It's Complicated
Thu February 10, 2011 5:12 pm

Gov. Rick Perry may talk about the Texas budget picture with an Aggie yell leader’s positive gusto (all smiles and rah-rah, though we’re down 28 in the fourth quarter), but his appointee to the top position at the Health and Human Services Commission did not dispel the discouraging tone of recent budget talks during his appearance before House Appropriations this morning. In fact, Commissioner Tom Suehs gave House budget writers a whole new set of things to be concerned about, like lower bond ratings for hospital bonds by Standard and Poor.

Suehs even cautioned the panel that extending Medicaid managed care – once considered low-hanging fruit for cost-savings – could have the unintended consequence of jeopardizing federal dollars now drawn by Texas hospitals statewide. That’s because they receive what’s known as Upper Payment Limit dollars based on fee-for-service, and switching to managed care (which involves a set fee per patient, not service) would upset those calculations. In fact, while state officials had estimated that extending managed care could save the state $400 million in revenues, the Texas Hospital Association is warning that the shift would cost its members $2 billion in lost federal dollars over the biennium.  ”You can’t expand managed care and jeopardize UPL,” Suehs advised the budget panel. He said his staff is searching for a solution under federal rules so that the state’s hospitals aren’t penalized by the legislature’s cost-cutting efforts.

As the headline notes, it’s complicated. But Suehs put it in terms even reporters and freshman members could understand: “We’re not debating whether someone gets healthcare; your debate is how you finance it.”

What he left unsaid is that local hospitals will end up bearing the cost – which either will be passed on to privately insured patients or prompt local property tax hikes. That prompted Vice-chair Sylvester Turner to ask Suehs to prepare information about how various budget scenarios would impact local communities. “I don’t want to make a decision where I’m saving a dollar here and the cost is heading to Harris County,” he said. Suehs said  his agency was reviewing the budget would impact on the 11 largest hospital districts in the state.

Already, for-profit hospitals have been rattled by Texas’ budget shortfall. The publication of the House budget in January triggered a one-day sell-off of hospital stocks among companies with a significant Texas presence.

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