1. Texas Hospital Association Annual Conference Steve Aragón, Chief Counsel Texas Health and Human Services Commission Stacy E. Wilson, J.D., Associate General Counsel Texas Hospital Association February 14, 2013 Medicaid 1115 Transformation Waiver: Where are We Now?

2. Why A Waiver?  Budget issues during the 2011 session led to need for cost savings  Upper Payment Limit Program - $2.8 billion/year (AF)  Eliminated due to statewide expansion of managed care  Need to save supplemental funding to hospitals 2

3. What Does This Waiver Do?  More money available? –$29 billion over 5 years vs. $14 billion under UPL –But budget neutral to the federal government; i.e., feds would have spent the same amount of money –IGT capacity  Creates two funding pools –Uncompensated Care Pool –Delivery System Reform Incentive Payment Pool 3

4. Structural Overview 4

5. UC and DSRIP Funding DY 1 (2011-12) DY 2 (2012-13) DY 3 (2013-14) DY 4 (2014-15) DY 5 (2015-16) Total UC$3.7 B$3.9 B$3.534 B$3.348 B$3.1 B$17.582 B DSRIP$500 M$2.3 B$2.666 B$2.852 B$3.1 B$11.418 B Total/DY$4.2 B$6.2 B 6.2 B$6.2 B$29 B % UC88%63%57%54%50%60% % DSRIP12%37%43%46%50%40% 5

6. Regional Healthcare Partnerships  20 regions proposed based on UPL affiliations and feedback  Each region has: –Anchor –Funding public entities –Performing providers 6

7. Uncompensated Care Pool  Uncompensated Care –Supplements hospitals for Medicaid underpayment and uninsured  Medicaid and uninsured shortfalls not covered by DSH  Additional categories of Medicaid & uninsured costs can be claimed –Physicians –Clinics –Pharmacies 7

8. DSRIP Projects TYPES OF CATEGORY 1 PROJECTS Pay for Performance Expand Primary Care Capacity Increase Training of Primary Care Workforce Implement and Use a Chronic Disease Management Registry Expand Urgent Care Access Expand Dental Services Behavioral Health Projects TYPES OF CATEGORY 2 PROJECTS Pay for Performance Expand/ Enhance Medical Homes Expand Chronic Care Management Models Redesign Primary Care Establish/Expand a Patient Care Navigation Program Implement Evidence-based Disease Prevention Programs TYPES OF CATEGORY 3 OUTCOMES Pay for Outcomes Primary Care and Chronic Disease Management Potentially Preventable Admissions Potentially Preventable Readmissions Patient Satisfaction Cost of Care Oral Health Right Care, Setting CATEGORY 4 PROJECTS Pay for Reporting Potentially Preventable Admissions* 30-day Readmissions* Potentially Preventable Complications* Patient-centered Healthcare Emergency Department (cycle time) Initial Core Set of Measures for Adults and Children in Medicaid/CHIP *Required for UC-only participants 8

9. SUMMARY OF DSRIP REQUIREMENTS 9 Categories 1 & 2Category 3Category 4 Performing Provider Hospital and non-hospital providers Hospital providers only PASS 1 PROJECTS AND REQUIREMENTS Project Begins DY 2DY 2 & DY 3DY 3 & DY 4 RHP Level RequirementPerforming Provider Level Requirement RHP Tier 1Minimum 20 projects (at least 10 from Category 2) Must adopt outcome measures that tie back to projects in Categories 1 and 2 Must establish outcome targets by DY 4 6 domains of measures: PPAs PPRs PPCs Patient-centered healthcare Emergency department Initial Core Set of Measures for Adults and Children in Medicaid/CHIP DY 2 DSRIP for status report on system changes RHP Tier 2Minimum 12 projects (at least 6 from Category 2) RHP Tier 3Minimum 8 projects (at least 4 from Category 2) RHP Tier 4Minimum 4 projects (at least 2 from Category 2)

10. DSRIP Funding – DYs 2 – 5  Pass 1 Funding –Hospitals – 75% –Others – 25%  Pass 2 Funding –Contingent on meeting participation requirements –RHP reallocates unused funds for new projects  Pass 3 Funding –RHP reallocates unused funds for new projects 10

11. Project Valuation - Hospitals 11 DY 2DY 3DY 4DY 5 Categories 1 & 2 No more than 85% No more than 80% No more than 75% No more than 57% Category 3At least 10% At least 15%At least 33% Category 45%10% - 15%

12. DSRIP Projects 12  All RHP plans timely submitted to HHSC  HHSC has provided feedback  1,341 Category 1 and 2 projects –Top Category 1 Project Areas:  1.1 - Expand Primary Care Capacity  1.9 – Expand Specialty Care Capacity –Top Category 2 Project Areas:  2.9 – Establish/Expand a Patient Care Navigation Program  2.2 – Expand Chronic Care Management Models

13. 13 Submitted RHP Plans All 20 RHPs submitted their complete plans to HHSC by the December 31, 2012 due date. HHSC received 1,335 Category 1 and 2 projects, totaling $7.6 billion. (Updated from 1,341 projects) RHPs proposed Delivery System Reform Incentive Payment (DSRIP) valuation for Categories 1, 2, 3, and 4 for DYs 2-5 of $9.9 billion. Providers estimated $19.5 billion in Uncompensated Care (UC) for DYs 2-5.

14. 14 Projects and Outcomes Category 1: 655 projects, totaling $4.0 billion –RHPs ranged from 7 to 91 projects –Project average value of $6.1 million, range of $44,000 to $57 million Category 2: 680 projects, totaling $3.6 billion –RHPs ranged from 7 to 80 projects –Project average value of $5.3 million, range of $43,000 to $32 million Category 3: 1810 outcomes, totaling $1.7 billion –RHPs ranged from 14 to 253 outcomes –Outcome average value of $922,000, range of $2,300 to $19 million

15. 15 Selected Project Areas  Top Category 1 Project Areas: 1.1 – Expand Primary Care Capacity (202 projects) 1.9 – Expand Specialty Care Capacity (140 projects)  Top Category 2 Project Areas: 2.13 – Provide an intervention for a targeted behavioral health population to prevent unnecessary use of services in a specified setting (92 projects) 2.9 – Establish/Expand a Patient Care Navigation Program (82 projects)

16. 16 Performing Providers  383 RHP Participants: –224 Hospital Performing Providers  46 Safety Net Hospitals  121 Private Hospitals –82 UC-only Hospitals  69 Private Hospitals –38 Community Mental Health Centers (CMHCs) –20 Local Health Departments (LHDs) –12 Physician Practices affiliated with an Academic Health Science Center (AHSCs) –6 Physician Practices not affiliated with an AHSC –1 Other

17. 17 Projects by Performing Provider Type of Provider # of Cat. 1 & 2 projects Average Project Value Total Cat. 1 & 2 Project Values Hospitals791$6.03 M$4.77 B Private398$4.85 M$1.93 B CMHCs297$4.21 M$1.25 B LHDs74$4.93 M$365 M AHSCs157$7.06 M$1.11 B

18. 18 DSRIP Allocation vs. Valuation Pass 1 DSRIP Allocation ($10.9 B) Proposed DSRIP Valuation ($9.8 B)

19. 19 Funds Available for Plan Modifications $793 million available for additional projects through plan modifications in DYs 3-5. Eight regions used total allocation or have less than $100,000 remaining. Three regions have $100 million or more in remaining funds (RHP 5 - $342 million, RHP 9 - $129 million, RHP 17 - $100 million).

20. Resources  HHSC website: http://www.hhsc.state.tx.us/1115- waiver.shtml http://www.hhsc.state.tx.us/1115- waiver.shtml  THA website: http://www.tha.org/waiverhttp://www.tha.org/waiver 20