TEXAS Texas Health and Human Services Commission Health and Human Services June 19, 2018 The Honorable Jane Nelson Senate Committee on Finance, Chair State Capitol, Room 1E.5 Austin, Texas 78701 Dear Chair Nelson: Thank you for your June 7, 2018, letter regarding Medicaid managed care. First and foremost, we take very seriously our responsibility to ensure a Texas Medicaid program that is both effective and ef?cient. The Health and Human Services Commission (HHSC) is charged with overseeing 20 contracted managed care organizations (MCOs) to ensure more than 3.8 million vulnerable Texans receive medically necessary services. We assure you that both personally and professionally, our staff are committed to the clients we serve. Building on initiatives that began in 2016, Medicaid leadership is focused on strengthening managed care oversight. While we continue to identify opportunities to improve, the agency has made great strides to provide the level of oversight and direction you, state leadership, and taxpayers expect. Enclosed and outlined below is a comprehensive response to the concerns and questions raised in your letter. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits the agency from providing case-speci?c information in this public forum; however, as we have discussed with your staff, we stand ready to brief you in detail under legislative privilege, as you consider potential policy changes. Texas Government Code Section 533.002 directs HHSC to implement a Medicaid managed care program that achieves the following goals: . Improves the health of Texans by emphasizing prevention, promoting continuity of care, and providing a medical home for recipients; . Ensures that each recipient receives high-quality, comprehensive healthcare services in the recipient's local community; . Encourages the training of and access to primary care physicians and providers; . Maximizes cooperation with existing public health entities, including local departments of health; PO. Box 13247 - Austin,Tean 78711-3247 . 512-424-6500 - hhs.texas.gov The Honorable Jane Nelson June 19, 2018 Page 2 . Provides incentives to MCOs to improve the quality of healthcare services for recipients by providing value-added services; and . Reduces administrative and other non?nancial barriers for recipients in obtaining healthcare services. In contracting with managed care organizations, Texas assumed signi?cant savings, as managed care provides a more cost-effective service delivery system than the traditional fee-for-service (FFS) model. Through tools like prior authorization and utilization review, MCOs control unnecessary medical expenses. MCOs also offer signi?cant resources, not available in a state-run model, that help clients and their families navigate complex healthcare needs. I With 92 percent of the Medicaid population served through managed care, HHSC serves primarily in a contract oversight role. To that end, the agency employs a number of oversight tools to verify MCO compliance with state and federal law, as well as their contract terms. HHSC regularly reviews ?nancial, operational, and clinical activities to ensure compliance with policies, procedures, and contract requirements. In addition to ongoing monitoring through contract deliverables, complaint tracking, and utilization review, in September 2017, HHSC established an on-site operational review process for MCOs. These operational reviews allow HHSC to conduct an in- depth review of MCO operational compliance and performance across a number of areas to ensure policies and practice align with performance standards. A multi? disciplinary team of more than 20 subject matter experts review key functions and requirements as stipulated in the MCO's contract through modules developed based on contractual standards, in addition to MCO staff interviews. MCO contracts also limit allowable expenses and pro?ts, which HHSC monitors through review of quarterly ?nancial data and independent annual ?nancial audits. HHSC uses a variety of remedies, including monetary and corrective action plans, to hold MCOs accountable for contractual non-compliance. If the MCO fails to perform any of the services described in the contract, HHSC may assess liquidated damages for each occurrence, consistent with HHSC's tailored approach to remedies and best contract practices. As evidence of the agency's increased oversight, for the ?rst three quarters of ?scal year 2017, HHSC has assessed over $27 million in liquidated damages to MCOs, The Honorable Jane Nelson June 19, 2018 Page 3 including $11.7 million for utilization review ?ndings. This is an increase of over 400 percent compared to all of 2016. We continue to review our managed care oversight processes and will take any additional steps necessary to ensure MCOs meet their obligations to the people we all serve. En rin Ensuring Medicaid members have access to providers by building an adequate network is the foundation of an MCO's responsibilities. As you know, robust specialist provider networks are a persistent challenge in health care, regardless of payer type and across the country. For example, Texas has 205 counties (in whole or in part) designated as mental health provider shortage areas. The total number of in Texas is relatively small and 171 counties have no Despite these challenges, and with direction from the Legislature, HHSC has implemented network adequacy standards more rigorous than many other states and those required by Medicare. HHSC continues to enhance its oversight of access to care and uses a variety of tools to monitor MCO provider networks, including time and distance standards, appointment wait time, pay-for-quality measures, and member satisfaction surveys. When de?ciencies are discovered, the agency addresses them through its established graduated remedies process. MCOs are required to update provider directories on their websites weekly. HHSC periodically calls a sample of providers from MCO directories to validate directory information. To improve MCO provider directories, we are initiating a project with the external quality review organization (EQRO) to examine provider directory issues and will also develop a plan to analyze claims data for providers that are not delivering servicesmanaged care model, where the agency is not directly approving service authorizations or claims, MCOs are responsible for providing all services and bene?ts in an amount (number of services available), duration (length of time the client may access services), and scope (the nature of the service, such as provider type, bene?t location, and procedures) that is available in fee-for-service (FFS) Medicaid, as medically necessary. HHSC reviews policies to ensure it meets these standards and conducts reviews related to medical necessity both on ongoing basis and individual member complaints. The Honorable Jane Nelson June 19, 2018 Page 4 HHSC is committed to improving the collection and analysis of prior authorization and appeals data to ensure Medicaid recipients are receiving appropriate services. We sincerely appreciate the Legislature's quick action in response to our request to transfer 90 positions to strengthen Medicaid operations. More than half of these positions will be dedicated to expanding our managed care clinical oversight, as well as the formation of an escalation team to analyze and trend complaint data. We believe the transfer of these positions are a timely force multiplier in our oversight improvements. We are actively exploring all possible resources to support these efforts. At the agency?s request, the Of?ce of the Inspector General has initiated an audit with an initial focus on children in the Medically Dependent Children's Program (MDCP). In 2019, HHSC will implement an MCO portal, which will allow HHSC to extract data more quickly for complaints analysis and other MCO deliverables. This more ?exible approach to data collection supports the data visualization and analysis dashboard allowing for strategic oversight of health plans servicing clients. We will closely monitor the results of these efforts already in development to determine if additional resources or statutory changes are necessary. We also expect recommendations from the independent evaluation currently underway as required by the 2018-19 General Appropriations Act, 5.3. 1, 85th Legislature, Regular Session, 2017 (Article II, HHSC, Rider 61) will inform additional policy changes. Thank you again for your continued leadership and oversight of the health and human services system. Through your work as Chair of both Health and Human Services and Senate Finance committees, your vision has helped shape service delivery for millions of Texans. You continue to advocate for improvements to that system, pushing our teams for better outcomes and higher standards. We stand committed to continuing that work and look forward to a more in-depth conversation regarding the path to that goal. The Honorable Jane Nelson June 19, 2018 Page 5 Should you have questions or need additional information, please contact Amanda Martin, Director of Government and Stakeholder Relations, at (512) 487-3300 or by email at Sincerely, 4,22. Cecile Erwin Young Acting Executive Commissioner PD. EON 12955 CAPITOL BUILDING AUSTIN. TEXAS 787 5 12-553 '0 I 12 512-163-0923 DSTRICT OFFICE I '1 I 12355 won-smearsme Ti]? Senni t? of line 510.1? of foxes omeevme. TEXAS recs: 817424?3445 - amaze-sass an ZN 1313 on gov 8.141 .- .triu 1 1 {33 June 7, 2013 Interim Commissioner Cecile Young Texas Health and Human Services Commission Brown-Heady Building 4900 N. Lamar Blvd. Austin, TX 78751-2316 Dear Commissioner Young: FINANCE, CHAIR TRAHSITION LEGISLATWE OVERSIGHT COMMITTEE. CO-CHAIFI LEGISJTWE AUDIT COMMITTEE BUDGET BOARD STATE AFFAIRS PARTNERSHIP ADVISORY COMMITTEE JOINT COMMITTEE TO STUDY TFIS HEALTH BENEFIT FLANS I am writing to request that the Health and Human Services Commission (HHSC) review concerns about Medicaid managed care that were raised in The Deltas Morning News series, "Pain Profit." If accurate, the report raises issues that warrant immediate attention, but I recognize that key data points were omitted, especially regarding the extraordinary steps taken to accommodate children and families during the STAR Kids transition. To clarify, the Legislature overwhelmingly approved Senate Bill 7 (83R, NelsonfRaymond), which laid out a long-term strategy to improve the quality and ef?ciency of care for Texans with disabilities and to allow thousands of Texans waiting for services to access the care they need. SB 7 was developed in close coordination with advocates for the disability community and was supported by ADAPT of Texas, Arc of Texas, and many other organizations dedicated to helping individuals with special needs. SB 7 directed HHSC to establish the STAR Kids managed care program to serve young Medicaid patients with disabilities, as well as individuals enrolled in the Medically Dependent Children's Program (MDCP). Approximately 5,700 children enrolled in MDCP receive the hill array of Medicaid services deemed medically necessary, along with wraparound services not available to traditional Medicaid clients. As we began the transition to managed care, I worked with your agency and the state's health plans to make several accommodations. The rollout of STAR Kids was delayed by 14 months as the state worked to strengthen a network of providers. Complicating matters was a provision in the Affordable Care Act mandating that Medicaid services only be provided by Medicaid enrolled providers. Because many MDCP providers were not enrolled in Medicaid, families were at risk of no longer being able to visit the provider of their choice. HHSC and STAR Kids health plans made a concerted effort to enroll providers in Medicaid to meet the Obamacare mandates and to make existing providers available to STAR Kids clients. STAR Kids clients were given a 12-month grace period allowing them to see the provider of their choice, and health plans can continue to enter into single case agreements with providers outside of their service areas -- particularly important for MDCP clients who see doctors around the state. Additionally, to ensure continuity of care during the transition to managed care, HHSC extended level of care assessments for six months and existing critical service authorizations for 90 days post implementation. A cursory review of he Dallas Morning News series raises alarming issues about oversight and accountability of Texas Medicaid managed care organizations (MCOs). I am particularly concerned by reports of potentially inaccurate and inadequate provider networks for and other specialty services, eSpecially given the Legislature's emphasis on graduate medical education and other efforts to grow our health care workforce. In addition, I question why MCOs are not being fully sanctioned if they have, in fact, violated the terms of their contracts. When MCOs fail to live up to their obligations, they should be penalized period, the end. As we consider legislative remedies to these issues, it would be helpful if you would provide to my of?ce: . A point-by-point response to the claims made in the article; - Your plan moving forward for holding MCOs accountable for contract violations, including determination of liquidated damaged and other penalties; - An immediate plan to review provider network directories, ensure their accuracy and, more importantly, your plan to ensure that Medicaid patients have access to and specialty care providers; . An overview of system to track service denials and intervene when appropriate on behalf of patients; and . Any recommendations you would make, whether from a budget or policy standpoint, to ensure that we live up to our responsibility to vulnerable Texans who rely on Medicaid services. I authored SB 7 because we had a broken fee-for-service system that was failing to properly coordinate care and operating so inef?ciently that costs were spiraling out of control. Managed care is by no means perfect, but with proper oversight, managed care improves quality of care, better coordinates services, eliminates inef?ciencies and contains the growth of our health care costs -- which everyone needs to understand are on an unsustainable trajectory nationwide. In closing, I understand that HHSC has an extremely dif?cult mission. I stand ready to help you ful?ll it. Together we will meet our responsibilities to seniors, children and other fragile Texans who rely on these important services. I look forward to your prompt response. Very truly yours, Senator Jane Nelson Chair, Senate Finance Committee