C.S.H.B. 1511
By: Berlanga
Committee Report (Substituted)


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. 


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. 


It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or


SECTION 1.  Amends Subchapter B, Chapter 32, Human Resources Code, by
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

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

SECTION 4.  Emergency clause.


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.