Settling Up: Update
Thu April 12, 2007 10:49 am

The Frew settlement was a great piece of work. That it happened at all came as a surprise to many at the Capitol, since the conventional wisdom was that the state's clear failure to live up to its agreements to serve children on Medicaid, and the track record of Judge William Wayne Justice, gave the plaintiffs every reason to anticipate that litigation would be successful. However, boths sides knew that federal judges prefer to see cases settled, if possible, and that it would be prudent to go into court having made the effort.

Update: One thing that I have learned since I originally posted this item is that the attorney general's office made no attempt to settle the case. I find that incredible. They told senators, "The state is out of bullets. We've been to the Supreme Court twice and lost." One of the plaintiff's lawyers told her next door neighbor that the state had never even tried to settle. The neighbor was Leticia van de Putte, who informed her colleagues. The impetus for settlement came from the Senate.

The negotiations took place over two kinds of issues. One was "corrective action," in which the state had to develop a plan to make sure that eligible children received the medical and dental services they are entitled to. For example, the state must provide toll free numbers that offer "prompt service by a person who is knowledgeable, helpful, and polite. It must provide health care training about "early and periodic diagnosis and treatment" at medical and dental schools. I'm not going to go through the whole list. Basically, the state is responsible for seeing that all eligible kids get their medical and dental checkups--and that includes outreach and transportation--and for tracking the number and percent who get them, including the separate category of children of migrant farmworkers. All corrective issues were negotiated by the attorney general's office, and the total cost was $45 million.

The big sticking point was the reimbursement rate paid to providers (primarily doctors and dentists). This is a political decision, and the politicians (Ogden, Chisum, Guillen, John Davis, Leticia van de Putte, and others) did the negotiating. The Legislature has a horrible record in this area. The reimbursement rate for dentists was 10% of the American Dental Association's recommended rate. For doctors, the state paid Medicaid patients about a third of the Medicare rate of $98. The 2003 budget cuts reduced reimbursements to 1993 levels, and the consequence was that more and more doctors simply refused to treat Medicaid patients because the reimbursement rates were inadequate. The main reason that the state was out of compliance was the lack of doctors who would treat the patients.

The Senate had already signaled the state's good faith by including $250 million to raise provider rates in the appropriations bills for each chamber. Finance chairman Ogden played the bad cop, reminding the plaintiffs that he couldn't pass a budget if it spent so much money that Republicans voted against it. Eventually, the two sides agreed on raising the doctors' reimbursement rate by a total of 25% (the last step was a $10 increase, from $41 to $51 per visit), and the dentists' rate by a total of 50%. The plaintiffs made the point that reimbursement rates alone were not enough; the state had to do something about serving kids who live in areas where no providers available. Chisum and Guillen came up with the idea of mobile clinics, and that sealed the deal. The total cost to the state for the next biennium is $706,700,000, which will yield more than $1 billion in federal matching funds--almost to the dollar what Chisum had estimated the state would have to pay to get a settlement.

In a previous posting about the Frew case, my headline was "We're Frew with Frew!" That was too cavalier. We're not through. We just don't have to go to court. The consent decree remains in effect. The state is obligated to live up to the promises it made, not only in the consent decree but also in the settlement. Judge Justice still presides over the case. The Legislature is going to have to continue increasing provider rates, and the studies it is obligated to undertake are going to have to show that a high percentage of kids are actually getting the services available. Only then can the state contemplate going back to court and show that it is in sufficient compliance with the consent decree to have it dissolved.

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