May 21, 2005

Senate Moving on Medicaid Reform
Amid High-Pressure Dealing on Bill

By Mike Hailey
Capitol Inside Editor

The Texas Senate appears to be moving forward on Medicaid reform by agreeing to consider a plan that's met resistance from Governor Rick Perry's health and human services chief and intense opposition from the HMO lobby.

The Senate Finance Committee has set a hearing for Saturday on House Bill 1771, which would establish an Integrated Care Management program in place of a planned expansion of a Medicaid HMO pilot program from Houston to other big cities across the state. But while advocates of the alternative ICM proposal were encouraged by the apparent movement in the upper chamber, they were also concerned about an expected compromise that could take some of the teeth out of the original proposal that would have shut the door completely on an expansion of the Star-Plus program that's been operating in Houston for the past seven years.

Sponsored by State Senator Jane Nelson in the upper chamber, the bill that State Rep. Dianne Delisi passed out of the House with only one opposing vote didn't get a hearing in the Senate until state budget negotiators agreed to a rider that would give the Health and Human Services Commission more flexibility in setting up a new Medicaid program in the state's largest cities.

The legislation would still outline the basic expectations that lawmakers have for an alternative ICM program. But the budget provision would give the HHSC the tools to implement a new system without the same direct force of law that the bill would have in the House-passed version.

A tentative accord reached Friday would prevent Dallas County's main hospital for indigents from losing millions of dollars that an extension of the Star-Plus program into the area would have cost. If the legislation fails, the HHSC could go back to its original plans to expand Star-Plus into the eight largest metropolitan areas in Texas. Parkland Hospital in Dallas would lose a projected $25 million in federal funds in that event while other public hospitals that treat indigents in the other large cities would lose a combined total of $125 million if Star-Plus is rolled out as initially planned by HHSC Commissioner Albert Hawkins.

Hawkins has been pushing vigorously for the plan backed by HMO's while warning that provider rates would have to be cut as much as $100 million if legislators turned to the ICM proposal instead of Star-Plus. The commission reportedly insisted that the rider be drafted apart from the legislation.

The HMO lobby that favors an expansion of Star-Plus has waged an aggressive campaign aimed at derailing the ICM alternative that the Delisi bill proposes. Proponents of the Medicaid HMO appeared to be on the ropes last month when the Texas Medical Association, the Texas Hospital Association and the Texas Association for Home Care rallied behind the ICM plan contained in HB 1771. But after sailing through the House with 148 votes, the alternative proposal stalled in the Senate as HHSC officials and representatives for HMO's turned up the pressure in the Capitol's east wing. A compromise proposal came together after Lieutenant Governor David Dewhurst urged both sides to see if they could find a middle ground.

In addition to the threat of losing hospital funds, opponents of the Star-Plus model have complained that HMO's continue to provide inadequate case management and care while they are slow to pay providers despite attempts by the Legislature to alleviate that. The Medicaid HMO's supporters dispute the criticism and insist that the savings from an expanded Star-Plus system would be substantially more than the amount that the ICM model would save.