MDNews - San Antonio

++++++++++++ + + ++++++++++++ LEGAL +++ +++ Texas Medicaid By Kathleen Quiroz and Cassia Ysaguirre T HE FEDERAL SOCIAL Security Act allows states to request waivers of certain federal Medicaid requirements from the Centers for Medicare and Medicaid Services (CMS) to promote changes in the health care delivery system that will result in better care and reductions in costs through system improvements. Specifically, Section 1115 of the Social Security Act authorizes CMS to waive certain federal Medicaid requirements to allow states to conduct demonstration projects with federal Medicaid funds to test innovative new ways to finance and deliver Medicaid health care services. As a result of a bill passed by the Texas Legislature instructing the Texas Health and Human Services Commission (HHSC) to expand its use of Medicaid managed care to achieve Medicaid program savings while also preserving locally funded supplemental payments to doctors and hospitals, HHSC applied to CMS for a Section 1115 demonstration project in July of 2011. HHSC requested the demonstration project in order to both expand the managed care delivery system and to operate two funding pools, supported by managed care savings and diverted supplemental payments, to reim- burse providers for uncompensated care costs and to provide incentive payments to participating hospitals that implement and operate delivery system reforms. In December 2011, CMS approved the demonstration project requested by HHSC. The demonstration proj- ect is authorized to continue through Sept. 30, 2016. The two stated purposes of the demonstration project are to expand the existing Texas Medicaid 10 | San Antonio MD NEWS ■ MDNEWS.COM Demonstration Project May Result in Additional Funding to Health Care Providers Kathleen Quiroz managed care programs, STAR and STAR+PLUS, on a statewide level, and to use savings from the expansion of managed care and the discontinuation of current supplemental provider pay- ments to finance and establish two new funding pools to assist providers with uncompensated care costs and promote health system transformation in prepara- tion for new coverage demands beginning in 2014. Required Enrollment in Managed Care Programs The STAR and STAR+PLUS managed care programs are currently operating to service Texas Medicaid patients under a previously approved demonstration proj- ect. The STAR program is the primary managed care program serving low- income families and children in Texas. The STAR+PLUS program provides acute care and long-term service and support (including home- and community-based care) to aged, disabled and chronically ill Texans. Under the demonstration project, the STAR and STAR+PLUS programs will be expanded to operate in all areas of the state by March 2012. This will result in a significant expansion in the number of Texas Medicaid beneficiaries required to enroll in STAR or STAR+PLUS. STAR and STAR+PLUS enrollees will receive the full benefit package available under the current Texas Medicaid plan. New Funding Pools The demonstration project uses the savings from the expansion of the man- aged care plans and redirects the current supplemental provider payments that exist now under the Texas Medicaid plan Cassia Ysaguirre in order to finance two new funding pools that will assist providers with uncompen- sated care costs and promote program innovation and improved quality of care. The Uncompensated Care (UC) Pool: The UC Pool is designed to defray the actual uncompensated care costs incurred by hospitals and physician practice groups for serving Medicaid- eligible and uninsured individuals. Distributions from the UC Pool in the first year of the demonstration project will be in the form of transition payments to hospitals and physician groups that received supplemental payments under the Texas Medicaid program for claims adjudicated during 2011. This transition period is meant to ensure that those providers are eligible to receive the Medicaid funding they have historically received as the state develops the UC Pool payment methodologies. The distribution of funds from the UC Pool in the second year of the demonstra- tion project is contingent upon approval by CMS of the state's provider cost report- ing tool and payment methodologies. Thus, although the historic supplemental payments will be discontinued starting in 2012, doctors and hospitals will have access to the UC Pool to offset the cost of caring for the uninsured. In order to receive payments from the UC Pool, providers will need to submit a waiver application documenting unmet costs of providing services to Medicaid patients and uninsured patients, such as physician costs, clinic costs and outpatient drug costs. The waiver application is still being developed. Uncompensated care Continued on Page 22

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