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February 8, 2002
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Senate committee examines health and human services rates and demand

AUSTIN - The Interim Subcommittee on Health and Human Services Demand, a subgroup of the Senate Finance Committee, met at the Capitol today, February 8, 2002.

Charge #3 orders the subcommittee to evaluate the processes by which health and human service agencies assess the demand for services and allocate their appropriations to address program demands and requested rate increases.

Senator Judith Zaffirini, chair of the committee, provided the welcome remarks and introduction, announcing that all the following meetings will take place in Austin. Today's hearing focused on an overview of rate increases and a discussion of how rates are set.

The 2002-2003 budget (SB 1) for the state of Texas approved by the 77th Legislature included a $5.1 billion increase for health and human services programs. Out of that amount, Medicaid prescription drugs, the program's cost increases, and caseload growth received $542 million.

Kelly Furgeson, Team Manager, and Paul Priest, Analyst, both with the Legislative Budget Board (LBB), provided the first testimonies. The witnesses concentrated on rate increases suffered by several social programs like foster care. They also gave an overview of how the tobacco settlement proceeds applied to health programs.

Don Gilbert, Commissioner of the Health and Human Services Commission, provided a more detailed testimony. Gilbert discussed the general methodology of rate setting for different programs. He pointed out that there are two active lawsuits challenging the commission's rate setting. He thanked legislators for the $900 million provided for rate increases, which allowed his agency to retain providers. Mr. Gilbert presides over the commission responsible for setting the rates of Medicaid and CHIP programs. These rates are subjected to the availability of funds assigned by the Legislature. The costs have increased since the legislative session according to Mr. Gilbert, and the appropriated funds are not enough, leading his department to run a deficit. Some senators didn't like what they heard. Chris Harris called it "a manipulation of figures," telling Gilbert "it ain't looking good, brother."

Some of the increase in funding was assigned to staffing increase, and wages and benefits. Nursing homes also need increased funding as the facilities age. Today, the state pays $96.16 per bed per day to nursing homes, one of the lowest rates in the country, according to Gilbert.

Based on the aging of the population in general and the large concentration of Medicaid recipients in the Border region, Senator Lucio asked for an analysis of the future needs of the region. The Border and inner cities show the highest concentration of low-income families, including those who receive Medicaid. In relation to this, doctors who treat Medicaid and CHIP patients receive lower reimbursement rates than providers of Medicare and private doctors.

Gilbert also presented written testimony about the pharmacists drug program, hospital outpatients, and dental services.

Thomas Chapmond, Executive Director, and other staff members of the Texas Department of Protective and Regulatory Services, testified next. Richard Hoffman talked about the deficit in the foster care program, which is running over $6 million. The program received a biennium increase of 3% or $14 million, but the caseload increase and changes in eligibility made this amount short. Chapmond informed the members about the process for taking care of abused or neglected children. The final intention in all such cases is to find a permanent living situation for the children.

The subcommittee recessed subject to call of the chair. The next hearing is schedule for the third week of March.

The Joint Interim Committee on Health Services also met today in the Capitol. Senator Judith Zaffirini and Representative Patricia Gray co-chair the group.

After the approval of the October 30, 2001, minutes the members heard testimony from Don Gilbert, Commissioner of the Texas Health and Human Services Commission, and Jim Hine, Commissioner of the Texas Department of Human Services.

The witnesses briefed members regarding Medicaid and CHIP caseloads and cost projections, and the reimbursement rates and administration of these two programs for low-income families. Following the increase in the general population, the caseloads keep growing, with 80 per cent of the growth due to the increase in children on the roles. More prescriptions at higher cost seriously affect the programs, as well as the increase in aged, disabled and blind recipients. Undocumented immigrants ending up in emergency rooms for lack of preventive care is another of the challenges faced by the health care system, a problem not confined to the border region only, but present also in big cities like Houston and San Antonio.

Gilbert and Hine also referred to the implementation of SB 43 -the Medicaid simplification bill. The bill was written by Zaffirini and Gray, simplifying the application process for approximately 600,000 eligible Texas children younger than 19, who were eligible but not served. The bill eliminates the face-to-face application, allowing applying by mail or phone. First time applicants must appear in person for an orientation session at the Department of Human Services or health care providers. The measure also smoothes the transition between programs and promotes the Texas Health steps program. Witnesses said that, faced with the problems already mentioned, the reform process is working favorably.

The joint committee recessed subject to the call of the chairs.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.