BILL ANALYSIS C.S.S.B. 10 By: Zaffirini Health and Human Services 03-17-95 Committee Report (Substituted) BACKGROUND The Texas Medicaid program has grown from a total budget of $7.5 billion in the 1990-91 biennium to an appropriation of $18.7 billion for the current 1994-95 biennium, including $6.8 billion in general revenue and $11.9 billion in federal funds. This growth is due to federal mandates regarding eligibility expansions, mandatory services, and provider reimbursement rules. Although caseload growth in the program slowed recently, the demand for new state funds for Medicaid in the 1996-97 biennium will be approximately $2.2 billion. Lt. Gov. Bob Bullock charged the Senate Committee on Health and Human Services with the challenging task of developing recommendations for wholesale reform. In response the committee began an intensive investigation that included a public hearing on May 31-June 1, 1994; on-site visits to Medicaid managed care pilot projects in Texas, to a rural health clinic, and to a rehabilitation center; and a second hearing on November 29-30, 1994. The committee heard public testimony with the House Committees on Public Health and on Human Services and then adopted the recommendations that are the basis of this legislation. PURPOSE As proposed, C.S.S.B. 10 requires the Health and Human Services Commission to develop a health care delivery system in an effort to restructure the delivery of Medicaid health care services. Sets forth regulations for the creation of intergovernmental initiatives to administer the system in a geographical area. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is granted to the Health and Human Services Commission in SECTION 1 (Sections 16A(b) and (j), Article 4413(503), V.T.C.S.) and to appropriate state operating agencies in SECTION 1 (Sections 16A(b) and Section 16B(l), Article 4413(503), V.T.C.S.) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 4413(502), V.T.C.S., by adding Section 16A, as follows: Sec. 16A. HEALTH CARE DELIVERY SYSTEM. (a) Requires the Health and Human Services Commission (commission), in conjunction with each operating agency (agency), to develop a health care delivery system (system) that restructures the delivery of health care services provided under the state Medicaid program. Requires the commission to develop the system only if the commission obtains a waiver or other authorization from all necessary federal agencies to implement the system. Sets forth requirements for the commission to meet in developing the system. (b) Requires the commission and each appropriate agency to jointly implement a system, adopt rules, and monitor compliance with and enforce this section and related rules, federal waivers and orders and decisions of the commission or agency. (c) Defines "resources." (d) Requires certain medical institutions or governmental entities, in accordance with matching funds agreements (agreements), to make resources available to the commission for use in implementing the system, if the system developed includes a method to finance the state Medicaid program by obtaining federal matching funds for local and state resources spent on indigent health care and if the commission has obtained federal authorization to implement the system. (e) Sets forth entities authorized to make resources available to the commission if the clients of and health care services provided by the entity are included in the system. (f) Sets forth the method for computing the amount of resources an entity makes available to the commission in a fiscal year. (g) Authorizes the governing body of an entity to elect to make available to the commission an amount greater than the computed amounts. Authorizes the additional resources or funds to include an amount that reflects the costs associated with the growth in the Medicaid program as estimated in a required federal waiver application. Requires additional amounts to be contained in the final agreement. (h) Requires the commission to prepare for an entity that makes resources available to the commission a proposed memorandum stating the amount of resources and other funds the entity will make available to the commission. Provides that the memorandum serves as the basis of a final "matching funds agreement" between the governing body of the entity, the commissioners court (court), and the commission. Requires the court to agree to the amount of resources made available by a hospital district if the entity is a district whose tax rate is set by the court in which the district is located (certain hospital district). Requires the agreement to be executed before the commission implements provisions affecting that entity. (i) Sets forth requirements for the agreement. (j) Requires the commission, by rule, to determine the manner in which an entity described by Subsection (d) is required to make resources available to the commission. Requires each entity that participates in an intergovernmental initiative (initiative) formed under Section 16B to make its resources available to the initiative. (k) Provides that this section prevails over another provision of state law regarding Medicaid to the extent of conflict. (l) Provides that this section expires September 1, 2001. Sec. 16B. INTERGOVERNMENTAL INITIATIVES. (a) Authorizes one or more entities that make resources available, if a system includes a method to finance the state Medicaid program by obtaining federal matching funds, to form an initiative to administer the system in an area, subject to the standards of and oversight by the commission and the appropriate agency. (b) Authorizes an initiative to serve more than one county. Prohibits a county from being served by more than one initiative. Authorizes the commission with the consent of each entity that forms the initiative to modify the area the initiative serves for certain purposes. (c) Requires an initiative to be formed as a nonprofit corporation or a nonstock, nonprofit entity approved by the commission. (d) Provides that an initiative formed is a governmental unit for purposes of Chapter 101, Civil Practice and Remedies Code. (e) Requires an initiative to be governed as provided by this subsection. Provides that each initiative has an executive committee composed of representatives of each entity that formed the initiative. Provides that the governing board (board) is composed of the executive committee and other persons the committee appoints. Sets forth a list of persons authorized to be appointed to the board. Requires the entities to share governance of the executive committee if more than one entity forms an initiative in proportion to the amount of resources they make available for matching under the matching funds agreement. Requires the representation on the board and the manner in which votes are apportioned among members of the board who are not members of the executive committee to be on the relative level of Medicaid and charity care services provided by those members over the previous two years. Requires the executive committee to have at least 51 percent of the voting rights on the board. Requires the votes to be apportioned as described under Subdivision (3). Requires the executive committee to manage the public funds of the initiative. Requires the initiative board to address system issues for the initiative. Requires the court, if an initiative includes a certain hospital district, to agree to the structure of governance of the initiative. (f) Sets forth requirements for an initiative formed under this section. (g) Authorizes an initiative to contract with any entity to perform any of the initiative's powers or duties. Authorizes the entities that form the initiative to contract, collaborate, or enter into a joint venture with the other entities to carry out the functions of the initiative. (h) Requires the entities listed that intend to form an initiative to submit within a certain time period a letter of intent (letter) to the commission. Requires the letter to include any information required by the commission. Provides that the letter is informational, not binding. (i) Requires the entities that have submitted a letter to submit to the appropriate agency a proposed health care delivery plan (plan) that contains the information required by the agency. Provides that the plan is not binding but only serves as the basis for a final agreement. Requires the agency, by rule, to set a date based on phasing in the system statewide by which the entities must submit the plan. (j) Requires the commission or a designee to approve the plan, the board structure, and the service area of an initiative before the initiative can administer the system in accordance with the plan. (k) Requires the appropriate agency to implement the system in accordance with an approved waiver in an area for which the commission does not receive a letter and that is not covered by a plan agreement that has become final and binding. (l) Requires the appropriate agency, by rule, to develop a model plan to establish the minimum requirements for a plan agreement developed and implemented by an initiative. Requires the agency to ensure that an initiative meets certain criteria. (m) Requires the plan agreement to be completed before the appropriate agency implements an approved waiver within the area covered by the initiative. Authorizes both the initiative and the agency, if a waiver is terminated or modified, to terminate or renegotiate the plan agreement. (n) Requires the initiative to file the plan agreement with the court if the initiative includes a certain hospital district. Provides that the plan agreement is considered approved within 30 days after its filing unless the court adopts a resolution rejecting the plan agreement. Authorizes the court to adopt a resolution to delegate the authority to reject the plan agreement to the board of directors of the hospital district. (o) Provides that this section prevails over another provision of state law regarding Medicaid to the extent of conflict. (p) Provides that this section expires September 1, 2001. SECTION 2. Amends Section 1, Article 4413(502), V.T.C.S., by adding Subdivision (3), to define "operating agency." SECTION 3. Amends Chapter 285, Health and Safety Code, by adding Subchapter H, as follows: SUBCHAPTER H. CONTRACTS, COLLABORATIONS, AND JOINT VENTURES Sec. 285.091. HOSPITAL DISTRICT CONTRACTS, COLLABORATIONS, AND JOINT VENTURES. Authorizes a hospital district created under general or special law to contract, collaborate, or enter into a joint venture with any entity to form or carry out the functions of or provide services to an initiative. SECTION 4. Prohibits the commission or an appropriate agency from implementing Sections 16A and 16B, Article 4413(502), V.T.C.S., unless the commission has obtained a waiver or authorization from necessary federal agencies to implement those provisions. Requires the commission to submit to the federal government the waivers or authorizations by July 31, 1995. SECTION 5. (a) Requires the Texas Department of Health (department) to continue to establish additional Medicaid pilot programs to decrease the cost to the state of providing Medicaid services while improving access for recipients. Requires the department to begin the process of establishing additional programs by the date on which the commission submits the waiver application to the federal government. (b) Authorizes the department to contract with entities for the department to perform its functions under this section. SECTION 6. Emergency clause. Effective date: upon passage.