The budget session

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The budget session

By Kate Alfano

Having passed the halfway point in the 82nd Texas Legislature, the dominant issue of this session has been and continues to be the budget. Lawmakers came into the session aware of a multi-billion-dollar shortfall for the 2012-2013 biennium, as well as a significant deficit in the current 2010-2011 biennium.

A revised revenue estimate from Texas Comptroller Susan Combs decreased the 2010-2011 deficit to $4 billion. After much wrangling, top state leaders and House budget writers agreed to use $3.1 billion of the Economic Stabilization Fund—also known as the Rainy Day Fund—to address this deficit. Agency cuts will make up the rest.

Using this portion of the Rainy Day Fund frees the same amount to be used in the 2012-2013 budget, which helps but does not come close to solving the looming shortfall—now estimated to be around $23 billion. Though a little more than $6 billion remains in the Rainy Day Fund, Gov. Rick Perry has said repeatedly that he will not sign a 2012-2013 state budget that uses any of the remaining balance.

The original versions of the House and Senate budgets released at the beginning of the session spared no area of government, especially health care and education. Both versions cut Medicaid provider rates and funding for graduate medical education. The House base budget eliminated many of the programs TAFP has advocated for years to increase Texans’ access to primary care: the Family Medicine Residency Program funding from the Texas Higher Education Coordinating Board, the Statewide Family Medicine Preceptorship Program, and the Physician Education Loan Repayment Program. The Senate didn’t eliminate these programs, but made large cuts.

After weeks of hearings, the House Appropriations Subcommittee on Article II made the restoration of most of the proposed cuts to Medicaid payments for primary care services its top priority. The subcommittee agreed that if funds become available during later stages of the budgeting process, payment for primary care services for children in Medicaid and for CHIP should be cut by only 2-3 percent rather than 10 percent.

This idea originated from Health and Human Services Commissioner Tom Suehs, who told the committee at an earlier hearing, “I’m really concerned about having to cut primary care rates for physicians treating children. We’ve already cut 2 percent this biennium from when y’all wrote the [2010-2011] budget. I believe that’s about as far as I can tolerate to maintain the access to primary care so I’m asking to put back not all 10 percent, but 8 percent.”

The House budget as passed in early April made few changes to the original, including retaining the 10-percent cut to Medicaid provider rates and other drastic cuts. The general revenue budget would spend $77.6 billion—$4.48 billion less than the 2010-2011 budget, and the total budget would spend $164.5 billion—$23 billion less than 2010-2011.

Though the House budget stays true to the no-new-tax, deep-cut approach advocated by leaders, chief budget writer Sen. Steve Ogden, R-Bryan, has said that passing such a stark budget in the Senate is likely impossible. That means that the Senate version can be expected to be less lean and the conference committee—which will comprise legislators from the House and Senate—will have a tough job hammering out a final budget bill before sine die on May 30.

As those deliberations continue, here is a quick synopsis of a few other bills important to family physicians’ practices and their patients. As always, TAFP will provide an in-depth report after the session.

Payment reform

Senate bills 7 and 8, authored by Sen. Jane Nelson, R-Flower Mound, and supported by Lt. Gov. David Dewhurst, would implement a host of pilot projects in the private insurance market, Medicaid, and CHIP to test the success of various health care payment reforms, including bundled payments, payments based on episodes of care, and quality incentives.

S.B. 7 introduces alternative payment systems for Medicaid and CHIP, while S.B. 8 provides a safe harbor from antitrust laws for hospitals, insurers, and physicians to experiment with various payment models. It also provides for so-called “health care collaboratives,” designed to align payment incentives for physicians, hospitals, and health plans.

“We don’t have health care in America—we have sick care,” Dewhurst said at a press conference on Feb. 15. “Studies by Dartmouth Institute and others indicate that we can save money and improve medical outcomes by incentivizing doctors and hospitals to use best practices and focus on wellness and prevention, rather than the number of procedures they perform.”

“These bills move us toward a payment system that rewards quality outcomes rather than quantity of services, along with reducing our costs for unnecessary tests and preventable hospital readmissions,” Nelson said at the press conference. “We need to refocus our payment system on the true goal: healthy outcomes for Texans.”

S.B. 7 and 8, as well as others in House and at the agency level, propose to change the way the state finances health care. TAFP CEO Tom Banning says these solutions hold great potential.

At a March 8 hearing of the House Committee on County Affairs, Banning spoke on health care financing, saying that reforms like these will be instrumental in “moving us away from a truly fractured delivery system of care to more of a clinically integrated delivery system where you align payments for outcomes and for quality to ultimately reduce costs.”

Graduate medical education

As mentioned above, graduate medical education suffered greatly in the base budgets of both bodies of the Legislature. Formula funding was cut by 32 percent in the House version and by 28 percent by the Senate. Total GME spending under the House budget was cut 44 percent; in the Senate, 26 percent.

Mike Ragain, M.D., chair of the department of family medicine at Texas Tech University Health Sciences Center testified before the Senate Committee on Finance on Feb. 15, asking the panel not to cut funding to family medicine residency programs and other primary care residencies.

“One of the challenges is that almost every revenue stream that we see in medical education is going to get cut, and that cumulative effect is tough,” he said. “We are pretty tight. You could say we’re running on fumes as far as keeping things going.”

One controversial budget proposal reported in a March 10 article in the Texas Tribune would concentrate state funds for graduate medical education on the first three years of residency training regardless of how long the residency takes to complete. That means that it would fully fund three-year residencies like family medicine, but not specialty residencies that last four to seven years.

Though opposed by the Texas Medical Association and many academic health centers, the rationale is to provide an incentive to produce more primary care physicians whose services do not garner high payments. After the first three years of training, proponents argue, subspecialty residents “pay for themselves.” For more on this proposal, see the Texas Family Docs blog post, “Can the state shift the balance of power in GME?”

Scope of practice

House and Senate members have filed 72 bills on scope expansions for a variety of non-physicians including advanced practice nurses, chiropractors, and podiatrists, according to the Texas Medical Association. TAFP is tracking five bills in particular that would expand the scope of APNs.

House Bill 708 by Rep. Kelly Hancock, R-North Richland Hills, would grant nurse practitioners, nurse anesthetists, and clinical nurse specialists complete prescriptive authority and the ability to diagnose and treat patients without physician supervision, all under the regulation of the Texas Board of Nursing.

Similar bills include H.B. 1266 by Rep. Garnet Coleman, D-Houston, and Rep. Rob Orr, R-Burleson, and its companion bill, S.B. 1260 by Sen. Rodney Ellis, D-Houston; H.B. 915 by Rep. Wayne Christian, R-Center; and S.B. 1339 by Sen. Royce West, D-Dallas.

TAFP working for you

TAFP is taking a number of steps to educate lawmakers on each of these issues and provide members with the tools needed to advocate on behalf of the specialty. Visit the Advocacy Resources page of to find a series of issue briefs outlining scope of practice, graduate medical education, and licensure for international medical graduates—as well as a multi-page brief on scope of practice. The policy brief—“The Question of Independent Diagnosis and Prescriptive Authority for Advanced Practice Registered Nurses in Texas: Is the Reward Worth the Risk?”—is authored by Marie- Elizabeth Ramas, M.D., a third-year family medicine resident at the Conroe Family Medicine Residency Program, and uses current research to dispute some of the claims made by advanced practice nurses as they work to expand their scope of practice.

The Academy will continue working hard to keep Texas family physicians informed on what’s happening under the dome. Watch your e-mail inbox for each edition of QuickInfo. During the session, each leads with the TAFP Capitol Update news report. TAFP has also released the first two Capitol Report webcasts of the session with more planned as the action heats up. Stay tuned.