BG C.S.H.B. 1511 75(R)BILL ANALYSIS PUBLIC HEALTH C.S.H.B. 1511 By: Berlanga 3-19-97 Committee Report (Substituted) BACKGROUND Texas enhances the Medicaid reimbursement rates it pays to teaching hospitals by permitting the inclusion of the allowable graduate medical education (GME) costs in its reimbursement rates. The purpose of these payments is to compensate for the higher costs associated with the clinical training of medical residents. As Texas increasingly emphasizes primary and outpatient care, in part by placing Medicaid beneficiaries into managed care programs, both inpatient admissions and Medicaid payments for hospital services are decreasing. As the state's managed care growth continues, the portion of cost for GME will increasingly be directed towards these managed care entities. The managed care organizations are not obligated to forward the GME component of their capitated rate to the teaching institutions. Nationally, state governments, in collaboration with their academic medical centers and various health service organizations, are devising innovative methods of financing their GME programs. In February 1996, state health officials in Minnesota developed a medical education and research trust fund through which any new funding can be distributed. It is based on a formula that is equitable and carries incentives to address the specific physician workforce needs of the state. PURPOSE HB 1511 directs the Texas Department of Health (TDH) to distribute funds for GME through a formula consistent with the GME needs of Texas and in consultation with the Texas Higher Education Coordinating Board. The bill also requires the coordinating board to allocate funding and administer a program for GME. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 32, Human Resources Code, by adding Sec. 32.0315 as follows: Subsection (a) requires TDH to establish procedures and formulas for the allocation of federal medical assistance funds used to support GME. Subsection (b) requires that TDH, taking into account other available GME support money, allocate the funds in a manner determined most effective, equitable, and consistent with the GME and resident physician training needs of this state. Requires that TDH emphasize primary care specialties when determining the needs of the state. Subsection (c) requires TDH to consult with the Texas Higher Education Coordinating Board (coordinating board) before adopting or revising a formula. Requires that the coordinating board provide any information to assist in administering this section to TDH at their request. Subsection (d) requires TDH to reimburse each teaching hospital under this section using the formula and calculations as specified. Subsection (d-1) requires a "hold-harmless" calculation for the fiscal year ending August 31, 1998. Establishes that this subsection expires on January 1, 1999. Subsection (e) allows TDH to use the most recent Medicaid cost reports or establish alternative procedures to determine a teaching hospital's average annual cost for training residents. Subsection (f) requires TDH to make payments and adjustments in payments, under this section, in installments as specified. Subsection (g) establishes that for the purpose of this section, primary care means a field or specialty described by Section 58.008(a), Education Code. Subsection (h) requires each hospital that received federal medical assistance funds for training residents in the state fiscal year ending August 31, 1995 to receive an amount under this section as specified, not withstanding subsections (d) and (e). SECTION 2. Amends Subchapter C, Chapter 61, Education Code, by adding Sec. 61.0594, as follows: Subsection (a) requires the coordinating board to administer a program to support GME programs consistent with the needs of this state for GME and the training of resident physicians in appropriate fields and specialties, including primary care specialties described by Section 58.008(a), Education Code. Subsection (b) allows the coordinating board to make grants or formula distributions from available funds to support GME programs and activities for which adequate funds are not otherwise available, or to foster new or expanded GME programs or activities to address the state's needs for GME, as determined by the coordinating board. Subsection (c) requires the coordinating board to give consideration to costs incurred to support faculty responsible for the education or supervision of resident physicians in accredited medical education programs, including osteopathic education programs, in making grants and distributions under this section. Subsection (d) establishes that the program is funded by appropriations, gifts, grants, donations and any other funds, including federal funds, that the coordinating board obtains. Requires that the comptroller issue warrants to each eligible institution or other entity receiving a grant or distribution from the program in the amount certified by the coordinating board. Requires that this amount be used only to support the program or activity specified by the coordinating board, and prohibits other expenditure for the general support of the institution or entity. Subsection (e) requires the coordinating board to appoint an advisory committee to advise on the administration and development of the program, including considering requests for grants and establishing a distribution formula for the money. Requires that the advisory committee consist of certain designated individuals and appointees as specified. Subsection (f) establishes that the advisory committee members serve staggered terms as specified. Requires the committee to elect a presiding officer as specified and meet at least once a year as specified. Subsection (g) requires the advisory committee to review applications and make recommendations for funding of GME programs under this section; to make recommendations relating to the standards and criteria used for grant consideration and approval or for the development of distribution formulas under this section; to recommend fund allocations; and perform other duties assigned by the coordinating board. SECTION 3. Establishes September 1, 1997 as the effective date of this Act. Stipulates that Section 32.0315, Human Resources Code, applies to funds received on or after the effective date of this Act, and to any funds received before the effective date that have not been already promised, obligated, or otherwise identified for distribution to specific entities. SECTION 4. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE CSSB 1511 revises the language in SECTION 1 (Sec. 32.0315(b), Human Resources Code) regarding the allocation of funds by TDH by omitting the introductory clause "in a formula established under this section", replacing the term "health care professionals" with the words "resident physician in accredited residency programs", and removes any specific reference to family practice as an TDH emphasis in GME. Also subsections (d) through (h) are newly added into the substitute version. In SECTION 2 (Sec. 61.0594(a), Education Code), the words "health care professionals" are replaced with "resident physicians in accredited residency programs" in the substitute bill. Additionally, CSHB 1511 replaces the words "family practice and other primary care specialties", as to what is included in appropriate fields and specialties for GME and training needs, with the words "primary care specialties described by Sec. 58.008(a)". Subsection (c) regarding considerations in grant distribution, is newly inserted into the substitute bill, with the original bill's subsection (c) which established program funding being relettered as (d). Also CSHB 1511 changes the permissive language in the original bill to require the coordinating board to appoint an advisory committee. The substitute has additional subsections (e),(f), and (g) which specifically list the composition of the committee, describe how terms should be staggered, and explain advisory committee duties regarding items such as reviewing applications, making recommendations and other duties as assigned by the board.