Background and context: Texas Managed Care Accountability bill

In late April, we covered the progress of the Managed Care Accountability bill that is making its way through the Texas Legislature. The 60-page bill is part of a larger conversation regarding Medicaid reform in Texas. Managed care has deep roots in the healthcare market and the program became problematic several years ago.


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Back in 2015, the Texas Department of Health and Human Services began a process of reorganization. The goal was to create a more responsive, efficient, and effective department overall. During this reorganization, the existing managed care program was expanded. The reorganization was split into two phases: an operational phase, which began in September 2016, and a final transition phase the following September.

Part of the operational phase included the creation of oversight advisory committees, to see which issues may need additional stakeholder input. The sunset process was also part of this phase. In this process, legislators and members of the public evaluated all state agencies to determine which would operate in the future and to ensure their budgets were being spent.

The transition phase included the implementation of the changes proposed during the operational phase. You can read the full transition phase report here.

The goals of the department transformation included:

  • Making the department and its programs easier to navigate for people who need information, benefits, or services;
  • Aligning the programs with the HHS mission, business, and statutory responsibilities;
  • Breaking down operational silos to create greater program integration;
  • Creating clear lines of accountability within the organization; and
  • Developing clearly defined and objective performance metrics for all areas of the organization.

The reorganization affected several departments within the broader agency including:

Although this reorganization of departments and the creation of a more efficient process attempted to provide easier access to services for a variety of Texans, this did not always occur. As a result, several agencies launched investigations into the program, and lawmakers started drafting legislation in response.

Dallas Morning News published an investigative series, Pain and Profit earlier this year, which detailed a series of individual stories demonstrating how companies denied life-sustaining services in order to boost profits. The series found that Medicaid Managed Care, the program that is supposed to provide these services, had been operating inadequately for years. These inadequacies were largely a result of the transformation of the department and the oversight within the system that followed.

In the Managed Care Program, managed care companies act as middlemen in the transaction between providers and patients with the goal of allowing for quicker and cheaper access to care. The series found that, in the years following the reorganization of the department, these companies were denying care, cutting costs of certain services, and overstating the number of specialists available to patients. These companies pocketed those funds while Texans were denied life-saving and life-sustaining services.

The investigative series created a massive response at the state level.

Several Texas health care organizations, as well as the public, crafted a letter to the Legislature and the Governor, demanding that Medicaid Managed Care be addressed. The letter demonstrated that the Dallas Morning News series brought to the forefront many of the issues that exist within the managed care system. It reinforced the clear structural problems of Medicaid Managed Care, and also expressed how valuable and vital of a service it is for Texans across the state.

The Legislature also held a public hearing in response to the series. The goal of the hearing was to address the claims made in the series and to hear directly from the companies and individuals mentioned in the investigation.

There have been nearly two dozen bills introduced in both chambers this session, many of which have received bipartisan support.

One such bill has received a considerable amount of attention. Representative Sarah Davis has introduced the Medicaid Managed Care Accountability Act, which attempts to provide greater oversight to the Medicaid Managed Care program as it currently stands. The bill would require the Texas Department of Health to better track medical denials and the appeal process that follows, if applicable. The bill also establishes an independent third party comprised of doctors to review these denials. The overall goal is to create more protections for Texans who receive care through this program.