Texas Healthcare Transformation and Quality Improvement Program 1115 Waiver

Medicaid services are established in State Medicaid Plans and are approved by the federal Center for Medicare and Medicaid Services (CMS).

CMS allows for exceptions to the state plan based on a waiver process

Waivers are subject to CMS approval and must be budget neutral

What is a Medicaid Waiver

A 1115 Waiver allows the state to test innovative approaches

to new Medicaid Services

The waiver is intended to be in effect during the

2011 – 2016 time frame

The Texas 1115 waiver seeks to be innovative by expanding the Medicaid

managed care plan

• This expansion encroaches on the UPL, or Upper Payment Limit payments that some Texas healthcare facilities currently receive and therefore suggests that a review of UPL is necessary to ensure that changes don’t drastically undermine these facilities.

Upper Payment Limit

• Supplemental payments made to hospitals for inpatient and outpatient services

• Upper Payment Limit (UPL) is the difference between what Medicaid reimbursed for the service and what Medicare would have paid

• The non-federal portion of the UPL is funded with local tax funds – usually through a taxing authority or hospital district

19%

17%

39%

25%

Texas Hospital Financing FY09

DSHOutpatientInpatientUPL

Upper Payment Limit

The 1115 Waiver allows for

• Expansion of managed care services in the state including a pharmacy and dental services

• Allowed for the preservation of Upper Payment Limit for hospitals in light of the fact that the state is expanding managed care services

• Created Regional Healthcare Partnerships or RHP’s

The waiver allows for additional funds to be drawn down from the

federal level to be used at the state level

• 2011 UPL payments to hospitals amounted to an estimated 2.8 billion dollars. Over the five year life of the waiver, that would amount to almost 14 billion in funds that would be drawn down from the federal government.

• Under the new waiver, there is an ability to drawn down nearly 29 billion in federal funds for the same time period.

• There is obvious advantages from a financial perspective for the state to pursue this program

UPL transitions to 1115

How the split progressesYear UCC DSRIP2012 88% 12%2013 80% 20%2014 70% 30%2015 60% 40%2016 50% 50%

Regional Health Partnerships

• Formed around facilities already receiving UPL payments and a public hospital typically serves as an anchor for a region

• Anchors coordinate the activity of the RHP and serve as a single point of contact for the region

• Anchors serve as administrators for the RHP but do not control the funds.

• Focus will be on improved quality, access, and coordination.

Regional Health Partnerships

• Anchors will bring stakeholders together to develop plans with public input.

• RHP participants with match funds will choose hospitals that will receive payments based on their incentive plans.

• Performance metrics will be established and payments will be issued based on facility performance against those metrics.

Anchors• Public hospitals will normally serve as anchors

• In regions without a public hospital, other entities such as a hospital district, a hospital authority, a county, or a state university with a health science center or medical school may serve as the anchor.

Tasks of Regional Health Partnerships• Identification of RHP participants• Providing a health assessment of the region• Identifying projects by DSRIP categories

• Infrastructure development• Program innovation and redesign• Quality Improvements• Population focused improvement

What RHP’s don’t do• They can not require participation.

• Even if an entity starts the program in the first year, the RHP can’t mandate participation for all four years. • They don’t determine health policy.

• They don’t determine Medicaid program policy.

• They don’t determine regional reimbursements.

• They don’t determine manage care requirements.

ReferencesTexas Health and Human Services Commission. HHSC Gets Approval for Medicaid Improvements. http://www.hhsc.state.tx.us/1115-waiver.shtml

Texas Association of Counties. Medicaid 1115 Waiver. https://www.county.org/resources/legis/medicaid1115/index.asp

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