Medicaid. HB 2896 extends the same requirement to UTMB, but does not mandate UTMB in other service areas.)
  • Requires HHSC to evaluate the feasibility of implementing a Medicaid managed care reimbursement system based on patient severity and risk, including implementation of health status screens for patients.
  • Establishes criteria for HHSC to set managed care plan premium rates. Criteria include regional variation in costs, number of Medicaid plans in the market, types and range of services delivered, and ability of managed care plans to pay inpatient and outpatient hospital rates at a level comparable to the PCCM.
  • Requires health plan profit sharing be returned to General Revenue for the purpose of funding Medicaid outreach and education activities.

Medicaid Reimbursement 

Responding to growing concerns about declining Medicaid access, the 76 th Legislature enacted the first Medicaid fee increase in seven years, allotting $30 million in new state funds toward professional and outpatient hospital reimbursement. Over the biennium, these funds will be matched with another $47.7 million in federal monies, creating a total increase of $77.7 million. The fee increase will benefit physicians, allied health professionals, and outpatient hospitals serving traditional Medicaid patients as well as those who participate in Medicaid managed care networks. As directed by the appropriations rider, managed care plans must pass the fee increase directly onto participating network physicians and providers. Medicaid managed care plans received a separate increase of $15 million to augment their premium rates.

The HHSC is charged with implementing the fee increase. Guiding HHSC's decisions on how best to distribute the funds will be a new Physician Payment Advisory Committee. PPAC will comprise 11 to 15 physicians chosen from geographically diverse primary and specialty care practices. TMA is working closely with HHSC, state specialty and county medical societies, and the Texas Osteopathic Medical Association to select qualified candidates for PPAC. It is anticipated that the first meeting of PPAC will be held in September. HB 1, the appropriations bill, directs HHSC to distribute the professional component of the fee increase by Sept. 1, 1999. However, the impending implementation of a new Medicaid claims payment system will unavoidably delay the first year's fee increase until April 2000.

In addition to advising HHSC on how to distribute new Medicaid dollars, the PPAC also will serve as a resource in evaluating and developing legislative requests for additional Medicaid funding.

Though grateful for the initial allocation, TMA supports further investment in the Medicaid program. TMA surveys indicate that Medicaid physician participation is eroding, thus impacting many patients' access to services. Throughout the interim, TMA will continue to advocate for additional monies to be appropriated during the 77 th Legislature.

Medicaid Eligibility 

Hoping to stanch the flow of Medicaid-eligible children leaving the program, lawmakers enacted HB 820 by Rep. Elliott Naishtat (D-Austin). The bill requires the Texas Department of Human Services to establish a mechanism to automatically review a child's eligibility when the child's welfare benefits end, but the child previously qualified for Medicaid. Many Medicaid clients mistakenly believe that the cessation of welfare benefits also disqualifies them or their children for Medicaid. The 1996 Welfare Reform Act separated Medicaid from welfare benefits, yet the vast majority of children are still eligible for Medicaid even if cash assistance ends. Under HB 820, if a child is found to be Medicaid eligible, the state is allowed to extend provisional Medicaid coverage until the family is recertified for the program. When a family loses welfare benefits, TDHS must notify the parents that their children may still be Medicaid eligible.

Medicaid Outreach 

Of the 1.4 million Texas children who are uninsured, approximately 500,000 are Medicaid eligible but not enrolled. As a result, these children often go without much needed primary and preventive care necessary to their healthy development. House Concurrent Resolution 96 by Representative Coleman directs HHSC to maximize the state's share of federal Medicaid outreach dollars. Approximately $27.5 million in federal matching funds are available for the purpose of outreach activities, yet Texas will soon run out of time to access these dollars. Outreach funds obtained by the state are to be used to implement targeted and culturally appropriate community-based outreach programs, develop educational programs relating to current or future beneficiaries, simplify eligibility and enrollment processes, train eligibility workers, providers and the community on available resources, update eligibility systems, and target individuals at risk of losing Medicaid benefits due to welfare reform.

 Medicaid Participation Requirements 

HB 1285 by Representative Janek will require that a parent or a guardian of a child 15 years old or younger to accompany the child for Early and Periodic Screening, Diagnosis and Treatment visits (also known as Texas Health Steps visits) in order for a physician or other health care provider to receive reimbursement. If a parent or guardian is unavailable, another adult, including an adult related to the child, may attend instead. The new law conforms to existing requirements in the Texas Family Code. Working with TMA, Representative Janek included exceptions for children who receive EPSDT exams at Head Start centers, school-based health clinics, or day care facilities. To be eligible for the exceptions, these facilities must have obtained written consent within the year preceding the date of service and also encourage parental involvement in and management of their children's health care.

The Texas Department of Health, which will administer the requirements of the act, will monitor compliance with the act by utilizing existing provider audit procedures. No additional paperwork is expected.

Medicaid Program Integrity 

Though Medicaid fraud and abuse prevention was high on reform lists for many legislators, physicians were not widely targeted. Most of the adopted reforms centered on automating existing fraud and abuse detection systems, ensuring the accuracy of Medicaid-eligibility, welfare, and food stamp lists, and conforming state law to meet federal requirements. SB 1588 requires Medicaid managed care plans to submit to HHSC: 1) descriptions of any financial or business relationships between the plan and a subcontractor; 2) contracts between the plan and subcontractor relating to delivery of or payment for services; and 3) a description of the plan's fraud control program. To ensure that physician practices weren't burdened with additional fraud and abuse compliance protocols, the bill author, Sen. Judith Zaffirini (D-Laredo), added a provision to SB 1588 stating that physicians or health care providers who complete the Medicaid provider re-enrollment process are not considered health plan subcontractors. 

Medicaid Staff Contacts
Helen Kent Davis, Governmental Affairs: (512) 370-1401
Rich Johnson, Medical Economics (512) 370-1315 

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