2005 Legislative Compendium: Medicaid and CHIP

Medicaid  | CHIP 

Medicaid

Integrated Care Management
Last summer, HHSC announced its intent to restructure the Medicaid delivery system. The proposal recommended:

• Eliminating the popular Primary Care Case management (PCCM) model in existing communities;
• Expanding the STAR+PLUS HMO model for the elderly and patients with disabilities to all urban areas of the state; and
• Expanding Medicaid HMOs to Nueces and surrounding counties.

If implemented, the proposal meant the majority of Texas' Medicaid patients would have access only to HMOs. HHSC based its decision on a provision in HB 2292, adopted in 2003, requiring the state to implement the "most cost-effective" Medicaid delivery system. TMA and other organizations vigorously protested the state's decision, arguing it was made on dubious and flawed assumptions.

Two months before the start of session, Dallas Medical Resource, a group of business and health care leaders, released a study finding that an HMO-only model would jeopardize public hospitals' ability to capture at least $150 million in federal "Upper Payment Limit" (UPL) dollars, which are used today to subsidize Medicaid and local indigent care programs. Without access to the federal funds, urban hospital districts, straining from rising numbers of uninsured and lower reimbursements, would have little choice but to increase local taxes, cut community services, or both.

The new findings galvanized an informal coalition of business, health care, and county leaders, who united anew to fight HHSC's HMO-only proposal. Most important, the data sparked considerable concern among legislators who worried about the tax and health care access implications back home.

The coalition advanced on three fronts: developing grassroots support via the media and outreach from stakeholders; challenging budget assumptions regarding the fiscal impact of HMOs; and developing a new approach to Medicaid managed care - Integrated Care Management (ICM), a model based on TMA's enhanced PCCM.

At battles' end, TMA and its partners achieved qualified success. HHSC cannot expand the STAR+PLUS HMO model statewide. Instead, ICM will be piloted in Dallas for the aged, blind, and disabled population. ICM also is a potential option in other urban communities, if selected by county and hospital district leaders.

For pregnant women and children, 70 percent of the total Medicaid population, HHSC succeeded in stripping the bill of language to replace PCCM with ICM. Without statutory protection, HHSC intends to proceed with repealing PCCM in existing areas, thereby establishing an HMO-only approach for the majority of Texas Medicaid enrollees.

All the legislative delegations from the affected urban areas rose to the challenge of questioning the HHSC plan and supporting a model that would protect their local taxpayers by preserving federal UPL dollars. HB 1771 had overwhelming support in both chambers. Notable leaders included Rep. Dianne Delisi (R-Temple), and Sen. Jane Nelson (R-Lewisville), author and sponsor (respectively) of the ICM legislation; Reps. Garnet Coleman (D-Houston), Vilma Luna (D-Corpus Christi), Jim McReynolds (D-Lufkin), and Vicki Truitt (R-Keller); Sens. Bob Deuell (R-Greenville), Kyle Janek (R-Houston), Jon Lindsay (R-Houston), Royce West (D-Dallas), and Judith Zaffirini (D-Laredo), author of the ICM budget rider.

ICM Legislation

HB 1771 by Representative Delisi and Senator Nelson establishes a new, noncapitated Medicaid managed care delivery system known as the ICM model. The bill itself establishes the critical features of the model, including:

• Assignment of a medical home;
• Utilization and prescription drug management;
• Disease management;
• Health data reporting to physicians and providers;
• Health risk and functional needs assessments to match patients with services they need, such as case and disease management;
• Efforts to delay institutionalization of elderly patients and patient with disabilities; and
• Coordination between acute care and long-term social support services, such as home health or attendant care.

The bill also allows HHSC to require an upfront savings from any ICM administrator. Additionally, HHSC must establish an ICM advisory committee consisting of physicians, hospitals, long-term care providers, and consumer advocates to assist with the establishment of the model. HHSC named the advisory council in June 2005. Two TMA appointees will represent medicine.

The adopted bill is a slimmed-down version of the bill as filed. Provisions of the bill that were removed include: 1) prohibiting HMO expansion entirely, 2) requiring that PCCM be replaced by ICM to assure patients and physicians retained a choice of a noncapitated delivery system, and 3) specifying more detailed roles and responsibilities of the ICM contractors.

Without statutory protection for PCCM, HHSC intends to proceed with repealing the model in 2006 from existing urban service areas. PCCM expansion to rural and border counties in September 2005 is not affected by HB 1771 or the budget rider.

ICM - Rider 49-HHSC

A companion budget rider to HB 1771 directs HHSC to pilot ICM in Dallas for the elderly and patients with disabilities (known officially as the "aged, blind, and disabled," or ABD, populations). In other service areas, HHSC must consult county officials and hospital districts in determining which model(s) to implement for these populations. Options include PCCM, ICM, or an "HMO carve-out." The carve-out would exclude public hospitals from HMO capitated payments to preserve access to UPL dollars, but retain other services, including physician services, in the HMO. 

No state has implemented a carve-out model, and it is not clear the model will win federal approval.  HHSC will submit a federal waiver requesting approval for the carve-out approach. In Harris County, where STAR+PLUS HMOs already exist, the rider directs HHSC to implement the carve-out model if federal approval is granted.

The budget bill assumes $109.5 in savings from enrolling the ABD populations in some form of managed care. HHSC will apportion the savings among the urban service delivery areas. PCCM can only be used for the ABD populations if actuarial data demonstrate the model can achieve the savings or via a combination of savings and provider rate cuts. 

X:  In place
X1:  Slated for repeal by HHSC in summer 2006.
X2:  To be implemented in 2006
O:  Options for ABD populations; HHSC must consult county and hospital district officials in determining which model(s) to implement in each region. New model will be implemented in late 2006 or early 2007.

Governor's Medicaid Workgroup Reform/Omnibus Medicaid Bill
SB 1188 by Senator Nelson and Representative Delisi represents the work of the Governor's Medicaid Workgroup. The governor convened the workgroup during the interim to identify mechanisms to increase Medicaid efficiency, improve patient care, and lower costs. Physicians, hospital administrators, and other interested stakeholders served on the panel. In the last days of the legislative session, many Medicaid-related bills, including HB 1771, were added to SB 1188 as time grew short.

Much of the bill directs HHSC to implement changes "if possible" or to examine whether a reform is feasible rather than giving definitive direction. HHSC must submit a report to the governor and presiding officers of standing oversight committees by Dec. 1, 2005, regarding the strategies it will use to implement the SB 1188 reforms, or whether a provision is not feasible and another strategy should be pursued.

Provisions of SB 1188 that are of particular importance to medicine include:

• Evaluate the case management fee within PCCM and make recommendations to the Legislative Budget Board if the commission finds that a different rate is appropriate. The study will examine the feasibility and cost-effectiveness of a sliding-scale fee based on physician or provider performance. 
• Require Medicaid health plans to develop, implement, and maintain a system for tracking and resolving all provider appeals related to claims payment.
• Enact a patient, physician, and provider education campaign to promote cost-effective care, the importance of using a medical home, and ways to reduce use of emergency departments for non-emergency needs.
• Direct HHSC to develop a proposal to provide higher reimbursements for PCCM physicians and providers who treat patients with chronic health conditions. 
• Evaluate the cost-effectiveness of expanding disease management to include additional diseases.
• Require Internet postings of managed care plans sanctioned for failure to comply with contractual obligations.
• Require Medicaid managed care organization (MCOs) to use advanced practice nurses in addition to physicians to serve as primary care providers in order to increase availability of primary care services.
• Establish a system to review patient prescription drug usage, and educate physicians and other providers about that usage, how to reduce inappropriate use, and possible adverse drug interactions.
• Establish payment for online medical consultations as a means to reduce Medicaid costs, pursuant to approval from the federal government and development of approved CPT codes. HHSC may develop the online consultation program as a pilot.
• Prohibit Medicaid from paying for erectile dysfunction drugs for registered sex offenders.
• Direct HHSC to conduct a study of polypharmacy (multiple-drug use) for Medicaid patients receiving long-term care services. 
• Require physicians participating in CHIP to inform a pregnant woman of the health benefits she or her child may be eligible for under the program.
• Require HHSC or its agent to provide written, public disclosure by drug class of the specific drugs the Pharmaceutical and Therapeutics Committee recommends be listed as preferred on the Medicaid preferred drug list (PDL).
• Require Medicaid managed care plans and disease management vendors to coordinate transition of patients moving from one program to another.

Other reforms, to be studied or implemented if feasible:

• Allow HHSC to develop reimbursement and related rules for group appointments with Medicaid patients with certain diseases or medical conditions.
• Require HHSC to reduce paperwork and administrative burdens on patients, physicians, and providers. Simplification measures include:
  • Utilize electronic claims,
  • Develop an Internet portal for prior authorization requests,
  • Place the Medicaid provider application on the Internet and encourage providers to submit it electronically, and
  • Promote use of electronic prescribing tools and computer order entry systems.
   
• Direct HHSC to evaluate the cost-effectiveness of a physician-triage telephone line and to implement a pilot program in at least two urban service areas if the state can demonstrate net cost savings. 
• Allow HHSC to enter into an agreement with a pharmaceutical manufacturer to develop a pilot electronic medical records system in lieu of providing supplemental drug rebates.
• Direct HHSC to improve the delivery of services within Medicaid managed care organizations by taking the following actions, if cost-effective:
  • Require managed care plans to work with the state and other stakeholders to improve immunization rates of Medicaid patients;
  • Allow MCOs to access previous claims history of new enrollees previously enrolled in traditional Medicaid or PCCM;
  • Encourage MCOs to operate nurse-triage telephone lines and to promote those lines to enrollees,  ensuring children have clinically appropriate alternatives to emergency rooms outside of regular office hours; and
  • Develop effective mechanisms to identify and control utilization of services by enrollees with high or abusive utilization patterns.
   
• Allow HHSC to adopt payment for appropriate nursing services provided to high-risk or high-cost patients if those services are a more effective alternative to hospitalization and a physician certifies the medical appropriateness of the nursing services.
• Direct HHSC to explore authority under federal law of providing a stipend payment from Medicaid to cover the cost of a patient's private health insurance plan as an alternative to providing Medicaid coverage, including assistance with purchase of long-term care insurance.
•  Require HHSC to evaluate the impact of the implementation of Medicare Part D on the Medicaid PDL and to disclose to pharmaceutical manufacturers any clinical edits to be implemented as part of the PDL before a supplemental rebate agreement is executed.

PCCM Quality Improvement Pilot Project
SB 1, Article II, HHSC Rider 55 directs HHSC to establish a pilot in one of the remaining PCCM service areas to test mechanisms that reduce non-emergent emergency room usage, including higher payment to primary care physicians and providers who offer after-hours care, case management services for patients who frequently rely on the ER for routine care, or other mechanisms HHSC develops. HHSC must submit a work plan for the pilot to the governor and Legislative Budget Board by Sept. 1, 2005. No new funds were allocated to the project.

Women's Health Waiver
SB 747 by Sen. John Carona (R-Dallas) and Representative Luna directs HHSC to seek a federal Medicaid women's health waiver to provide family planning and preventive health services, including cancer, diabetes, sexually transmitted diseases, and blood pressure screenings, to women 18 years and older with incomes up to 185 percent of poverty. Enrolled women receive family planning counseling and contraceptives.  An amendment to the bill excluded coverage for emergency contraception to make the bill acceptable to legislators opposed to such coverage. The bill also clarifies that the waiver will not provide funding for elective abortions, which are prohibited under federal law. Women found to have medical problems must be referred to appropriate physicians and providers who do not perform or promote elective abortions nor contract or affiliate with entities that provide such services.

Under the waiver, which has been approved in 13 other states, Texas would gain a 90-percent federal match rate for waiver-related services versus 60 percent for regular Medicaid services. Over five years, the waiver is expected to save the state nearly $25 million. A portion of the savings will be used to fund restoration of the Medically Needy Program. TMA supported SB 747.

Payment for Advanced Practice Nurses and Physician Assistants
Budget Rider 72, Article II ─ HHSC, requires the agency to adopt rules specifying that HHSC may not pay for any Medicaid services provided by an associate practical nurse (APN) or physician assistant (PA) unless the service is billed under an APNs or PAs own provider number. Under current Medicaid rules, an APN can get an independent provider number. However, many APN services are currently billed "incident to" physician services using the practice's Medicaid provider number. PAs, on the other hand, currently are not allowed to obtain their own number and thus always bill. From a program integrity perspective, assigning an identification number to individual practitioners makes sense because it allows the state to discern more easily who actually provided the service. The rider will result in a decrease in revenue for some practices, as APN and PA services are paid at a lower rate for most services.

Treatment of Chronic Kidney Disease
HB 1252 by Rep. Ryan Guillen (D-Rio Grande City) and Senator Zaffirini expands Medicaid disease management to include chronic kidney disease.  The bill applies to both Medicaid HMOs and the private vendor operating the disease management program for traditional Medicaid. The bill requires the disease management program to use generally recognized clinical practice guidelines and laboratory assessments that identify chronic kidney disease.

Payment for Services for Dually Eligible Patients
HB 1502 by Rep. John Davis (R-Houston) and Senator Nelson repeals a provision enacted last year that prohibited the state from paying the Medicare coinsurance or deductible if the Medicare reimbursement rate for a service exceeded the rate allowed by Medicaid.

Interpreter Services
HB 3235 by Rep. Carlos Uresti (D-San Antonio) and Sen. Leticia Van de Putte (D-San Antonio) requires HHSC to provide interpreter services to Medicaid patients who are deaf or hard of hearing, or to their parents or guardians. Implementation is subject to appropriation, which was not funded this biennium.

SB 376 by Sen. Frank Madla (D-San Antonio) and Rep. Bill Zedler (R-Arlington) directs HHSC to implement a pilot Medicaid oral and written interpreter program in collaboration with at least five local funding entities, such as hospital districts. The bill gives preference to hospital districts from Bexar, Dallas, El Paso, Harris, and Tarrant counties, but allows other entities to participate if any of the preferred districts decline. The state funding needed to access the federal matching funds for the pilot must be provided using local dollars.

Medicaid Buy-In Program
SB 566 by Senator Deuell and Representative Delisi directs HHSC to implement a Medicaid buy-in program for patients with disabilities. Federal law allows states to implement buy-in programs for patients with disabilities earning up to 400 percent of the federal poverty level to encourage these patients to enter or return to the workforce, where they may not be able to obtain health insurance coverage. Patients enrolled in the program will be required to pay premiums and copayments.

Medicaid Rebates for Physician Administered Drugs
Rider 54, Article II, in SB 1, the state's appropriations act, directs HHSC to amend its current information system to allow it to collect pharmaceutical rebates on drugs administered within physician offices. Currently, physicians bill for drugs administered in their offices using "J-codes" instead of National Drug Codes (NDC). J-codes are needed to identify the drug with a specific manufacturer, and allow the state to collect a rebate. The rider effectively means physicians will have to alter the way they code and bill for these services. There is not a field on the current claim forms for physicians to use NDC. TMA opposed the provision, and HHSC raised concerns about its ability to implement it. SB 1 reduced appropriations to the Medicaid vendor drug program by $4 million in anticipation of implementing the initiative.

Medicaid Fraud Reduction
SB 563 by Senator Janek and Representative Delisi requires HHSC to expand the current finger imaging pilot in phases statewide if HHSC determines it is cost-effective. Last session, HB 2292 required HHSC to test the feasibility of finger imaging systems to better identity fraud by patients, and service fraud by physicians and providers. Several systems are being tested now in the Valley, Dallas, Austin, and Houston. HHSC must also adopt policies and procedures relating to the program, including lost identification cards, using finger images of children, parents/guardians, or recipients who may havedifficulty using a finger imaging device, such as the elderly and patients with disabilities. TMA serves on the oversight committee for the finger imaging pilot, and will closely monitor any program expansion.

Medicaid Provider Audits
SB 630 by Senator Van de Putte and Rep. Yvonne Gonzalez Toureilles (D-Alice) directs HHSC to adopt rules governing the audit of Medicaid providers. "Provider" is broadly defined to include individuals, partnerships, corporations, or any entity with a contract or provider agreement with Medicaid.

Rules must require that an agency 1) notify a provider of impending audit, no later than the seventh day before the audit; 2) limit the period covered to three years; 3) accommodate the provider's schedule to the greatest extent possible when conducting a field audit; 4) require an entrance interview prior to beginning a field audit; 5) provide that providers of the same type to be audited with the same standards and parameters; 6) require an exit interview at the conclusion of any field investigation to review the initial findings; 7) allow the provider to correct questioned cost information if there is no indication of intent to commit fraud; 8) allow provider, within 10 days of audit completion, to give documentation to clarify any found irregularities; 9) require the agency to deliver a preliminary audit report to provider no later than the 60th day after the audit is completed and a final report within 180 days; and 10) establish an ad hoc peer review panel to administer an informal process to facilitate provider appeals/corrections.

The bill does not apply to audits conducted by the Medicaid fraud control unit of the attorney general's office or computerized audits using the Medicaid fraud detection system.

Children's Health Insurance Program

Perinatal Program
SB 1, the General Appropriations Act, includes a rider directing HHSC to establish a Children's Health Insurance Program (CHIP) perinatal program. Under the program, now operating in eight other states, Texas would allow a mother who is not Medicaid eligible to enroll her unborn child in CHIP. The program would be available to undocumented immigrants as well as legal resident immigrants. The enrollee will be allowed 12 months' continuous coverage dating from the time the mother enrolls in the program. The program is expected to expand prenatal coverage to some 17,000 babies in state fiscal year 2006, and 47,000 babies in 2007. Texas must submit a CHIP plan amendment outlining eligibility, benefit coverage, and enrollment policies. 

Medicaid and CHIP TMA Staff Contacts:  

• Hilary Dennis, Legislative Affairs, (512) 370-1370
• Rich Johnson, Medical Economics, (512) 370-1315
• Helen Kent Davis, Governmental Affairs, (512) 370-1401

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