• A surprising turn in Texas

    There are times I feel like I’ve become so jaded about health care reform that I think nothing can surprise me. And then I read this:

    But back in Texas, Perry is actually pursuing a highly technocratic and pragmatic attempt at Medicaid reform that doesn’t much resemble the policy he’s floated in his presidential run. He is currently negotiating a waiver with the Obama administration that would net the state increased Medicaid funding if providers could hit certain performance metrics agreed to by the federal government. It’s an approach that has pleased just about everyone involved, from Medicaid advocates to major hospitals.

    “As an advocate, if this is done reasonably well, it could be requiring more from hospitals for what they’re doing,” says Anne Dunkelberg of the Center for Public Policy Priorities. “It wouldn’t just be a cash cow. Hospitals would have to deliver care to the uninsured and have to participate in some payment and delivery reforms.

    Here’s more:

    Those payments are significant. Texas received more than $2 billion in what are called Upper Limit Payments, a decent portion of the state’s $23.7 billion Medicaid budget. And those funds show up with no strings attached, allowing hospitals to use them as they see fit. “That money is free and clear,” says Jared Wolfe, executive director of the Texas Association of Health Plans. “It’s theirs to do what they want with it.”

    The Medicaid waiver that Texas is currently negotiating with the federal government has a lot do with the supplemental funds. Specifically, the state wants a a lot more of them, about $12 billion more than it currently receives, over the next five years.

    To get that extra money, Texas is willing to pay a price. The state proposes to implement greater restrictions on what that money can be used for. Under the waiver it has requested, hospitals would have to come together to draw up a Regional Health Partnerships, which would pick metrics that hospitals have to hit — such as reducing re-admissions or slowing emergency room use. The state then has to bless those plans. And the federal government has to sign off on the whole framework.

    I went and read the waiver. It seems to me that Texas is concerned that its managed care restrictions might run afoul of federal guidelines that require Medicaid to cover any eligible providers. Others seem to agree with me:

    The new funding pools are essentially a workaround to keep money flowing to hospitals that would otherwise be canceled out by the managed-care expansion. Hospitals have expressed concern over whether the proposal would meet approval at the federal level.

    So here’s what I think might be going on. Texas believes that it can save money by upping its managed care. This requires some restrictions on access to certain hospitals, clinics, or physicians. They are also recognizing that there is a large funding gap between what they have available, and what they actually need. So in order to get the federal government to agree to give them money and a loosening of the rules, they are proposing to make changes to regulations in Texas that look a lot like encouraging ACO’s and paying for quality.

    It remains to be seen if Obama administration will approve this. If they do, it’s also unclear what the details of the final waiver will be. But what I find fascinating is that the state of Texas (and its governor) are requesting significant amounts of money from the federal government in order to set up changes that lack a lot of the anti-ACA fervor that usually seems to come from the Lone Star State. Color me surprised.

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    • If you lived here, you wouldn’t be so surprised.

    • Texas is facing major budget deficits. Like everyone else, health care costs are a major cost for them. It is not surprising they are asking for more money. I am surprised that they did not embrace a more market oriented approach.

      Steve

    • My understanding is that the idea was generated by staff at the agency that oversees the Medicaid program, not from within the governor’s office. As in many agencies, there are some smart, creative people there who don’t have a big political agenda, they just want to fix problems and make programs run more effectively given the constraints they have to operate within.