The Associated Press June 9, 2011, 9:50AM ET

Texas House approves Medicaid changes

Texas lawmakers passed major changes to Medicaid on Wednesday that would privatize the health program in South Texas and allow the formation of health care cooperatives.

The 142-page measure is part of a special legislative session to pass laws that will balance the state budget. The Legislative Budget Board says it could save the state $467 million, almost two-thirds of that coming from Medicaid savings. Medicaid is a joint state and federal health insurance program for the poor and disabled.

"It's a big bill and it tries to do a lot of things, it really is transformative," said Rep. John Zerwas, R-Simonton, who authored the bill and is also a doctor.

The bill passed 91-47, largely along party lines with Democrats opposing it. After a final procedural vote, the measure goes back to the Senate for consideration of the small changes made by amendments added Thursday.

Representatives from South Texas expressed concern that allowing private health care companies to manage the Medicaid program could create problems by cutting reimbursement rates to doctors. That would result in fewer doctors accepting Medicaid patients, and fewer poor people receiving adequate medical care.

Zerwas assured fellow legislators he was confident private managed care would work along the Rio Grande Valley, Texas's largest Medicaid service area. Managed care groups already administer Medicaid in the rest of the state.

"Now that we've had some experience with that, we now feel confident that we can move it out into South Texas," Zerwas said.

Lawmakers are cutting $27 billion worth of state services in order to balance the budget. The Legislative Budget Board says the Medicaid portion of the budget that was passed during the regular session is $4.8 billion short of expected case growth, and supporters of this bill said they hope it will save more money.

The bill establishes the Texas Institute of Health Care Quality and Efficiency, which would seek to identify and encourage innovative health care programs that save money. The institute would supervise the implementation of the bill and report back to the Legislature.

"When has the government made anything more efficient?" asked Rep. David Simpson, R-Longview, asked about the new institute, in opposition to the bill.

The biggest change would be the establishment of state-sanctioned health care collaboratives, which allow hospitals, doctors and insurers to work together to lower costs. Critics worry that such organizations would violate anti-trust laws, but the bill requires the attorney general to first determine that the new group would not affect the health market in that community.

Simpson urged lawmakers to vote against the bill because of the immunities the bill would give health care collaboratives against anti-trust laws.

The measure also abolishes the State Kids Insurance Program and moves those children into the Child's Health Insurance Program. The state would also require Medicaid patients to make co-payments.

In order to lower costs, the bill would require the Department of Health and Human Services to develop and evaluate doctor incentive programs designed to keep non-urgent cases out of the emergency room. The bill would also allow public hospitals that treat legal immigrants to demand repayment for health services from that person's sponsor, if they have one.

The state would also create the Medicaid and CHIP Quality-Based Payment Advisory Committee to develop ways to pay doctors based on the patient's outcome rather than payment per procedure. The state would develop incentive programs for doctors, hospitals and nursing homes.

The measure also prioritizes where state family planning funds would go, a subject of intense debate during the regular session as conservatives attempted to cut off all support to groups associated with Planned Parenthood. The money would first go to public entities, then private entities that offer other primary care services and finally to private entities that offer family planning services alone.

Some health care providers would also be required to get vaccinations against preventable diseases. Some workers could request exemptions, but the facility would have to take steps to ensure the worker does not infect patients.


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