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Health and Human Services Commission

Medical Care Advisory Committee

August 24, 2017

Meeting Minutes

Members Present:

Dr. Gilbert Handal, Chair

Colleen Horton, Vice Chair

Deshpande, Salil, M.D.

Edgar Walsh, R. Ph

Mary Helen Tieken, RN

David Webster, M.D.

William Galinsky, HPAC Representative

Members Absent:

Cynthia Jumper

Donna Smith, PT

George Smith, DO

Doug Svien

1. Opening comments: Gilbert Handal, M.D., Medical Care Advisory Committee (MCAC)

Chair.

Dr. Gilbert Handal called the meeting to order at 9:05 a.m. and based upon the members in

attendance, a quorum was present.

2. Approval of June 15, 2017, meeting minutes.

Bill Galinsky motioned for approval of the minutes

Mary Helen Tieken seconded the motion

The motion to approve the minutes passed unanimously

3. Comments from the Associate Commissioner for Medicaid and CHIP Services

Department, Jami Snyder, Health and Human Services Commission (HHSC).

Ms. Snyder provided Medicaid status updates on the Network Access Improvement Program

(NAIP), the 1115 Waiver and an update on the Special Legislative Session which followed

the 85th Legislative Session, 2017.

Ms. Snyder noted that originally the NAIP concept paper was approved in September, 2014;

in November, 2016, the Centers for Medicare and Medicaid Services (CMS) determined

NAIP to be a pass-through payment program under the new federal regulations. This has

changed the nature of the program and creates limitations as to how the Health and Human

Services Commission (HHSC) administers the program going forward. In 2018, ten

Managed Care Organizations (MCOs) will partner with five health related institutions and

ten public hospitals on a voluntary basis, regarding the NAIP pass-through payments. MCOs

will receive a small administrative fee for managing the payments but the All Funds amount

for the NAIP program in 2018 is 427 million dollars. As a pass-through program, CMS has

indicated the amounts for NAIP in 2018 cannot exceed those established for fiscal year 2017.

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That is a limitation imposed by CMS when they deemed it a pass-through program. It should

be noted that costs for the program are included in the budget neutrality calculation as HHSC

negotiates the 1115 Waiver. All participants in the 2017 NAIP program will also participate

in the 2018 program.

Ms. Snyder stated negotiations in relation to the 1115 Waiver are ongoing. There are three

areas of negotiation that continue, one is around the budget neutrality calculation and

ensuring that an agreement is reached in regard to understanding the room that's available

within the waiver which is a calculation that speaks to the cost of the program without a

waiver versus the cost of the program with a waiver. Arriving at a mutual agreement around

the size of the Uncompensated Care (UC) pool is a second point of discussion. The third area

of negotiation is the future of the Delivery System Reform Incentive Payments (DSRIP)

program. HHSC has been in very active negotiations with CMS to discuss the three

components of the waiver negotiation. HHSC has stressed to CMS the importance of

wrapping up negotiations around the 1115 Waiver by the end of September, 2017.

Dr. Handal noted there were original health partnerships that had money left over when the

program was incepted, the original idea was the Regional Health Partners that had money left

over, would have their funds transferred to other partnerships that had DSRIP; however, that

did not happen. Secondly, will there be opportunity for new projects; projects that are really

innovative are not funded. Dr. Handal asked if there will be opportunities to have new

DSRIPs; the 21 month timetable is not a lot of time.

Ms. Snyder replied, the original proposal from HHSC to CMS early in the 2017 calendar

year was for a 21-month extension of the waiver as it currently stands at existing funding

levels. HHSC feels it has been open in its discussions; the conversation with CMS as HHSC

worked through the various negotiation points, included a conversation around the full five-

year renewal. While the formal request that HHSC sent to CMS is around a 21 month

extension; the more recent discussions have been around of a full five-year renewal.

Regarding Dr. Handal’s questions about the DSRIP program, Ms. Snyder deferred to John

Scott who is presenting Agenda Item 5 to include a discussion around the plan going forward

as well as the mechanics of the program.

The final update the MCAC requested was outcomes of the special session. Ms. Snyder

noted that when the governor initially issued a statement around the special session, HHSC

did not contemplate there would be a lot of activity on the Medicaid front because the items

on the call didn't relate to Medicaid specifically. HHSC was, however, very active during the

special session around a couple of issues, one of which addressed the deferral of MCO

payments in order to fund salary increases for teachers. The other area addressed what are

known as deemed preferred provider arrangements, involving new expectations HHSC has

within the Medicaid program to increase the amount of value-based purchasing activity

occurring within the program. As of contractor year 2018 which begins on September 1,

2017, HHSC is setting a threshold for health plans, mandating that 25percent of all payments

to providers for any health plan across all product lines be governed by some sort of value-

based purchasing or alternative payment model. As such, HHSC has seen an increase in the

activity on the part of MCOs to form preferred provider arrangements, which are really

arrangements with providers that MCOs feel are interested in partnering with them around a

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value based model which seeks to enhance quality and drive down costs.

This is a shift away from where HHSC has been and there are providers and stakeholders in

the community that have concerns about how those preferred provider arrangements are

established. HHSC worked very closely with legislators throughout the special session and

provided testimony to explain the value of reimbursement arrangements which really seek to

enhance quality. The preferred provider arrangement is one tool in that process of enhancing

quality and reducing costs.

Dr. Handal noted there are several big hits here. MCOs have been cut by 62.5 million dollars

for the biennium and are asked at the same time to develop new strategies to eliminate waste

at 25 percent levels beginning this year. MCOs will not have freedom in contracting with

providers, typically MCOs use what room they have to contract with providers and get into

value-based alternative payments or quality improvement programs. Secondly, there is the

fact that there is $300 million dollars loaned to the educational system, this comes from

Medicaid as well and has a big impact, over 150 million dollars a year for the biennium.

Thirdly, Medicaid has been cut over 400 million dollars. How will the commissioner come

up with a solution to three cuts at the same time that HHSC is trying to impose a value based

program? Value based systems are not cost savers in the beginning, perhaps after they are

mature and established they may cut costs somewhat, but in the very beginning they are more

expensive. There are some unrealistic expectations here.

Ed Walsh stated at the pharmacy level, pharmacies are already losing money filling Medicaid

prescriptions in the state. Nationally, pharmacists are working on programs to put more

money into pharmacy so that we can develop programs that are going to reduce the problems

with non-adherence to medications or adverse reactions to medications. Mr. Walsh stated he

feels that we are going in the wrong direction.

Ms. Snyder: you make really good points. HHSC certainly understands we have our work cut

out for us in terms of looking at the levers that we have available to us as we seek to contain

costs. As part of the 85th Regular Session HHSC has a number of cost-containment

initiatives that emerged that we’ll be pursuing to ensure that we are able to stay within the

budgetary limitations that have been established. To the point about pharmacy in particular,

one of the things we are focused on as we look at this value based work is ensuring that the

MCOs that are working with providers are really at the front end of their negotiations with

providers around value based work; that the MCOs are doing their due diligence in terms of

assessing providers interests and aptitude in participating in value-based purchasing

arrangements. To the point specifically about factors which can play into pharmacy benefits,

there are various kinds of quality metrics that could be integrated into those arrangements

where the MCO could incentivize a provider for their willingness to work on things like

medication adherence. Dr. Handal is right that these types of arrangements do not reduce

cost immediately, there has to be investment up front. There has to be a commitment on the

part of HHSC as a regulator to recognize that investment on the part of MCOS and providers.

HHSC’s hope is that health plans will work closely with providers to develop arrangements

where they're recognizing the provider’s commitment to quality through various kind of

incentives that are available connected to those different quality metrics.

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Ed Walsh stated, nationally, almost 25 percent of the money spent on taking care of chronic

care management is going to pay for bad outcomes due to pharmacy. It is showing that we

need to spend money in pharmacy to hold down costs on the bad outcomes that are due to not

spending enough on pharmacy. There is a product involved, once you say okay we're going

to put this person on medication, that's not the end, it is just the beginning of the treatment.

There is a lot of money to be saved if we invest in the proper programs that will help create

better outcomes.

Ms. Snyder replied, that is absolutely the intent of value-based purchasing work in our

system; to incentivize providers in a way that is going to lead to optimal health outcomes for

members. What HHSC would like to see is real incentive alignment so members are

accessing the right care, at the right place, at the right time in a way that's more cost-effective

as well. Mr. Walsh replied, the problem that pharmacies have seen in the national area is

there have been Pharmacy Benefit Managers (PBMs) who, as CMS has pushed incentives on

Medicare Part D, have come up with ways to offset risk by the way they handle pharmacy

reimbursement. This was not the purpose CMS initiated; laws exist now to roll that back.

Ms. Horton stated there were cost containment measures included in the regular budget, also

a rider that said that HHSC had to develop additional cost containment in the Medicaid

program. Has HHSC identified where the additional 400 plus million will come from?

Ms. Snyder noted HHSC has a variety of cost containment measures underway. Value-based

purchasing is one vehicle in the HHSC system being used to realize additional savings. The

legislature identified a number of cost containment opportunities, some of which have been

around in the HHSC system for some time; some of which of which are new. HHSC has

been using data to inform its evaluation of cost-containment opportunities, looking at

utilization data and opportunities for cost containment in that area. The HHSC Rate Analysis

team is always looking at reimbursement but also remaining cognizant of where the system is

at and the challenges that stakeholders in the system face as that cost containment work is

pursued.

Ms. Horton noted, you spoke about rates and utilization, then we hear about people losing

services through utilization management and about inadequate provider networks because the

rates are so low and the administrative costs are so high. When the rubber hits the road

people get hurt and 450 million dollars is a lot of money to take away from an already

stressed system. It would be beneficial for this committee to have a little bit more detail.

Ms. Snyder stated she would be happy to bring to the next MCAC meeting a more detailed

description of what HHSC is doing in regard to cost containment across the board across the

legislatively mandated cost containment items as well as the other items that HHSC has been

discussing. It is not about reduced utilization; it's about appropriate utilization that is the

conversation HHSC has been having with MCOs as to how to ensure individuals are

obtaining the preventive services they need on the front end so they are not having to access

services, for instance, in the emergency department.

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Ms. Horton replied, for families it is not a matter of reduced utilization when there are

children who have been in the medically dependent children's program for years because they

have significant disabilities and suddenly they are either not eligible for the program or they

are receiving minimal hours of services. This is very real and it impacts people and is not

just a utilization management number, it is a very real impact on families. If that is the

direction the state is going to take, then HHSC needs to be honest and transparent about it

and let the public know; people can't fight back if they don't know what's happening.

Ms. Horton questioned the 1115 Waiver projects; HHSC was receiving a significant influx of

money on behavioral health through House Bill 13, the community collaboratives and Senate

Bill 292. There are over 400 behavioral health 1115 Waiver projects; is there any effort to

really look at what we've been doing and what we plan to do and coordinate the two or are

we just going to add projects on top of projects.

John Scott noted, in the revised DSRIP proposal, HHSC is shifting away from past projects

to focus on measures and measure bundles. There is a shift from the project idea to give more

flexibility to providers in the DSRIP program to identify measures and measure bundles they

want to improve upon. HHSC is moving beyond the projects and focusing on system-level

outcomes.

Ms. Horton noted the results would depend on the quality of the measures, specifically

around behavioral health and mental health. There is focus on people served numbers but no

real focus on recovery outcomes. If we're moving to an outcome-focused system, we need to

really look at the quality of the outcomes, using measures which actually measure

improvement in the quality of life for people; just measuring outcomes is not enough.

Dr. Webster asked, regarding the outcomes with the provider groups, who vets the outcomes,

who looks to say there is value to members from those outcomes. How would that happen?

Mr. Scott replied, HHSC went through a stakeholder process with clinicians to identify the

measures that would be most appropriate. In Spring 2017, HHSC had over one hundred

clinicians on bundle advisory teams. The teams went through an iterative prioritization

process to identify measures, discuss the measures and refine them and went through

multiple votes to prioritize and select. HHSC ended up with 144 measures through the

process with the clinicians; this was used as a starting point, looking at the areas which were

already being measured under DSRIP to see which ones were successful project areas. They

also looked at commonly used national measures; CMS, the federal approval authority, is

very concerned with measuring the same things across states. The clinicians on these teams

were also able to propose measures if there was anything they thought wasn't being captured.

HHSC does have a few innovative measures that are not necessarily well tested yet. These

measures had value to clinicians who were on the committees.

Dr. Handal noted that Ms. Snyder offered to send the MCAC Committee a package for the

November 16, 2017 meeting to inform the committee of several items HHSC is working on.

The HHSC Executive Commissioner has until December, 2017, to present to the legislature

where the cuts will take place. The cuts are a mandate from the legislature. The same is true

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with the 1115 Waiver; it is a negotiation. HHSC is trying to obtain a full five-year renewal

instead of a 21 month extension.

Dr. Handal stated that he sent a letter to the Executive Commissioner in accordance with the

request from the MCAC members at the June 15, 2017, meeting. Dr. Handal expressed to

the Executive Commissioner the concerns the MCAC has regarding input in the rulemaking

process for Medicaid funded programs.

Ms. Snyder noted that subsequent to the June 15, 2017, meeting, Dr. Handal sent a letter to

the Executive Commissioner expressing his concern about the number of items that are

coming to the MCAC as information only versus action items. HHSC has started a

conversation about ways to address that issue while understanding the number of expedited

rule packages HHSC has to process, some of which are due to legislative direction and other

variables. One of the options is to increase the frequency of the MCAC meetings. HHSC

also has created an internal work group to investigate what other options might be available

to provide an opportunity for the MCAC to weigh in on regulatory changes during the public

comment period. Ms. Snyder stated the commentary the MCAC provides is incredibly

valuable to HHSC, even if it is outside of the public comment period, in terms of how HHSC

operationalizes the rules. HHSC understands the committee's concern in regard to the

number of items that are now coming to the MCAC as informational only items and realizes

that there needs to be a better solution to help the committee engage in the process. HHSC is

working through the mechanics and hopefully will have a proposal to the MCAC before the

next meeting.

NOTICE OF INFORMATIONAL ITEMS:

4. Texas Medicaid Fee-for-Service Access Monitoring Review Plan.

State Medicaid programs must comply with federal rules at 42 C.F.R. §§ 447.203-204

intended to establish a standardized, transparent, data-driven process for states to document

that fee-for-service provider payment rates are consistent with Social Security Act §

1902(a)(30)(A), 42 U.S.C.A. § 1396(a)(30)(A). This section of the Act requires states to have

methods and procedures to assure payments to providers are “sufficient to enlist enough

providers so that care and services are available under the plan at least to the extent that such

care and services are available to the general population in the geographic area.” In its initial

plan submitted to the Centers for Medicare & Medicaid Services (CMS) in October 2016,

HHSC indicated a follow-up plan in 2017 was necessary to address the requirement of rate

comparisons and to present data pertaining to children with disabilities. HHSC presents a

draft of the 2017 Texas Medicaid Fee-For-Service Access Monitoring Review Plan to the

Committee as an informational item and is prepared to take questions the Committee has

about the plan.

- Brian Dees, Senior Policy Advisor, Program and Policy Section, Medicaid and CHIP

Services Department, HHSC

- Michelle Long, Program Specialist, Medical and Social Services Division, HHSC

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Brian Dees: This plan is required by federal regulation. States are required to submit a plan

to CMS every three years detailing how access and rates are monitored to ensure sufficient

access to care within the Fee-For-Service components of a Medicaid program. Texas

submitted its initial report in October, 2016. In that report, HHSC notified CMS that we

would be submitting a subsequent, follow-up report off-cycle in 2017 to add additional

components; one of the components being a rate comparison between Medicare and

Medicaid rates, and the other being additional data to take into account the proportion of the

Medicaid population that is children with disabilities, primarily Supplemental Security

Income (SSI) and children on waiver programs. This report is solely on the Fee-For-Service

part of the program and does not include any of the large proportion of the population that is

in managed care. The data in the report presented to the MCAC is for Fiscal Year 2016. One

of the changes that has happened to the program and will be accounted for in the 2019 report,

is the transition of a large part of the existing Fee-For-Service population from Fee-For-

Service into the STAR Kids Program in November, 2016, and subsequent to that, in Calendar

Year 2017, HHSC will be transitioning the Adoption Assistance and the Medicaid for Breast

and Cervical Cancer populations into managed care.

The report is available for public comment until December 7, 2017, through GovDelivery

and HHSC websites.

Dr. Handal noted three areas where he has concerns:

- The first issue is when you strive to improve quality of care, you must compensate the

physicians and the providers at all levels.

- The second issue is that Medicaid pays specialty care the same as it pays pediatric care;

this is unfair and inappropriate. If you want quality, you have to pay for quality; you

cannot compensate specialists at the same level you compensate primary care physicians.

- The third issue is that patient-time must be included in the payment calculation for

physician compensation. The amount of time a physician spends with a special needs

patient far exceeds the amount of time needed to be spent with a well child.

Ms. Snyder: Brian mentioned that this report is focused only on Fee-For-Service. The

National Association of Medicaid Directors has been discussing approaching CMS around

some flexibility the new administration may offer to Medicaid programs; specifically, the

National Association has asked that for states like Texas, where a large percentage of the

population are served in managed care, that they be relieved of the responsibility of

producing this report because it is not as meaningful and will become less meaningful.

Another tactic may be approaching CMS about the creation of a report that is really reflective

of the service system as a whole, in particular for those states which are largely managed care

focused states, having a report that looks at access to care on both sides of the system may be

a more meaningful representation of access to care.

Ms. Horton: When I look at the enrolled providers versus the active providers, I would ask if

when you conducted your survey, were you asking the question, managed care versus Fee-

For-Service. Hopefully if we go into a new type of reporting, we look not only at the

managed care side but that we ask questions that will really delineate if people are getting the

services they need and if they have access to the providers they need.

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Mr. Dees: For this report it is solely quantitative as we are looking at claims data, that is

essentially how we are identifying if a provider is active, it is not based on the survey yet.

Public Comment - Sarah Mills, Director of Public Policy and Government Relations, Texas

Association for Home Care and Hospice, testified neutral to the plan.

Mr. Dees: This report does highlight some of the things that have always been problematic

about Fee-For-Service and some of the ways in which the levers we have to really impact the

quality of care and to really enhance outcomes for our clients are somewhat limited in a Fee-

For-Service environment. This report highlights some of the limitations the program has

always had.

Dr. Handal: In Austin only 10 to 12 percent of the private providers take Medicaid.

In El Paso 62 percent of the children are on Medicaid, 8 per cent more are on CHIP. What

works in Austin or in Houston is much different than what works in a border town. It takes a

lot more time and a physician is paid much less. We have to be very careful how we put data

together.

Dr. Deshpande: It is important that we understand what the underlying rationale is for

determining whether we have met or not met an access standard. Even though there has been

a lot of work put into place to come up with geographic and time based access standards, at

the end of the day, there may still be patient who cannot get in to see a doctor. That is really

what matters. Is there any other venue or reporting that enumerates complaints and

resolutions.

Ms. Snyder: HHSC has several avenues that members, providers and stakeholders can use to

issue complaints, the complaints are tracked through all of those avenues as well. At the

Agency level, there is the Ombudsman’s office, our Health Plan Management Team

maintains a complaint email address where individuals can issue written complaints, and

MCOs collect data on complaints that are issued through the MCO and that is supplied to the

Agency. HHSC has routine reporting for the MCOs and we have internal reports that reflect

complaints issued to the Ombudsman or to the Health Plan Management (HPM) email box.

That data has been historically shared in various venues. Integration of that data into the

report is merited. We feel complaint data is one of the key indicators of system performance.

HHSC routinely meets to discuss trends being seen in the complaint data and use that to form

interventions across the system

Mr. Dees: For particular initiatives, HHSC does specifically track complaints both received

at the HPM level, the Ombudsman level and the MCO level.

5. Delivery System Reform Incentive Payment (DSRIP) Program Demonstration

Years 7-8.

HHSC proposes new rules to Texas Administrative Code (TAC), Title 1, Part 15, Chapter

354, Subchapter D, Division 7, relating to DSRIP Program Demonstration Years 7-8,

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including §354.1691, relating to Definitions; §354.1693, relating to Regional Healthcare

Partnerships (RHPs); §354.1695, relating to Participants; §354.1697, relating to RHP Plan

Update; §354.1699, relating to RHP Plan Update Review; §354.1701, relating to RHP Plan

Update Modifications; §354.1703, relating to Independent Assessor; §354.1705, relating to

Categories; §354.1707, relating to Performer Valuations; §354.1709, relating to Category A

Requirements for Performers; §354.1711, relating to Category B Requirements for

Performers; §354.1713, relating to Category C Requirements for Performers; §354.1715,

relating to Category D Requirements for Performers; §354.1717, relating to Uncompensated

Care (UC) Hospital Requirements; §354.1719, relating to Disbursement of Funds; and

§354.1721, relating to Remaining Funds for Demonstration Years 7-8; Chapter 355,

Subchapter J, Division 11, §355.8205, relating to DSRIP for Demonstration Years 7-8; and

§355.8206, relating to Funding for DSRIP Monitoring Program for Demonstration Years 7-8.

On December 12, 2011, the CMS approved Texas's request for a new Medicaid

demonstration waiver entitled “Texas Healthcare Transformation and Quality Improvement

Program” in accordance with section 1115 of the Social Security Act. The DSRIP program is

one of the three main components of this waiver. The initial waiver was approved through

September 30, 2016, and an initial extension was granted through December 31, 2017.

HHSC has requested an additional 21 months that would extend the waiver through

September 30, 2019. The framework for DSRIP payments is governed by the Program

Funding and Mechanics (PFM) protocol that is referenced in the waiver’s Special Terms and

Conditions. HHSC developed the draft PFM protocol proposal for the requested additional

21 months (demonstration years 7-8) and submitted it to CMS on May 17, 2017. These

proposed new rules closely mirror the PFM protocol proposal that HHSC submitted to CMS.

- John Scott, Director of Operations, Texas Healthcare Transformation Waiver, HHSC

John Scott: HHSC went through a stakeholder process with the Program Funding and

Mechanics (PFM) protocol; it originally posted in January 2017 and received over 170

comments that were closely reviewed. HHSC incorporated some changes and then had

another draft that was sent to CMS in May, 2017. Since then there have been additional

updates based on additional input from the public. We now have a draft that was sent to

CMS on August 4, 2017; the PFM may have additional changes. This proposal for

demonstration years (DY) 7 and 8 moves us from the historical project level reporting to

provider system-level reporting. Originally HHSC had about 1400 separate projects with ten

thousand or more metrics that were reported annually. In our proposal for the future, HHSC

proposes to move to system level reporting with 300 providers that will report data system

level. For the most part, providers will keep their same valuation in the future assuming that

the DSRIP pool size remains constant. HHSC has four provider types, the first thing that

they'll do is define what will be their system. This is their clinics, hospitals, the places where

they serve individuals. Once they define their system, they will begin looking at data to

report under four different categories, A, B, C, and D.

Category A is qualitative reporting where providers will describe the various activities they

have to make improvements, they will also describe progress toward alternative payment

methodologies, they'll do a cost and savings analysis on one of their key activities and they'll

describe any collaborative activities that they're doing with other providers. Category A is

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required reporting but there's not a payment associated with it, it is just required in order to

receive their other payments.

Category B is patient population by provider. This is where providers will state how many

individuals their system serves as a whole and will also provide information regarding how

many individuals they serve are Medicaid-eligible or low income or uninsured. The target

population for the 1115 Waiver is Medicaid and Low Income Uninsured (MLIU). This

category B is a way for HHSC to see where providers are in terms of numbers of MLIU

served and then continue that level as they go into the subsequent years of the waiver. If

their number of MLIU individuals drops too significantly, the payment associated with

category B would be reduced as well. Category B is HHSC’s attempt to ensure that the

target population remains served.

Category C is where the measure bundles and measures are; this is the heart of the program.

This is the step that providers would take after they define their system. They would identify

measure bundles or measures that they want to improve upon. Measure bundles and

measures have certain point values and providers are given a minimum point threshold that

they must achieve. For example, a provider might have a minimum point threshold of 20;

they need to select measure bundles or measures that would add up to at least 20 points.

Different types of providers have different minimum point threshold maximums, a hospital

or physician practice would have a maximum point threshold of 75, a community mental

health center would have a maximum threshold of 40 and a local health department would

have a maximum point threshold of 20. The formula we use to determine these point

thresholds for providers results in providers having approximately the same number of

measures in the future years as they've had previously under Category 3 which is where

they've measured outcome measures. HHSC went through a process to identify the measure

bundles and measures with bundle advisory teams. The focus was on using common existing

measures as well as national measures from CMS consensus and core sets, Medicare Access

and CHIP Reauthorization Act (MACRA) Payment System, Merit-Based Incentive Payment

System (MIPS) and Quality Payment Program (QPP) measures as well as other measure

submitted by advisory team members. Once the providers have defined their systems and

selected measures to meet their point threshold, they will report their base lines for their

measures based on Calendar Year 17. They can then report their achievement based on

Calendar Year 18 and 19. The payments then that result from reporting are divided among

categories B, C and D which have specific payment amounts.

Category D is Pay-for-Reporting of population health measures. These measures are

statewide; for example, population health for hospitals would be potentially preventable

admissions, readmissions, complications and ED visits. HHSC would ask providers to report

this data; the payment for this is just pay for reporting.

For DY7, providers will receive 20 percent of their evaluation payment for participating in

the Regional Healthcare Partnership (RHP) plan update process and defining systems and

selecting measures and submitting that with their RHP. Category B would have a 10 percent

of the valuation payment, category C, the measure bundles, would be either 55 or 65 percent

and category D would be 15 or 5 percent. The reason for the variation in category C and D

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payments is that HHSC has tried to incentivize continuing the level of private hospital

participation by allowing regions which maintain their private hospital participation to shift

some of their payment into category D which is pay for reporting. In DY8, the 20 percent for

the RHP plan update would no longer be paid because that would already have been

accomplished; the 20 percent shifts into category C and then there is quite a lot at stake in

pay-for-performance, 75 to 85 percent under category C.

HHSC has had various stakeholder processes and we've had a few stakeholder concerns...

One concern was ensuring that we had sufficient incentive for private hospital participation

and that is why we have percentages for category C and D to incentivize private hospital

participation. We also had comments related to allocating remaining DSRIP funds. Certain

regions did not allocate their full amount for DY 5 so under the proposal those regions that

did not allocate all of their dollars will have a chance to allocate dollars under this new

planning process. Concerns have also been raised about the formula for calculating the

minimum threshold; HHSC worked with the formula to make sure that providers have

approximately the same number of measures going forward as they've had in the past.

Dr. Deshpande asked if the dollar allocation is happening by taking the existing project

valuations and then re-attributing those to the new groupings of providers. John Scott

replied, as an example, a provider may now have five projects going on under DSRIP and

those five projects would each have a valuation. HHSC would add those valuations together

and the provider would have that lump sum valuation under this new structure.

Dr. Deshpande asked if is it correct to say that HHSC does not really care what the provider

is doing going forward but only cares about what outcomes they achieve. John Scott replied,

we do care about what they're doing; under their category A reporting we are asking them to

tell us what core activities they're doing to achieve the measures they focused on. Also,

when they submit their RHP plan updates as a first step, they'll be mapping their current

projects into the new structure and they'll be able to tell us at that time if they look at if they

plan to continue the activities under existing projects. They also will have the flexibility to

decide at this point that activities under a specific project now could end because they're

refocusing on a different set of measures. Dr. Deshpande responded, would you retain the

privilege of reallocating the dollars? John Scott: They would still keep their overall lump-

sum valuation, they will tell us what activities they're going to be doing to support the

measures that they've chosen with that valuation. Dr. Deshpande replied, I think there's a

potential risk there for systems getting something for not doing a whole lot. I understand that

at the end of the day we want outcomes but if the activities that are designed to achieve those

outcomes are fairly simple they may not necessarily warrant the investment.

Dr. Deshpande asked for more background around the desire to ensure the participation of

the private hospital systems and how HHSC decided to allocate certain categories

differentially to incentivize them to participate. John Scott responded, in our first waiver

when the regional health care partnerships were formed and providers were identified to

participate, there was recognition that private hospitals were an important part of the safety

net for the MLIU population. CMS encouraged us and wanted us to find a way to ensure that

private hospitals would be included in the planning and implementation of DSRIP which is

why they were included originally. As we've looked at this proposal going forward there

12

were concerns that there was a point in time when private hospitals were included, there

would be a temptation for the Intergovernmental Transfer (IGT) entities that fund the DSRIP

activities to drop the private hospitals and no longer provide the IGT for them to be part of

the program. HHSC wanted to ensure there were some incentives to maintain that IGT which

supports the private hospital participation. Dr. Deshpande asked, how did you decide to do

that? John Scott replied, the incentive is built into the payment amounts that are possible

under category C and D. Category C is the pay- for- performance on those measures that that

providers are choosing; because category C is pay-for-performance, those dollars are more

difficult to earn. Category D is pay for reporting of data and is within the provider’s control

to provide data and get a payment. If a region is able to maintain their private hospital

participation, all the providers in that region can shift a percentage of their payments into

category D, which is easier to earn, out of category C. Dr. Deshpande asked categories A

and D are just reporting related? John Scott: yes and category D has a payment attached but

category A does not have a payment attached, but category A is required as a type of

prerequisite.

Dr. Handal commented, theoretically this is going to be a continuance of the same projects

that are already approved. The question is will there be an opportunity to shift gears for

people on regular health partnership who don't have any funding to develop new projects?

John Scott: because of the way the financing is set up requiring the IGT source, it is

essential that the providers have an IGT source to move forward in the program; however, as

the providers look at their measures and look at community needs they certainly do have

flexibility to work with community partners and others outside of a direct DSRIP provider

roll. There is more flexibility in this model than there was in our previous DSRIP program.

Dr. Deshpande asked if the dollar allocation is happening by taking the existing project

valuations and then re-attributing those to the new groupings of providers. John Scott

replied, as an example, a provider may now have five projects going on under DSRIP and

those five projects would each have a valuation. HHSC would add those valuations together

and the provider would have that lump sum valuation under this new structure.

Dr. Deshpande asked if is it correct to say that HHSC does not really care what the provider

is doing going forward but only cares about what outcomes they achieve. John Scott replied,

we do care about what they're doing; under their category A reporting we are asking them to

tell us what core activities they're doing to achieve the measures they focused on. Also,

when they submit their RHP plan updates as a first step, they'll be mapping their current

projects into the new structure and they'll be able to tell us at that time if they look at if they

plan to continue the activities under existing projects. They also will have the flexibility to

decide at this point that activities under a specific project now could end because they're

refocusing on a different set of measures. Dr. Deshpande responded, would you retain the

privilege of reallocating the dollars. John Scott: They would still keep their overall lump-

sum valuation, they will tell us what activities they're going to be doing to support the

measures that they've chosen with that valuation. Dr. Deshpande replied, I think there's a

potential risk there for systems getting something for not doing a whole lot. I understand that

at the end of the day we want outcomes but if the activities that are designed to achieve those

outcomes are fairly simple they may not necessarily warrant the investment.

13

Dr. Deshpande asked for more background around the desire to ensure the participation of

the private hospital systems and how HHSC decided to allocate certain categories

differentially to incentivize them to participate. John Scott responded, in our first waiver

when the regional health care partnerships were formed and providers were identified to

participate, there was recognition that private hospitals were an important part of the safety

net for the MLIU population. CMS encouraged us and wanted us to find a way to ensure that

private hospitals would be included in the planning and implementation of DSRIP which is

why they were included originally. As we've looked at this proposal going forward there

were concerns that there was a point in time when private hospitals were included, there

would be a temptation for the Intergovernmental Transfer (IGT) entities that fund the DSRIP

activities to drop the private hospitals and no longer provide the IGT for them to be part of

the program. HHSC wanted to ensure there were some incentives to maintain that IGT which

supports the private hospital participation. Dr. Deshpande asked, how did you decide to do

that. John Scott replied, the incentive is built into the payment amounts that are possible

under category C and D. Category C is the pay for performance on those measures that that

providers are choosing, because category C is pay-for-performance those dollars are more

difficult to earn. Category D is pay for reporting of data and is within the provider’s control

to provide data and get a payment. If a region is able to maintain their private hospital

participation, all the providers in that region can shift a percentage of their payments into

category D, which is easier to earn, out of category C. Dr. Deshpande asked are A and D are

just reporting related? John Scott: yes and D has a payment attached but A does not have a

payment attached, but A is required as a type of prerequisite.

Dr. Handal commented, theoretically this is going to be a continuance of the same projects

that are already approved. The question is will there be an opportunity to shift gears for

people on regular health partnership who don't have any funding to develop new projects.

John Scott responded, because of the way the financing is set up requiring the IGT source, it

is essential that the providers have an IGT source to move forward in the program; however,

as the providers look at their measures and look at community needs they certainly do have

flexibility to work with community partners and others outside of a direct DSRIP provider

roll. There is more flexibility in this model than there was in our previous DSRIP program.

Dr. Deshpande asked do you have any specific ways in which you would envision that would

happen in this next phase. John Scott: yes, there are things going on at HHSC that are even

broader in scope than just DSRIP. We are trying to link into those and one way is through

our category A reporting of progress toward alternative payment models. We will be asking

providers to tell us their progress in working with MCOs on alternative payment models;

they may have had a successful DSRIP project which is saving money and so they would

have a reason to approach an MCO and try to get an enhanced payment of some kind if

they're able to save the MCO money. CMS has pressed us on how can we look at DSRIP

moving into a more integrated system with MCOs. Dr. Handal noted that of HHSC’s 1400 +

current projects, not very many have them have MCOs involved. Most of them really are

individual endeavors. Dr. Handal questioned, will there be opportunity to shift gears and shift

programs and put resources into new projects that would allow through transformation to

value based programs?

14

Dr. Deshpande questioned, if the provider system is already receiving a significant

supplemental payment through this IGT, it's not readily apparent why the MCO would pay

them some additional fee through some alternative payment model for doing the same thing

for which they have already drawn down money.

John Scott replied, it would be, for example, if a project that they've done historically, maybe

in the future model they are choosing certain measures where that project may not directly

feed into a new measure they've chosen but they want to continue it anyway. HHSC has

tried to make sure providers know that DSRIP is a temporary program. We've had MCOs in

our statewide learning collaboratives; our regional health care partnerships have also had

regional meetings where the topic is specifically around matching MCO interests with

DSRIP type projects and making those connections. This gives us a foundation for providers

and MCOs to work together.

Dr. Deshpande replied, I agree with what Dr Handal was saying, it probably would have been

a better idea to follow some of that money through the health plans because they are

ultimately going to be the people who will take over as it were when the current DSRIP

funding goes away, then we would have had a very definitive system of operational

interaction between the MCOs and the providers to build upon and that is not necessarily

what we're going to have. John Scott: your point is well taken because CMS has encouraged

that as well; we've seen the obstacles that need to be worked out because the IGT is the

source of payment. Dr Handal responded, to continue funding the same proposals that have

made very little transformation in health care will be a big error, we have to shift gears and

look into how, with the actual managed care system we can include providers and the

community-at-large to really work in a value system supported by 1115 monies and DSRIP

monies.

6. Reimbursement Methodology for Certified Registered Nurse Anesthetists.

HHSC proposes an amendment to TAC Title 1, Part 15, Chapter 355, Subchapter J, Division

12, §355.8221 relating to Reimbursement Methodology for Certified Registered Nurse

Anesthetists.

The proposed amendment adds Anesthesiologist Assistants (AAs) to the reimbursement

methodology and adjusts the percentage payment for a supervised anesthesia service for both

Certified Registered Nurse Anesthetists (CRNAs) and AAs. CRNAs and AAs will be

reimbursed the lesser of the CRNA's or AA's billed charges or 50 percent of the calculated

payment for a supervised anesthesia service. For example, if the calculated payment for a

supervised anesthesia service is $100, the payment to the CRNA or AA would be $50.

Previously, both CRNAs and AAs were reimbursed at the lesser of billed charges or 92

percent of the solo physician's reimbursement. CRNA's and AA's will not receive a 42

percent decrease as a result of this proposed rule. In Texas, CRNAs and AAs may not

practice independently and must provide services under the supervision of a physician.

There is an estimated fiscal impact for the proposed rule change. Additional rate adjustments

related to anesthesia conversion factors are anticipated to be effective October 1, 2017.

15

- Megan Wolfe, Senior Rate Analyst, HHSC Rate Analysis

Ed Walsh questioned, how do you not get that 42 percent reduction. Ms. Wolfe replied,

there will be additional adjustments made in the calculation of the total rate. Currently a

CRNA or anesthesiologist assistant receives 92 percent of the calculated fee for an

anesthesiologist’s service, in order to maintain cost neutrality, that calculated

anesthesiologist fee would be increased so that 50 percent would not be the same number as

the 92 percent.

Public Comment - Margot Cardwell, Texas Association of Nurse Anesthesiologists testified

in opposition to the rule.

7. Reimbursement Methodology for Preadmission Screening and Resident Review

(PASRR) Specialized Services.

HHSC proposes a new rule to TAC Title 1, Part 15, Chapter 355, Subchapter C, §355.315,

relating to Reimbursement Methodology for Preadmission Screening and Resident Review

(PASRR) Specialized Services. Effective December 1, 2017, HHSC plans to implement an

array of PASRR Specialized Services for Medicaid clients that reside in nursing facilities as

required by the CMS under 42 C.F.R. §§ 483.100 to 483.138. This rule project proposes the

reimbursement methodology for those services. HHSC will develop the payment rates for

PASRR Specialized Services based upon rates for other programs that provide similar

services. If payment rates are not available from other programs that provide similar

services, payment rates will be determined using a pro forma approach.

- Victor Perez, Director, HHSC Rate Analysis

The rule being presented is going to create the methodology needed to develop the rates for a

group of specialized services under the Pre-Admission Screening and Resident Review

(PASRR) services for clients residing in nursing facilities. The rule will be effective

December 1, 2017. The PASRR specialized services that we are developing rates for are

required by federal law for a nursing facility resident with mental illness or an intellectual

disability. HHSC has currently been providing these services using General Revenue

funding. The list or the group of services for PASRR specialized services will consist of

employment services, supported employment and employment assistance, independent living

skills training, behavioral support, debilitation coordination and day habilitation. These rules

were published just recently so we have not received any comments to date.

Ms. Horton asked, this is just stating that you are going to create rates but you haven't created

any yet. Mr. Perez replied, the rule must be adopted before we can move ahead with the

development of rates. Once we get the rule adopted, we will move forward with the rate

approval process. Mr. Galinsky asked, if you don't know what the rates are going to be how

can you determine the fiscal impact? Mr. Perez replied, there are a number of tasks that we

have to do - a state plan amendment had to be submitted to CMS earlier than the normal

process, along with the rate rule. Our plan is to use the Home and Community-based

Services program (HCS) rates that we use for the consolidated budget which is using the

16

most recently audited HCS cost reports; this played into how we developed the fiscal impact.

Before we move with a formal rate adoption process we have to have the methodology set.

8. Amendments to Disallowance Provisions in Directed Payment General Provisions.

HHSC proposes amendments to TAC Title 1, Part 15, Chapter 353, Subchapter O,

§353.1301, relating to General Provisions. In March of 2017, HHSC adopted a series of

rules governing delivery system and provider payment initiatives through Medicaid managed

care organizations (MCOs). These initiatives are, generally, funded through

intergovernmental transfers (IGTs) from local governmental entities. Given that these

programs are not funded with state general revenue, HHSC must ensure, to the greatest

extent possible, that no state dollars are at risk through the operation of these programs. A

disallowance by CMS is one potential risk to general revenue, unless HHSC can ensure that

funds from another source are available.

Section 353.1301(j) describes the procedure HHSC would use in the case of a disallowance.

The rule delineates between a disallowance for impermissible provider-related donations and

all other disallowances. At present, if there is a disallowance for impermissible provider-

related donations, the rule requires HHSC to recover the disallowed amount from

transferring governmental entities responsible for the non-federal share of the disallowed

payments. If there is a disallowance for reasons other than an impermissible provider-related

donation, HHSC reserves the right to recoup the disallowed amount from MCOs, providers,

or governmental entities.

In an effort to provide HHSC more flexibility when determining the appropriate entity from

which to recoup, HHSC proposes to amend §353.1301 to remove the requirement that it

recover only from governmental entities in the case of a disallowance for impermissible

provider-related donations. Instead, HHSC will reserve the right to recoup from MCOs,

providers, or governmental entities in any disallowance. In order to ensure that there is no

risk to general revenue, to the greatest extent possible, HHSC will require that if a

recoupment for a disallowance results in a subsequent disallowance, the entity that HHSC

initially recouped against will face a recoupment for the subsequent disallowance.

In addition, HHSC will clarify the heading for §353.1301(k) by changing the name from

“Recoupment” to “Overpayment.”

- Charles Greenberg, Director of Policy, Office of Chief Counsel, HHSC

As of now this rule only applies to two separate programs, one of which is Uniform Hospital

Rate Increase Program (UHRIP), the other is a Quality Incentive Payment Program (QIPP).

It is important to distinguish between those two programs and other supplemental payment

programs that we have such as Uncompensated Care Program (UC) and DSRIP. This rule

does not apply to UC or to DSRIP. One of the facets of this rule is it discusses HHSC’s

policies in the case of federal disallowance. A federal disallowance is when basically CMS

says you, state, did something wrong or there's a problem so we are going to take back in the

next quarter some of the federal share of our money. There are number of ways in which

17

you can have such a disallowance; in most cases and historically, HHSC would approach the

entity most responsible for the disallowance to recoup from them the amount of federal or

share that was withheld from HHSC. In this particular rule we chose to do that for almost all

disallowances except for disallowances in the case of provider-related donations, which is a

very specific area of federal law. For disallowance for a provider-related donation, HHSC

chose, at the time in March, 2017, to fill that budget hole by getting that amount of money

from the governmental entity that provided the non-federal share of the payment at issue.

UHRIP, QIPP and the directed payment models are funded through local dollars from

typically hospital districts and counties, just like UC and DSRIP and non-federal shares are

funded through local dollars. Because of that HHSC must very zealously guard its General

Revenue. If there is a disallowance, we don't have the appropriation authority to cover those

dollars; which is why we chose to be very strict in this one particular instance, to say we will

go to the governmental entity that IGT’d initially to get those dollars back. We continue to

receive feedback from stakeholders about this policy and we decided to sit down again with

stakeholders to have more discussions and we had discussions with CMS about possible

alternatives. This amendment is the result of those discussions. We're proposing to remove

the requirement that the IGT and governmental entity be responsible for filling the budget

hole in the case of a disallowance for provider related donations. So in essence we're going

back to the way things are in UC and DSRIP where in any type of disallowance, HHSC will

determine who is the most appropriate entity to recoup against. This provides HHSC

flexibility to negotiate with CMS to find a better solution for all parties involved. There is

one caveat however; we are proposing that if a disallowance and the recoupment from that

disallowance were to result in yet another disallowance, which is theoretically possible, the

entity that HHSC recouped against in the first case will be recouped against for the

subsequent disallowance. This has to do with the provider-related donation issue that I

brought up earlier. If we require that the initial entity that was recouped against in the first

disallowance is recouped against in all the subsequent disallowances that were caused by

that, HHSC can maintain that we will ultimately repay the entire amount of federal share at

issue while keeping HHSC’s General Revenue safe.

Dr. Handal asked how much money has been disallowed so far in DSRIP. Mr. Greenberg

replied, the only disallowance we have right now is in the UC context. It is about 26 million

dollars, it is for one quarter in Tarrant and Dallas County. HHSC is currently fighting that in

front of the HHS Department of Appeals Board; there have been no other disallowances in

these types of programs.

Dr. Handal: The system looks complicated; will it lead to finger-pointing from the MCOs

and the providers and the IGT organization; how will you control that? Mr. Greenberg

replied, going back to the issue of the UC disallowance however that gets answered will

answer a lot of questions here. In the future with UHRIP and QIPP, we're going to have to

navigate this as best we can. It is difficult for me to think of a situation in which an MCO

would be on the hook for a disallowed amount, but we can’t say that for sure. It is not clear

that CMS can disallow a portion of a managed care payment, and I say this because in the

preamble to the most recent massive overhaul of federal regulation regarding MCOs, it

specifically says that CMS does not believe it has the authority to disallow only portions of

capitated payments. It can either disallow the entire contract amount or nothing. I'm not

18

exceedingly worried that there could be a disallowance in these types of programs because of

that language; however we can't take the chance that there's some change in belief at CMS;

however we think that between this rule and negotiating with CMS and our relationships

with stakeholders, we can come to a good outcome.

Dr. Handal noted that John Scott’s presentation about the points feels like a preventive way

of disallowance, resulting in less possibility of disallowance.

Mr. Greenberg replied, HHSC requires in UC and DSRIP, certifications of participation that

list out do's and don'ts for the entities providing us IGT. We do have some preventive

measures to some extent. One of the issues that we always end up having on the finance side

is we don't know everything going on the background. We accept IGT and we can tell

people these are generally do's and don'ts but it is impossible for anyone to know everything

that's going on in the background. We lay out the law as best we can and then tell everyone

think about what you're doing, talk with your attorneys and just make sure that you're doing

everything that you're supposed to. Dr. Handal replied, you cannot look into just the legal

issue or the financial issue or the governmental issue, you have to look at the whole picture.

9. Amendments to Uniform Hospital Rate Increase Program.

HHSC proposes amendments to TAC Title 1, Part 15, Chapter 353, Subchapter O,

§353.1305, relating to the Uniform Hospital Rate Increase Program.

In March of 2017, HHSC adopted rules governing a provider payment initiative through

Medicaid managed care organizations (MCOs) called the Uniform Hospital Rate Increase

Program (UHRIP) (42 TexReg 13). Under the UHRIP initiative, a service delivery area

(SDA) may apply to receive an increase in certain hospital rates which would vary by class

of hospital. Although UHRIP was supposed to begin in September 2017 and be available to

any SDA, operational issues necessitated a delay. Such issues included lack of readiness by

MCOs, lack of program understanding among providers, and incomplete approvals from the

CMS. HHSC proposes to amend the UHRIP rules in three ways.

First, HHSC proposes to amend §353.1305(b)(7) and (8), the definitions of “rural private

hospital” and “rural public hospital” to be consistent with a revised definition of “rural

hospital” that was adopted earlier this year in §355.8052 (relating to Inpatient Hospital

Reimbursement). The definitions in this rule would now refer to the definition of “rural

hospital” in §355.8052.

Second, HHSC proposes to add §353.1305(k) which would allow for a limited December 1,

2017, entry into UHRIP for a subset of SDAs. Specifically, if HHSC received an approval

from CMS for any particular SDA by April 15, 2017, that SDA would be able to participate

in UHRIP for dates of service beginning December 1, 2017.

Third, HHSC standardizes references to SDAs throughout the section.

- Selvadas Govind, Director for Hospitals, HHSC Rate Analysis

19

In May, 2016, CMS finalized a federal rule that allows states to direct expenditures under

contracts with MCOs under certain limited circumstances. Based on Federal rule, a state

may direct an MCO to raise rates for a class of providers for a particular service, by a

uniform dollar amount or percentage subject to contract approvals by CMS.

Dr. Webster: it appears this implementation may possibly start December 1, 2017; earlier

you listed the challenges that precluded it being started earlier; have all of those challenges

been resolved in such a way to facilitate a smooth beginning of this on December 1, 2017?

Mr. Govind: This is a new and complicated program. This is the first time it is being

implemented in Texas and is also the first time CMS is approving the program across

various states. It requires a lot of education and understanding and appreciation of the

impact this program and the methodologies for reimbursement this program might have on

new MCOs, hospitals and accounting systems. It is not a smooth road but we are making

good progress; we are still aiming for the December 1, 2017 rollout for Bexar and El Paso

SDAs.

Dr. Deshpande: About a week ago, Jami Snyder indicated HHSC had not yet determined

what the hospital rate increases would be in those two SDAs; has that happened at this time?

Mr. Govind: We are still working out the rates which are based on certain guidelines that

the Executive Commissioner has instructed us to use. Among the considerations in working

out the rates are costs and the availability of IGTs from the SDAs. The Executive

Commissioner has instructed us not to allow rate increases to be more than 95 percent of

Medicaid shortfall and we have to keep it in the budget neutrality limitations of the program.

Dr. Handal: This is IGT dependent, is there a limit to the amount of money, will it be

dependent on the IGT only? Mr. Govind: The Executive Commissioner had instructed us

to use 800 million dollars on an annual basis for the roll-out of this program in

terms of budget neutrality; that would be the total amount in All Funds. Since we are

looking at a roll out for two SDAs for the first of December for three months, we will

prorate it accordingly. We also intend to do a state wide roll out for March 1, 2018, and

since that will be for six months for the balance of the state fiscal year, the budget neutrality

cap for the March 1, 2018 rollout will be 400 million dollars.

Mr. Galinsky: Why would we want to limit the amount available to the hospitals and

prorate it out when it is an annual amount that’s available and if we compressed it into six

months we still could access the full amount rather than prorate it. This is not a matter of

fiscal impact to the state because there is no fiscal impact due to the fact that it is funded by

IGTs; I am curious as to why we would trim back and prorate half the year off, other than

the two SDAs that are going live December 1, 2017. Why would we want to limit ourselves

to accessing federal funds to only half of the available annual amount. Mr. Govind: I am

not aware of all of the considerations the Executive Commissioner had in mind; however, I

can suggest that first of all it is a new and very complicated program, attempting to roll it

out with a large amount of money may not be the most prudent strategy; secondly, there is a

potential for some disruption when hospitals might be dependent on certain cash flows in a

short period of time as opposed to over an entire fiscal year.

20

Dr. Handal: to work on a six month timeframe is not appropriate, planning must be done

well ahead of time. Mr. Govind: Under the terms of the UHRIP program these programs

have to be reauthorized by CMS on an annual basis. For this particular program we had

intended to roll it out September 1, 2017; however, there were certain obstacles and

operational issues with regard to rolling it out, not on the part of HHSC but on the part of

the stakeholder community. There is a great deal of interest among the hospitals for this

program to be rolled out, and in response to representations by hospitals, the Executive

Commissioner agreed to roll it out for six months from March 1, 2018. In response to

representations by the hospitals from Bexar and El Paso SDAs, he agreed to this pilot

program due to the fact they were the two SDAs in the state which appeared to be the most

eager to implement the program. Ideally we would have an annual planning process.

Mr. Galinsky: regarding the two SDAs which are potentially going live December 1, 2017,

will they receive a 9 month allocation or will they take the 6 month allocation, divide by 9

and spread it out over 9 months to achieve the full amount of their payment? Mr. Govind:

this is a pilot program, it will be for three months and we will allocate a portion of the

budget neutrality those two SDAs would have cost. They will not receive anything more

than they would have if all the other SDAs participated on December 1, 2017. Mr.

Galinsky: but if all the SDAs participated on December 1, 2017 then presumably they would

receive 600 million dollars spread over the nine months equaling three quarters of a year

versus half a year. Being a pilot in that scenario would have its benefits of having an

additional one quarter of a year in funding. Mr. Govind: yes, because it is a pilot program.

Mr. Galinsky: this goes back to my point earlier as to why we are limiting the money out to

six months whether it is a pilot program or not, the pot of money shouldn’t change, if it

does, more SDAs should have been given the opportunity to participate in the pilot.

Mr. Govind: It would have been beneficial to the hospitals if all of the SDAs had been ready

to participate by December 1, 2017. We were not able to be ready by September 1, 2017,

due to differences in viewpoint between MCOs and the hospitals and even within the SDAs.

Mr. Galinsky: I have voiced my opinion that I believe the full amount should have been

allocated for the year, not prorated out. On the March 1, 2018, rollout, is the entire state

being rolled out or will any SDAs be held back. Mr. Govind: HHSC has approval from

CMS on all the SDAs; we anticipate that all of the SDAs will participate.

ACTION ITEMS:

10. Nursing Facility Applications and Informal Reviews.

The Department of Aging and Disability Services (DADS) proposes to amend TAC Title 40,

Part 1, Chapter 19, Subchapter C, §19.212, relating to Time Periods for Processing License

Applications; and Subchapter X, §19.2322, relating to Medicaid Bed Allocation

Requirements.

The proposed amendments clarify the deadline for HHSC to receive a nursing facility license

application. The proposed amendments also allow HHSC to pend an application for up to six

21

months to allow an applicant to comply with licensure requirements. The proposed

amendments further enable HHSC to pend an application for renewal if the facility is subject

to a proposed denial or pending licensure revocation.

In addition, the proposed amendments also allow an existing nursing facility to request an

informal review when the nursing facility has been denied an increase in Medicaid bed

allocations or was subject to decertification or de-allocation of Medicaid beds.

- Bobby Schmidt, Manager, DADS Regulatory Services

The proposed rule amendments are the result of an HHSC Medicaid Bed Allocation Audit

and an HHSC internal audit requested by Department of Aging Disability Services

(DADS) Regulatory Services Licensing and Credentialing Section.

There are 3 items in the proposal; first, all references to DADS will be changed to HHSC.

Second, new rules regarding timeframes for processing licensing applications and additional

circumstances for pending an application for renewal will be added. Third, we will be

proposing amendments to rules to allow nursing facilities to request an informal review

regarding decisions related to Medicaid bed allocations. Specifically in Section 19.212

Time Periods for Processing License Applications; there is language that will change “within

60 days” to “at least 60 days” for an application to be received for review. Language will be

retained in that section which allows HHSC to pend an application for up to six months

to allow license application applicants to comply with licensure requirements. In the

proposed amendment in Section 19.2322K Informal Review Procedures, in the

Medicaid Bed Allocation Section, this will allow an existing nursing facility to request an

informal review when it has been denied an increase in Medicaid bed allocations, or when it

was the subject to decertification or deallocation of Medicaid beds.

Interested stakeholders were provided a copy of these rules, via email and GovDelivery on

April 3, 2017. In addition a public meeting was held on April 10, 2017. We received no

comments on these rules.

Colleen Horton motioned for approval of the rule

Dr. Deshpande seconded the motion

The motion to approve the rule passed unanimously

10. Public Comment.

No additional Public Comment was received.

11. Proposed next meeting: February 15, 2018, at 9 a.m.

12. Meeting Adjourned.