House committee reviews managed care in Texas

Last week, the House Committee on Human Services met to continue its interim charge of reviewing cost, quality and access measures.  The agenda specifically laid out the following areas of focus.

  • Review the history of Medicaid Managed Care in Texas and determine the impact managed care has had on the quality and cost of care.
  • Review initiatives that managed care organizations (MCOs) have implemented to improve quality of care and determine whether MCOs have improved coordination of care.
  • Review the Health and Human Services Commission’s (HHSC) oversight of MCOs, and make recommendations for any needed improvement.

Chairman Richard Raymond started the meeting saying the review of managed care felt something more like a full existential review of the model.

“We’re looking at managed care in Texas in the way that we would during a sunset review, and I guess it can be.  If we decide we want to sunset managed care, we can certainly make that recommendation, but I don’t anticipate that.”

HHSC Commissioner Charles Smith started the 6-hour hearing with opening comments related to the recent Medicaid procurement challenges.  Smith said they had implemented significant staffing and process changes to respond to the issues that have arisen in recent months.

This addresses the flawed process that didn’t have the appropriate checks and balances followed by staff…  We had staff, including management staff, that chose not to follow those processes…  I continually apologize that the system didn’t work as it was designed. It is my responsibility to assure that this never happens again.

I cannot promise you that my agency will be perfect.  As a matter of fact, with 108,000 contracts, 700 programs, and 700,000 employees I can almost promise you that it won’t be. What I can promise you is that I will never stop seeking perfection.

Chair Raymond responded to Smith’s opening comments by putting recent procurement news in perspective.

We’ve created such a large agency – it’s my understanding it’s the largest state agency in the country…  I don’t think there was anything criminal that has happened.  There were not people in there trying to shift and direct contracts that went to any particular entity.  That wasn’t the case.

The contract management and oversight process taken up by the committee differed significantly from the procurement process, Smith said.  Stephanie Muth, Director of Medicaid, laid out some highlights of plan quality and performance.  She said that 92% of Texas Medicaid has moved to a managed care model.

It’s a huge organizational shift that we’ve been going through as we moved into managed care.

Muth explained that HHSC didn’t want to tell Medicaid plans how they should compensate their executives.  If a plan wanted to provide bonus payments as part of its compensation package, that was up to the plan.  However, the plans had a limited amount of administrative overhead they were allowed to provide.  Costs, including compensation, that were in excess of that cap would be considered “profit” that would be subject to profit sharing terms with the State of Texas under the contract.

Anne Rote is the President of Molina Healthcare of Texas.  She testified that the “carving in” of nursing facilities into the managed care benefit had delivered significant and unique value for the State of Texas that aren’t being captured in some other states.

We implemented a pay for quality program (in nursing facilities).  We wanted to try to increase the quality of our nursing facilities and that if a member chose Molina, then they would have a higher likelihood of a quality nursing facility.

We paid facilities $10 per member per month for each of seven metrics…  things like flu shots, pneumonia vaccines, having residents report that their pain was in control, pressure ulcers, emergency department admissions, and hospital readmissions.  We have paid over $2.5m to date in incentives to nursing facilities.  What we’ve found is that our residents in these nursing facilities have a 21% decreased hospital admission rate.  So if we have someone in a higher quality facility, they are healthier.

Jaime Dudensing leads the Texas Association of Health Plans.  She detailed the Texas Medicaid population.

One in five Texans is on Medicaid. More than 50% of the babies born in Texas, their deliveries were covered through Medicaid.  Nearly half of all Texas children are on Medicaid or CHIP.  One in three Texans with disabilities is on Medicaid.  More than 60% of Texas nursing home residents depends on Medicaid.  More than 90% of the children in foster care (is on Medicaid). One in four Medicare recipients depends on Medicaid for their long term care services.

You can view the full list of witnesses that provided testimony here.  The video archive of the hearing can be viewed at this page.

The committee meets again next week on May 9th.  The agenda will turn to the view of providers into the managed care model, including:

  • Study whether access to care and network adequacy contractual requirements are sufficient.
  • Determine Medicaid participant and provider satisfaction within STAR, STAR Health, STAR Kids and STAR+PLUS managed care programs.
  • Study the future delivery of services under a managed care model to additional populations.

Chair Raymond said to expect another meeting on August 29th with the final hearing in late September or early October.