Dewhurst, Nelson Tout Proposals to Curb Medicaid Costs

Lt. Gov David Dewhurst and Sen. Jane Nelson, R-Flower Mound, on Wednesday touted Senate proposals they say would bring down spending on Medicaid, the state’s health program for the poor, by instituting quality-based payment reforms for long-term care services and measures to catch Medicaid fraud and abuse.

“Our Medicaid costs have doubled, doubled since 2002-2003,” said Dewhurst, adding that Medicaid costs are crowding out room in the budget for “services people in Texas want to see,” such as public education, higher education and transportation.

Dewhurst said Senate Bills 7 and 8, filed by Nelson, the chairwoman of the Senate Health and Human Services Committee, would bring down ballooning state Medicaid costs. “What we’re trying to do, Senator Nelson and myself, is improve the quality of health care for our Medicaid population” by providing incentives that lead to better patient outcomes.

SB 7 would redesign long-term and acute care services for the disabled and elderly — the most costly services in Medicaid — by instituting quality-based payment systems and expanding Medicaid managed care to cover services provided in nursing facilities.

SB 8 would ensure that providers found guilty of Medicaid fraud in Texas or other states would be barred from participating in the state’s program, strengthen prohibitions against marketing to Medicaid patients, add medical transportation services to managed care and enable the Health and Human Services Commission's Office of Inspector General to establish a new data system to catch Medicaid fraud earlier. 

Nelson highlighted that the OIG has identified more than $6 billion in fraud and waste between 2004 and 2011 in Medicaid, and she said a computerized claims monitoring program could be used “to identify outliers, anomalies and red flags in the Medicaid program so we can deal with those abuse trends on the front end.”

“It is infuriating to hear report after report on the kind of abuses that are taking place,” she said. “I feel like we’re playing Whac-a-Mole — we have one problem uncovered and we try to deal with it, and then we see another emerge.” 

The Senate’s proposed budget includes $22.5 billion in general revenue to fund Medicaid. That amount includes $480 million for growth in Medicaid enrollment in the 2012-13 biennium, but does not account for anticipated increases in cost because of medical inflation or higher utilization in the 2014-15 biennium. The proposed budget also reduces general revenue by $250 million in anticipation of cost containment initiatives that would be implemented in the coming biennium.

Cost containment initiatives the Legislature passed in 2011, including a measure to expand Medicaid managed care services statewide, will save an estimated $2 billion in the 2012-13 biennium. Still, Texas legislators underfunded the program last session and must pass a $4.5 billion supplemental appropriations bill by March to avoid causing cash-flow problems for the HHSC.

Dewhurst also announced at Wednesday's news conference that Texas would not expand Medicaid to cover impoverished adults, as outlined by the federal Affordable Care Act. “One size does not fit all in the health care arena,” he said, explaining he would rather apply for a block grant from the federal government to run the state’s Medicaid program independently.    

Republican lawmakers have been under pressure to expand Medicaid to bring down the rate of uninsured and cut uncompensated care costs for hospitals and local government entities. Some Republicans in other states — such as Arizona Gov. Jan Brewer — have agreed to support the Medicaid expansion. 

The Legislative Budget Board — headed by Dewhurst and House Speaker Joe Straus — issued a performance review on Wednesday morning recommending that the state empower counties to choose whether to expand Medicaid. Supporters of the Medicaid expansion say turning the decision power over to counties would relieve political pressure on Republican leadership.

The LBB report recommends that lawmakers pass a statute allowing counties to use local revenue to fund the expansion. In that way, local money that is currently spent on uncompensated care for the uninsured could be used to pull down $2.5 billion in federal funds for the 2014-15 biennium and cover 1.3 million impoverished adults in the six most populous counties. 

Asked if he supported the LBB’s recommendation, Dewhurst said, “These are [LBB] staff ideas and so those ideas have not been incorporated into the budget and are not being endorsed by Senator Nelson or by me.”