1. Presented by: Ted Shaw THA president/CEO 2015 – A Conservative Year September 23, 2014 Texas Association for Healthcare Financial Administrators Fort Worth, TX Texas Hospital Priorities

2. THA Priorities 1. Texas Way Program: Coverage for Low- Wage Working Texans 2. Renewal of Medicaid 1115 Transformation Waiver and Increase in UC Funds 3. State Funding for Hospital Supplemental Payments 4. Challenging the State to Increase Medicaid Reimbursement for Out-of-Network ER Services. 2

3. The Texas Way Program A private insurance program to get low-wage working Texans covered and healthy. 3 The Texas Way is NOT Medicaid expansion The Texas Way is NOT access to an open-ended entitlement The Texas Way is NOT a government handout

4. The Texas Way Program: Why It Is Needed  >1 million low-wage working Texans with no access to public or private insurance  $5.5 billion annually in hospital uncompensated care  Inefficient health care spending: –Use of ER as primary source of care –Uncompensated care costs shifted to privately insured and local property taxpayers 4

5. The Texas Way Program: What It Is  Responsible use of available federal funds  Private market insurance for > 1 million low- wage working Texans  Way to engage consumers in health care decisions  Equity for hospitals and other health care providers to offset reimbursement rate cuts under ACA  Opportunity for Texas to be at forefront of health care innovation 5

6. The Texas Way Program: Healthy Workforce  Texas leads nation in job growth; has one of nation’s lowest unemployment rates  BUT 25% of state’s population is still uninsured  Small businesses less likely to offer insurance as employee benefit  Texas Way Program will connect 1.1 million low-wage working Texans with private insurance  Result: Healthier, more productive workforce; less absenteeism; less turnover 6

7. The Texas Way Program: Consumer Engagement  Required use of health savings accounts  Required point-of-service cost sharing  Incentives to work  Penalties for use of ER for non- emergent reasons  Incentives for meeting health benchmarks 7

8. The Texas Way Program: Impact Less uncompensated care Healthier workforce and state economy Financial relief for privately insured and local property taxpayers More effective health care system 8

9. The Texas Way Program: Next Steps  Build a coalition of stakeholders  Identify business leaders willing to be the public face and voice of the Texas Way Program  Generate grassroots support  Target media markets 9

10. Hospitals Designing Local Solutions Medicaid 1115 Transformation Waiver  Provides $3.1 billion in transformational dollars and additional $3.1 billion in UC funds in FY 2016  Positions Texas at forefront of health care innovation  THA supports: –Waiver renewal –Streamlining the process for development, review and implementation of DSRIP projects –Increase in UC funds 10

11. Hospital Supplemental Payments  State’s rate of uninsured remains at 25%; exceeds 30% in some communities >$5.5 billion annually in hospital uncompensated care  Medicaid shortfall: exceeding $3 billion in FY 2016 and growing –Reimbursement well below cost  <50% for inpatient services for most hospitals  72% for outpatient services 11

12. Hospital Supplemental Payments  THA supports continued state appropriations to fund Medicaid hospital payments, including: –No reductions in base reimbursement rates; and –Full state funding of the Medicaid DSH program ($555 million in FY 2016) in the base budget.  THA also supports negotiating an increase in the level of uncompensated care funds provided through the Medicaid Transformation waiver 12

13. Medicaid Reimbursement for Out-of- Network ER Services  Under state law, Medicaid MCOs reimburse hospitals the Medicaid FFS rate, minus five percent, for out-of-network ER services  No incentive for MCOs to contract with hospitals  Hospitals can’t turn away ER patients 13

14. Medicaid Reimbursement for Out-of- Network ER Services  THA will file a petition for rulemaking with THHSC to increase out-of-network ER services to 100 percent of the FFS rate.  If petition is denied, THA will seek a change in statute during 2015 legislative session.  If statute change is not successful, THA supports a legal challenge to the 95% payment. 14

15. Feedback Questions and comments, please 15