82R25156 E

By: Gonzales of Hidalgo, Schwertner, Coleman, H.B. No. 3744

et al.

Substitute the following for H.B. No. 3744:

By: Kolkhorst C.S.H.B. No. 3744

A BILL TO BE ENTITLED

AN ACT

relating to the reimbursements for certain services provided to Medicaid recipients and reimbursement adjustments relating to those services.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 531.001, Government Code, is amended by adding Subdivisions (4-a) and (4-b) to read as follows:

(4-a) "Potentially preventable complication" means a harmful event or negative outcome with respect to a person, including an infection or surgical complication, that:

(A) occurs after the person's admission to a hospital or long-term care facility;

(B) results from the care, lack of care, or treatment provided during the hospital or long-term care facility stay, as applicable, rather than from a natural progression of an underlying disease; and

(C) could reasonably have been prevented if care and treatment had been provided in accordance with accepted standards of care.

(4-b) "Potentially preventable readmission" means a return hospitalization of a person within a period specified by the commission that results from deficiencies in the care or treatment provided to the person during a previous hospital stay or from deficiencies in post-hospital discharge follow-up. The term does not include a hospital readmission necessitated by the occurrence of unrelated events after the discharge. The term includes the readmission of a person to a hospital for:

(A) the same condition or procedure for which the person was previously admitted;

(B) an infection or other complication resulting from care previously provided;

(C) a condition or procedure that indicates that a surgical intervention performed during a previous admission was unsuccessful in achieving the anticipated outcome; or

(D) another condition or procedure of a similar nature, as determined by the executive commissioner.

SECTION 2. Subchapter B, Chapter 531, Government Code, is amended by adding Sections 531.02115 and 531.02117 to read as follows:

Sec. 531.02115. REIMBURSEMENT METHODOLOGY FOR MEDICAID INPATIENT HOSPITAL SERVICES. (a) To incentivize controlling costs and improving efficiency, the commission shall, subject to adjustments required by this section:

(1) convert the reimbursement methodology used under the Medicaid program to reimburse inpatient hospital services to an all patient refined diagnosis-related groups (DRG) methodology; and

(2) establish a statewide standard dollar amount (SDA) rate that is based on the average of all hospital costs associated with providing services under the Medicaid program during the preceding fiscal year.

(b) In converting to the reimbursement methodology under Subsection (a)(1), the commission shall, to the extent possible, examine reimbursement methodologies, including nationally implemented reimbursement methodologies, that address historical disparities in the provision of health care services to women, children, and persons with mental illnesses.

(c) The commission may adjust rates determined using the factors under Subsection (a) to ensure the equitable reimbursement of hospitals for inpatient services by adjusting the rates as necessary to take into account different markets and provider responsibilities, including by making rate adjustments to account for:

(1) whether a hospital is a teaching institution;

(2) market wage indexes; and

(3) whether the hospital is a state-designated trauma facility or a burn center.

(d) The commission shall adjust rates determined using the factors under Subsection (a) to provide incentives for hospitals to provide higher quality of care. To provide the incentives, the commission shall establish a hospital value-based purchasing program that includes quality standards established by the executive commissioner by rule, other than quality standards relating to potentially preventable readmissions and potentially preventable complications. Incentives provided under the program must be based on whether a hospital meets, or improves the hospital's performance with respect to meeting, those quality standards. Under the program, the commission may:

(1) reduce a hospital's reimbursement rates by two percent each fiscal year the hospital fails to meet, or to make progress toward meeting, the quality standards; and

(2) use 50 percent of the money saved as a result of the reimbursement rate reductions to award hospitals that meet, or make progress toward meeting, the quality standards.

(e) Notwithstanding Subsection (d)(1), the commission may reduce reimbursement rates as provided by that subsection only by the following percentages:

(1) one percent for the state fiscal year beginning September 1, 2012;

(2) 1.25 percent for the state fiscal year beginning September 1, 2013;

(3) 1.5 percent for the state fiscal year beginning September 1, 2014; and

(4) 1.75 percent for the state fiscal year beginning September 1, 2015.

(f) Except as provided by Subsection (g), this section does not apply to a hospital:

(1) located in a county with a population of less than 50,000 according to the 2000 federal decennial census;

(2) owned or operated by this state;

(3) whose inpatients are predominately individuals under 18 years of age as described under Section 1886(d)(1)(B)(iii), Social Security Act (42 U.S.C. Section 1395ww(d)(1)(B)(iii));

(4) classified as a rural referral center under Section 1886(d)(1)(C)(i), Social Security Act (42 U.S.C. Section 1395ww(d)(1)(C)(i));

(5) that is a sole community hospital as defined under Section 1886(d)(1)(D)(iii), Social Security Act (42 U.S.C. Section 1395ww(d)(1)(D)(iii)), that is not located in a metropolitan statistical area as defined by the United States Office of Management and Budget; or

(6) that is a critical access hospital as defined under Section 1861(mm)(1), Social Security Act (42 U.S.C. Section 1395x(mm)(1)).

(g) The commission shall reimburse hospitals described under Subsection (f) for inpatient care services in a manner that is consistent with provision of payments for inpatient care services under Title XVIII, Social Security Act (42 U.S.C. Section 1395 et seq.).

(h) This subsection and Subsection (e) expire September 1, 2017.

Sec. 531.02117. REIMBURSEMENT ADJUSTMENTS. (a) Subject to Subsection (b), using the data collected under Section 531.02116 and the all patient refined diagnosis-related groups (DRG) methodology implemented under Section 531.02115, the commission shall to the extent feasible adjust Medicaid reimbursements to hospitals, including payments made under the disproportionate share hospitals and upper payment limit supplemental payment programs, in a manner that penalizes a hospital based on the hospital's failure to reduce potentially preventable readmissions and potentially preventable complications.

(b) The commission must provide the report required under Section 531.02116(b) to a hospital at least one year before the commission adjusts Medicaid reimbursements to the hospital under this section.

(c) This section does not apply to a hospital described under Section 531.02115(f).

SECTION 3. Section 531.913, Government Code, is transferred to Subchapter B, Chapter 531, Government Code, redesignated as Section 531.02116, Government Code, and amended to read as follows:

Sec. 531.02116 [531.913]. COLLECTION AND REPORTING OF CERTAIN [HOSPITAL HEALTH] INFORMATION [EXCHANGE]. (a) [In this section, "potentially preventable readmission" means a return hospitalization of a person within a period specified by the commission that results from deficiencies in the care or treatment provided to the person during a previous hospital stay or from deficiencies in post-hospital discharge follow-up. The term does not include a hospital readmission necessitated by the occurrence of unrelated events after the discharge. The term includes the readmission of a person to a hospital for:

[(1) the same condition or procedure for which the person was previously admitted;

[(2) an infection or other complication resulting from care previously provided;

[(3) a condition or procedure that indicates that a surgical intervention performed during a previous admission was unsuccessful in achieving the anticipated outcome; or

[(4) another condition or procedure of a similar nature, as determined by the executive commissioner.

[(b)] The executive commissioner shall adopt rules for identifying potentially preventable readmissions of Medicaid recipients and potentially preventable complications experienced by those recipients. The [and the] commission shall collect [exchange] data from [with] hospitals on present-on-admission indicators for purposes of this section.

(b) [(c)] The commission shall establish a [health information exchange] program to provide a [exchange] confidential report to [information with] each hospital in this state that participates in the Medicaid program regarding the hospital's performance with respect to potentially preventable readmissions and potentially preventable complications. To the extent possible, a report provided under this section should include potentially preventable readmissions and potentially preventable complications information across all payment systems. A hospital shall distribute the information contained in the report [received from the commission] to health care providers providing services at the hospital.

(c) A report provided to a hospital under this section is confidential and is not subject to Chapter 552.

(d) This section does not apply to a hospital described under Section 531.02115(f).

SECTION 4. (a) As soon as possible after the effective date of this Act, but not later than September 1, 2012:

(1) the Health and Human Services Commission shall convert the Medicaid hospital services reimbursement methodology to an all patient refined diagnosis-related groups (DRG) methodology as required by Section 531.02115(a), Government Code, as added by this Act, under which hospitals are reimbursed for the provision of services under the Medicaid program at a rate that is based on the statewide standard dollar amount (SDA) rate also required under that section; and

(2) the executive commissioner of the Health and Human Services Commission shall adopt the quality standards for use in the hospital value-based purchasing program as required by Section 531.02115(d), Government Code, as added by this Act.

(b) The Health and Human Services Commission shall provide reimbursements to hospitals for the provision of services under the Medicaid program using the reimbursement rates in effect on August 31, 2011, until the commission meets the requirements of Subsection (a)(1) of this section. After the commission implements that methodology and notwithstanding any other law, the commission may not use appropriated money to provide reimbursements under any other methodology.

(c) Notwithstanding Sections 531.02115(d) and (e) and 531.02117, Government Code, as added by this Act, the Health and Human Services Commission may only implement the hospital value-based purchasing program as required by Section 531.02115(d), Government Code, as added by this Act, or otherwise adjust reimbursement rates as provided by this Act after the Health and Human Services Commission converts the Medicaid hospital services reimbursement methodology and establishes the statewide standard dollar amount (SDA) rate under Section 531.02115(a), Government Code, as added by this Act.

(d) Not later than September 1, 2012, the Health and Human Services Commission shall begin providing performance reports to hospitals regarding the hospitals' performances with respect to potentially preventable complications as required by Section 531.02116, Government Code, as transferred, redesignated, and amended by this Act.

SECTION 5. If before implementing any provision of this Act a state agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, the agency affected by the provision shall request the waiver or authorization and may delay implementing that provision until the waiver or authorization is granted.

SECTION 6. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2011.