TMA to Budget Conferees: Keep Medicaid Agreement

May 3, 2007

The Honorable David Dewhurst
Lieutenant Governor of Texas
P.O. Box 12068
Austin, Texas 78711-12068

Dear Governor Dewhurst:

On behalf of the nearly 42,000 members of the Texas Medical Association, I am writing to call your attention to an urgent matter related to your conference committee deliberations and the pending settlement of the Frew vs. Hawkins lawsuit.

In early April, legislative leaders asked TMA to support a measure intended to satisfy the access-to-care issues in Frew . As the attached letter ( PDF ) documents, we understood at the time that the legislature intended to increase all physician Medicaid payment rates by 25 percent. The plan also included an additional $50 million for targeted rate adjustments to address the most critical pediatric access problems. We now understand instead that the legislature intends to apply the 25-percent increase only to payments for treating children under 21.

Coming into this session and throughout the session, we have maintained that Medicaid rates for physicians are woefully inadequate and have been for more than a decade. As a consequence, physicians have left the program in large numbers. Most of those who remain have limited their practice by not taking new Medicaid patients. With the obvious exception of pediatricians, the majority of physicians in Medicaid treat patients of all ages. Their decision to enroll as an active Medicaid provider in large part relates to the adequacy of rates and the sheer economic effect on their practices of providing services well below cost.

I firmly believe that a decision to bring some but not all of the Medicaid rates to a level that more closely covers physicians' operating costs is not likely to have the intended effect of satisfying the access-to-care issues raised in the Frew lawsuit . I strongly urge the conference committee on House Bill 1 to take the necessary steps to increase Medicaid payment rates for adult services as well.

We certainly acknowledge that the cost of addressing payment rates in Medicaid is significant, and we sincerely appreciate the legislature's commitment this session to funding needed rate increases. Unfortunately, rates have been virtually flat since the early 1990s. While a 25-percent increase is thus a momentous step in the right direction, the increase still would leave Medicaid payment rates well below Medicare rates and at the bottom of rates paid for physician care by all payers.

The Texas Medical Association remains firmly committed to our pledge to pursue a vigorous outreach campaign that encourages physicians to rejoin the Medicaid program and open their practices to new Medicaid patients. I am personally committed to leading this effort. The success of that campaign and our ability to help the state achieve its goals in the Frew settlement will depend extensively on the issues raised above.

I would be happy to discuss these issues with you further at your convenience. And we remain committed to working collaboratively with you to improve the health of all Texans.


William W. Hinchey, M.D.
President, Texas Medical Association

cc: The Honorable Tom Craddick
      Members, Conference Committee on House Bill 1

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