Texas: A Healthcare System Evaluation and Recommendation

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RUNNING HEAD: TEXAS: A HEALTHCARE

Texas: A Healthcare System Evaluation and Recommendation

Nia Llenas, B.S.

UMUC



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I. Introduction

II. Literature Review

III. Texas Medicaid and SCHIP

a. Addressing access to care

i. Target demographic

ii. Medicaid eligibility standards

b. Rationing care

i. Emergency room use

ii. Medicaid reimbursement scheme

c. Financing care

i. State owned facilities

ii. Alternatives to federal funding

d. Quality care

i. State and national initiatives

ii. Implementing change

IV. Conclusion



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Introduction

According to Kaiser¶s State Health Facts (2007), 25% of Texans are

uninsured. In a state whose healthcare systems ranks last in the Commonwealth

Fund¶s state scorecard, the room for improvement is endless, but frequently slow

and resisted. While many states fund safety net provisions and stretch out their

hands to the Federal government, Texas collects no income tax and refuses to

increase funding for a larger federal match. This lack of a cohesive effort has

propelled the plight of Texans to the national stage. Residents frequently drive 2

hours to hospitals offering free care, some wait 4-6 hours in emergency rooms

(ER) for ailments easily treated by primary care providers (PCP), and others are

simply turned away in favor of more needy or acutely ill patients.

Literature Review

Texas is frequently studied in the context of access to services,

emergency room utilization and as an early indicator of the effects of rapid

population growth, but few scholarly articles examine the state¶s health systems

and the factors that control it. Additionally, many community-led and non-profit

organizations produce reputable studies into the inner workings of the Texas

health system in their efforts to enact change, especially in SCHIP and Medicaid.

Access and utilization

Adults with children covered by SCHIP are often left uninsured due to

stringent income restrictions by state Medicaid (Center for Public Policy Priorities,

2008). Those left uninsured find that their employers are less likely to provide



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insurance, and employer-sponsored plans have steadily declined in the past 10

years as market regulations loosen in Texas (Texas Impact).

F

inance and reimbursement

Texan border towns present an additional challenge due to lower Medicaid

reimbursement levels for providers. Although CHIP enrollment has increased,

providers in border towns have either closed their doors to additional patients or

moved their practice (Figueroa, 2003) prompting lawsuits in the name of Equal

Access (14th Amendment). Weismann, et al (2008) also found that in states with

the lowest Medicaid coverage, access to primary care services was unattainable

for low-income adults, which in turn increased emergency room use in the

metropolis (Begley, Vojvodic, Seo, & Burau, 2006).

Rationing

Also, the combination of lower reimbursements, high rates of uninsured

and well-paced immigration have led to severe rationing at major medical centers

(Wolf, 2007) (Severson, 2008). To combat rationing, the community health

workforce has fully embraced ³promotores´ to help residents navigate the

healthcare system (Nichols, Berrios, & Samar, 2005) and in El Paso, approval of

a ballot initiative, will soon grow into a children¶s hospital financed through private

funds and tax revenue (Mrkvicka, 2007).

Quality

The most recent analysis of quality assurance and improvement in Texas

by the Commonwealth Fund, finds the state in disrepair, ranking it 49 th. Several

initiatives are in play to bring the state within range of the CMS and JCAHO



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standards for accreditation. Focus on heart failure, surgical infection prevention,

pneumonia and acute myocardial infarctions are a few of the indicators leading

organizations monitor throughout the state. (Institutes for Health Improvement,

2007) (TMF Health Quality Intitutes).

Thesis

The purpose of this paper is to highlight and prioritize the problems ailing

the Texas healthcare system and formulate viable recommendations for change.

Access and utilization

Texas is one of the few states with experience in managing immense

natural population growth and net migration. The Census Bureau (2005) projects

that by 2030 Texas will see a 59.8% increase in population and that population,

according to the State Demographer¶s Office (2006), will be a majority Hispanic

by 2026. While the demographic shift itself, is not a problem, the results of that

shift do pose problems for Texas and other states such as California, and

Florida, none of which have entered the top 30 overall ranking in the

Commonwealth Fund¶s State Scorecard.

At of the end of March 2008, Texas Medicaid had 2.86 million residents

enrolled, of which 2.11 million or 73.7%, were children 19 and under. Non-

elderly and non-disabled adults, including pregnant women comprise only 5.8%

of the state¶s Medicaid beneficiaries (Texas Health and Human Services

Commision). An additional 450,000 children are covered under the state¶s CHIP

and CHIP perinatal program. This figure present a gap in coverage for low-



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income adults, as Kaiser (2007), calculates 2.19 million Texans living at or below

100% of the Federal Poverty Level (FPL) are uninsured.

The problem lies in the income eligibility set by the state to qualify for

Medicaid coverage. Non-working parents must fall under $2,256 annual income

and working parents, under $4,824 annual income. Compared to the national

averages of $6,996 and $10,849, respectively, Texas is one of the most

restrictive states in the U.S., effectively shutting out large portions of poverty-

stricken adults while contributing to the epidemic of unreimbursed care (The

Henry J. Kaiser Family Foundation, 2008).

Those covered by Medicaid are subject to lower coverage and less

reimbursement than many states offer. As a result, access to physician services

is extremely limited, especially in comparison to higher income individuals, many

of whom hold private insurance. According to Weissman, et al. (2008), ³access

gaps for preventative services were as much as 80% greater in states with the

lowest Medicaid coverage´, thereby, were increasing demand for service. In

such a situation, the need for access to community safety-net providers and

clinics becomes more relevant, unfortunately in Texas; provider and benefit

reductions were followed by sharp changes in eligibility, reductions in

disproportionate share hospitals and graduate medical education (GME)

(Regenstein & Huang, 2005).

Rationing

As primary and preventative services are quite difficult to access, a sharp

rise in emergency room use has emerged. In Houston, a crowded city with over



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60 hospitals, close to 30% of its residents are uninsured, 68% of those being

below 200% FPL. Consequently, 82.9% to 83.5% of categorized visits to the

emergency room, between 2002 and 2003, were primary care related (Begley,

Vojvodic, Seo, & Burau, 2006) and a patient with an over-exaggerated or

preventable illness often cause overcrowding and long waits. The group Save

Our ER¶s (2002) commissioned a survey of Texas hospitals and found that in

2001 hospitals were diverting 105 hours per emergency room, with only a

minority of diversions due to nursing shortages and 41% diverting ambulances at

least three times per week.

These facts alone have raised awareness to the importance of safety nets;

unfortunately, safety nets are increasingly difficult to navigate, mainly due to

legislative requirements and the county¶s role as decider. Texas counties have

the authority to redistrict facilities, build new ones or create County Indigent

Health Care Programs, usually at the expense of taxpayers (Begley, Vojvodic,

Seo, & Burau, 2006). These choices come with resistance from both taxpayers

and county officials, many times leaving the needy to search for alternatives.

The extremes of rationing can be seen in the University of Texas Medical

Branch, where administrators are in the process of ending cancer care for illegal

immigrants. This state has seen unreimbursed expenses for illegal immigrants

double and UTMB has been caught in a ³perfect storm´ according to Dr. John

Stobo, former president of UTMB (Severson, 2008).

Other forms of rationing prevail, particularly along the border with Mexico.

The Medicaid and Medicare reimbursement scheme in El Paso is starkly different



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than that of Dallas or Houston. The Medicaid method of reimbursing physicians,

which is based on Resource-Based Relative-Value Scale fee schedule, a

constant by geography and specialty, is multiplied by a relative value unit, which

does not remain constant. Inpatient care reimbursement is calculated based on

Diagnoses Relate Groups and Standard Dollar Amounts, which depend on case-

mix. Also, Disproportionate Share Hospital (DSH) payments to UT hospitals with

permanent DSH status don¶t account for inflation and demand and have not

managed to actually pay for actual patient cost (Figueroa, 2003).

The resulting reimbursement scheme in border towns has led to an

absence of care particularly in specialties, but PCP¶s are affected as well.

Doctors, essentially, refuse to take Medicaid and SCHIP patient. Pediatric

access is especially hampered, and in the case of Equal Access for El Paso, Inc.

v. Hawkins, the reimbursement scheme has caused facilities and physicians to

ration care and reject those who have Medicaid. The suit charge that the

scheme used resulted in inadequate access for area residents and does not

comply with the Equal Protection clause of the 14 th Amendment. (Equal Access

for El Paso, Inc. v. Albert Hawkins, 2007). The case is still under review.

Funding

As rationing has become the preeminent strategy in the Texas healthcare

System, non-profits and for-profit centers manage to stay afloat by shifting costs

or changing their case-mix and meeting charity care limits. Public facilities,

however, are at a crossroads between Medicaid (shortfall), charity care, DSH,

GME, and Upper Payment Limits (UPL).



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Texas has 120 state or locally owned hospitals, representing 29% of

hospitals in the state (The Henry J. Kaiser Family Foundation, 2006). These

hospitals include the University of Texas systems and Ben Taub General

Hospital in Houston. Their payer mix is heavily skewed towards public insurance

or no insurance at all, with 38% of outpatient visits in 2002 attributed to the

uninsured (Regenstein & Huang, 2005, pg9). Public hospitals rely heavily on

Medicaid reimbursements, but unreimbursed and uncompensated care is

increasing.

State owned teaching hospitals and general public hospitals have three

distinct federal/state matching programs to draw upon. Disproportionate Share

Hospital payments are a requirement for federal and state funding to be directed

towards hospitals serving a majority of Medicaid, low-income, indigent patients.

According to Texas Health and Human Service (2008, p.4), ³Texas pays $1.5

billion in DSH per year to 3 state teaching hospitals, 1 state chest hospital, 10

state psychiatric hospitals and approximately 165 non-state hospitals, with

federal funds capped at $901 million per FY.´

Upper Payment Limits also increase the funding potential for Medicaid

services for Texans. Using Medicare payment structures, ³Texas pays $1.6

billion in UPL payments per year for inpatient and outpatient services to eligible

acute care hospitals, over $900 million of which was paid to 11 of the largest

public hospitals in the state (Kaiser, 2008, p.4).´

Because these payments are capped based on the Medicaid shortfall and

self-reported uninsured costs according to Medicaid fees, uncompensated care is



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rampant in the public university hospitals that were previously mentioned in the

section on ³rationing´.

The fact remains that Texas, unlike many states who have income tax,

does not have the guaranteed tax revenue that would offset the effects of

uncompensated care. Some agencies have argued the idea of increasing

cigarette and alcohol tax, implementing a payroll and income tax (Texas Health

Care for all), or assessing a quality assurance fee (QAF) to for-profit and non-

profit hospitals. The QAF may prove to be the most reliable in that it would ³tax

health provider¶s revenues so that the state can draw more federal matching

funds and increase payments to those providers´ (Center for Public Policy

Priorities, 2008, p. 17).

Quality

Quality assurance and improvement is the cornerstone of efficient

systems and Texas¶s healthcare systems have committed to improving their

status. According to the Commonwealth Fund, Texas ranks 49th for quality

indicators such as preventative screenings, vaccinations, evidence-based care,

discharge instructions, provider attentiveness and others, particularly those

attributed to nursing home care.

TMF Health Quality Institute, a large contractor for CMS and partner with

Institutes for Health Improvement, has been assigned the duty of reforming

systems in danger of losing accreditation over quality and performance. Patient

care indicators such as acute myocardial infarction (AMI), heart failure,



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pneumonia and surgical care with antibiotic use, are the primary focus of

intervention as well as decreasing costs.

Additionally, other Texas organizations have joined in the IHI¶s 5 Million

Lives campaign eliminate facility-induced patient harm. The twelve objectives

are avidly monitored by eight medical, pharmaceutical and community

organizations in Texas. Results show that significant improvements have been

achieved between the 4th quarter of 2006 and the third quarter of 2007. Such

improvements include the areas of prophylactic antibiotic use within 1 hour prior

to surgery (5.8% increase), adult smoking cessation counseling for pneumonia

patients (3.3% increase), discharge instructions for heart failure patients (5.3%

increase), and percutaneous coronary intervention received within 90 minutes of

hospital arrival (12.9% increase). Although stagnation was found for oxygenation

assessments of pneumonia patients as well as a significant decrease in

fibrinolytic within 30 minutes for AMI patients, overall indications for improvement

are quite positive (TMF Health Quality Institute, 2007, 2008).

In a recent response to Congressional inquiry, the Texas Hospital

Association outlined the full efforts of Texas hospitals to meet and exceed the

standards set forth.

y Implementation of an infection reporting and prevention system

y Establishment of a Health Care Associated Infection Advisory Panel to

manage the reporting system

y Investment of private funding for aforementioned system, as the Texas

Legislature did not provide funding



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y MRSA prevention initiative led by the Texas Department of State Health

Service and the Texas Department of Aging and Disability Services

y

The successful IHI 5 Million Lives campaign is underway

y Implementation of incentives to succeed, such as the Texas Health Care

Quality Improvement Award. 23 of the most recent recipients were rural

or Critical Access hospitals. (Stulz, 2008)

Conclusion

The Texas healthcare system presents problems unlike any other state.

Increased net migration has left hospitals unprepared and falling behind their

funding year by year. Lax insurance standards have proved to eradicate the

employer-sponsored market and in conjunction with the limited income eligibility

requirements for Medicaid, the working poor are left uninsured.

Texas has also left their healthcare systems to become reactive to acute

and chronic care as opposed to preventative modeling. Increased demand for

emergency care has led to severe rationing system wide, even in the case of the

public facilities, which have been tasked to care for the indigent. In some

communities, the use of promotores, can mitigate excessive use of high cost

procedures, buy employing case management techniques (Nichols, Berrios, &

Samar, 2005), but overall, this system is torn and everyone is aware.

On April 16, 2008, Texas Governor Rick Perry sent a health reform waiver

to the Department of Health and Human Services, outlining the steps Texas is

prepared to take to address inefficiencies in its system. The reform is targeted to

parents and caretakers under 133% to 200% FPL and childless individuals under



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100% FPL and will primarily be funded by DSH, UPL, and intergovernmental

transfer funds. Small businesses would also receive premium assistance and

effectively be able to pool risk with other small employer groups.

The coverage set forth would effectively insure 2.15 million Texans who

would receive a subsidy to purchase health insurance with individual costs to

vary based on income and plan selected, participate in health savings accounts

and choose providers and facilities. Texas Health and Human Services projects

that 55% of their target population is Hispanic, many without children.

This program is designed to relieve the pressures of indigent care on

hospitals and emergency rooms, shifting that care to community and local

agencies with incentive to emphasize routine, preventative care. Hospitals will

then increase diversions and reduce hospitalizations to reduce costs.

For Texas, this reform is an important step towards reducing the amount

of uninsured and reducing the costs associated. Although, the reform does not

include the assessment of QAF or personal income tax, I recommend that both

phased in to ensure budget neutrality in the face of unprecedented and projected

future population growth and mandate employer-sponsored coverage, ask risk is

being pooled.



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