Are Payment Reform, Texas Budget In Conflict?

Call it a primary care conundrum. On one hand, lawmakers are crafting legislation to make health care more affordable and effective through a series of programs to reward doctors and health care providers who achieve the best medical outcomes. On the other, they’re proposing meeting the state’s budget crunch by slashing Medicaid provider rates and eliminating funding for family practice medical residents — the same workforce they’re relying on to implement key parts of their reform.  

“They’re completely contradictory policy objectives,” said Tom Banning, chief executive of the Texas Academy of Family Physicians. “To get the health care delivery system turned around, absent financial support, is like tilting at windmills.” 

Lt. Gov. David Dewhurst, who is championing the payment reforms in the Senate, doesn’t see a contradiction. The state stands to generate massive savings — and Texans will have far better health care, he said — if doctors and hospitals are paid for how well they treat patients, not for how many tests they run, or how many days they keep someone in the intensive care unit.  

“Whether we’re sitting on a surplus or looking for savings, it doesn’t make any difference,” Dewhurst said in an interview with The Texas Tribune. “We can’t afford, as a country or a state, to be spending a third of our entire budget on health care.”

Under the guidance of Dewhurst and Sen. Jane Nelson, R-Grapevine, the Senate approved legislation last session that would have created a variety of outcomes-based health care initiatives, from pay-for-performance pilot programs that provide incentives to doctors in the private market, to preventative care-focused “medical homes” for disabled and needy Texans on Medicaid and CHIP, the Children’s Health Insurance Program. The measure died in the House — stuck behind an end-of-session voter ID stall-fest. 

This session, with the estimated $15 billion to $27 billion budget shortfall on everyone’s minds, Dewhurst and Nelson are determined to get such legislation through. They believe such programs are in the best interest of patients. They are also keen to achieve the cost savings that reform could create, at least in theory. Dewhurst estimates those savings could be as much as 40 percent of health care spending overall and up to 28 percent of spending in hospital settings. “If we don’t come together on a change in our payment structure, on how we pay doctors and hospitals, we’re going to crowd out spending on essential public programs,” Dewhurst said.

But early House and Senate drafts of the proposed 2012-13 budget have not been kind to anyone, Nelson acknowledges, including primary care physicians. The House version eliminates all funding for the state’s Family Practice and Primary Care Residency programs, which received a combined $26 million this biennium. The Senate version cuts the programs by 29 percent and 45 percent, respectively. The House budget also wipes out all funding for the Physician Loan Repayment Program, which got $23 million this biennium to help relieve doctors who agree to work in underserved communities — the majority of them in family practice — of their medical school debt. The Senate version cuts a quarter of the program’s funding — nearly $6 million.

Meanwhile, both chambers have suggested cutting by 30 percent certain subsidies for training graduate medical students, an estimated $24 million hit over the next two years. And they’ve proposed slashing by 10 percent the payments paid to health care providers who treat Medicaid patients, a devastating blow to the primary care doctors who struggle to stay afloat at the current Medicaid rates. If these providers go the way of a growing number of doctors who refuse to accept Medicaid, Texas’ ever-growing population of needy patients will have few options for care — save the emergency rooms that are prohibited from turning them away, and drive everyone’s costs up.  

“We’re spending so many health care dollars in emergency rooms, which is the most expensive place to get care,” Nelson said. “Clearly we need to rethink our whole philosophy and to increase our general practitioners.” In such a tough budget year, she added, “we have to make sure every dollar we’re spending on health care has a direct impact on people.”

Health and Human Services Commissioner Tom Suehs is hopeful that family practice doctors can be protected from the Medicaid rate cut. The state is already well short of its primary care needs. A January study in the New England Journal of Medicine found that Texas would have the third-toughest time meeting the expected surge in new Medicaid enrollees — a result of population growth and the terms of federal health care reform — with its current primary care capacity, after Oklahoma and Georgia.  

“I want to work with lawmakers to protect rates for primary care providers as much as possible,” Suehs said. “Maintaining access to preventive services will help us head off higher-cost medical care for many of our clients.”

But even if family practice doctors avoid the brunt of the rate cut, medical educators say the cuts to primary care residency programs could knock them out of operation. Dr. Clare Hawkins, the family medicine program director for San Jacinto Methodist Hospital in Baytown, said the roughly two-dozen family practice residency programs in Texas won’t make it through such cuts unscathed — and that those operating with the narrowest margins will be forced to shut their doors.

“If the Legislature wants a long-term solution to the rising cost of health care, it’s the primary care workforce that’s the solution,” Hawkins said. “This will end up decreasing the supply, and eliminating residencies that serve as social safety nets.”