2013 Texas Legislative Session – Select Healthcare Issues 

May, 2013 -

The Budget. The 83rd Texas Legislative Session convened on January 8th with news of a better-than-anticipated revenue estimate, an unusually high number of new and second-term legislators, and less controversy and fanfare than observers have come to expect at the start of the biennial, 140-day process. In mid-March, only days before the bill became due, lawmakers passed and the Governor signed legislation to fill the $4.7 billion hole in the current budget’s Medicaid funding.1 As the Memorial Day conclusion of the session approaches, the tone has been more conciliatory than any session in recent memory; however, the workload only intensifies in the final month. The House and Senate have each passed a budget bill, moving the settlement of the differences to conference committee members to complete in time to obtain the necessary votes before the session closes.2 While legislative leaders approved a self-imposed budget cap for the 2014-2015 biennium that holds lawmakers to not more than a 10.71 percent increase over last session’s budget, in an effort to comply with the state constitution’s requirement that government not grow faster than the state’s economy, neither version of the budget restores all of the education funding that was slashed last session.3 Both the Senate and House versions come in at about $600 million below the cap, with the House version allocating more to education than the Senate, but without funding anticipated Medicaid caseload growth. Lawmakers could vote to exceed the cap or use funds from the “Rainy Day Fund” to increase funding for additional priorities, such as education, transportation and water. Both versions of the budget direct numerous Medicaid cost containment measures — many of which target hospital funding — but also increase funding for mental health services, primary and women’s healthcare, and fraud and abuse detection and prevention.

Healthcare Reform. During the 2011 session, any legislation with an appearance of relation to “Obamacare” was dead on arrival. Post-Supreme Court ruling, remnants of the anti-Washington sentiment remain, but with some acceptance of the provisions that are not optional. Even so, Republican lawmakers are hesitant to vote for anything that could be interpreted as support for the Affordable Care Act (ACA). While most agree that the state’s uninsured rate is unacceptable and acknowledge that uninsured individuals will need to obtain basic coverage by January 1, 2014, it doesn’t appear to be a primary goal of the majority to help make that happen. According to Governor Rick Perry, who holds the powerful veto pen, Texas won’t be sanctioning a state-run health insurance exchange. Perry has also promised that Texas won’t be expanding eligibility for Medicaid, which he characterizes as a badly broken system that cannot accommodate additional enrollees without significant reform. By reform, he means “Texas-style” coverage, as in no-strings-attached block granted funds. A measure intended to set conditions by which the state would consider accepting federal dollars intended for Medicaid expansion was narrowly approved by the House Appropriations Committee and faces a tough fight on the House floor.4 Hospitals and counties have scrambled to spread the word that the Medicaid expansion dollars were intended to replace the supplemental funds that hospitals sacrificed in the ACA negotiations, but their pleas seem to be falling on deaf ears.

Medicaid 1115 Waiver. Texas Medicaid underwent a major managed care-style overhaul last session, and the speedy implementation of significant program changes allowed under the federal waiver has heads spinning. Hospitals are clamoring to protect disproportionate share and uncompensated care funding, which have been renamed, revised, and re-organized to reward improved care coordination and innovation. New rules have created reimbursement uncertainty and put public and private hospitals at odds. Once again, legislation to repeal the Driver Responsibility Program, which funds state trauma care with fines assessed on driving violations, is making progress.5 A proposal to transfer these funds to be used as the non-federal share for the Medicaid DSH program leaves trauma funding uncertain.

Payment Reform. Senator Nelson is again leading the charge to expand Medicaid managed care, this time to seniors and individuals with intellectual and developmental disabilities receiving long-term care Medicaid services.6 Another measure authored by Senator Nelson would integrate behavioral health and physical health services in the program, with a focus on targeted case management and psychiatric rehabilitation services.7 The Texas Legislature and HHSC continues to promote Medicaid cost containment initiatives by focusing on improving the quality and efficiency of healthcare services through implementing pay for performance reimbursement systems. Numerous quality-related task forces and committees were created last session to hammer out ways to pay for quality instead of quantity in the program. As a result of some of these studies, various measures seek to test new payment models, such as legislation to establish a Medicaid managed care pilot program using provider-owned managed care organizations by Health Care Collaboratives.8 Efforts to ensure that managed care organizations aren’t incentivized to direct patients to higher paying services and programs are apparent in various bills and amendment attempts.9 A bill to establish a new process at HHSC would require the review, analysis, reporting, and implementation of clinical initiatives designed to reduce costs in the Medicaid program and to improve the quality of care.10 The budget conference committee will consider provisions contained in Rider 51, which depending on the version, could impose 25 different cost-containment measures aimed at reforming how providers are paid.11

Pursuit of Fraud and Abuse. Recent new rules from the HHSC OIG authorize the state to stop payment “upon receipt of reliable evidence that verifies a credible allegation of fraud.” More troubling for hospitals and other providers is the HHSC OIG’s ability to impose a payment hold for submission of claims for services or items that are not reimbursable by the Medicaid program. Numerous bills have been filed to beef up the OIG’s authority to pursue fraud and abuse, with the major vehicle for change filed by Senator Nelson.12 However, efforts to address due process for providers accused of fraud or abuse are also making progress.13 In an effort to protect welfare funds, bills to institute drug testing for TANF (Temporary Assistance for Needy Families) and unemployment compensation applicants have received priority designation.14 Provisions intended to keep state dollars out of the hands of rule-breakers and over-users are included in several bills targeting orthodontic services, nursing facilities, and medical transportation programs.

Managed Care.
Health Care Price Transparency. Several proposals have been filed this session that seek to give consumers more information about the cost of healthcare services. One bill would require disclosure by healthcare practitioners and facilities of the price of certain healthcare services15 , and another would require that certain health care providers give patients a good faith estimate of the expected payment for health care services and goods before the services or goods are provided.16 Another would require providers and facilities to post a price list for frequently performed procedures.17 A measure to require that health plans submit their rate information to the Texas Department of Insurance, which in turn would be charged with verifying that rates do not fall outside of a 25% range of the payments made for the same service to other providers was met with opposition from providers and health plans alike.18 With regard to pharmacy benefits, several efforts are underway to require transparency into the use of maximum allowable cost, or “MAC” lists under Medicaid managed care.19

Out-of-Network Providers. Numerous bills to address payment issues for out-of-network (OON) providers have been filed, including measures to: protect providers who inform patients about OON providers and insured patients who see OON providers from being removed from their HMO20 ; require health plans to disclose to enrollees the usual charge for OON services, the methodology by which OON payments are calculated, and the anticipated out-of-pocket costs21 ; and require health plans to pay usual and customary charges for an OON ambulatory surgery center.22

Silent PPOs. Physicians are again pushing for regulation of “silent PPOs,” or “rental networks” that use a physician’s contract rates without authorization.23

HB 300 Revisions. Questions about the implementation of medical privacy legislation from 2011 have prompted lawmakers to clarify statutes related to covered entity employee training and breach notification requirements. One bill that would amend the provisions passed in HB 300 last session would give covered entities flexibility to determine the format of patient privacy training for their employees, removing language that was interpreted to require a prescribed program; allow 90 days to complete the training; require retraining only if a material change in the law occurs; and require retention of training logs for only six years rather than indefinitely.24 A second bill would amend the HB 300 provisions regarding breach of sensitive personal information to require notification of all affected individuals, regardless of the state in which they reside. This change removes statutory language that when enacted resulted in requiring the entity charged with notification with researching the laws of the state in which the individual resides to determine their state’s requirements with regard to notification. Finally, the bill allows for the notification to be sent to the last known address of individuals affected.25

Mental Health Privacy. Historically, mental health records have been afforded heightened protections against disclosure. However, various events, including tragedies that have garnered national attention, have prompted some to seek certain exceptions. One measure under consideration would authorize a provider to share certain information if the provider believes it would assist with the coordination or provision of care to the individual; specifically, to disclose confidential mental health information to the patient's family members or friends, if the information concerns:

  • the patient's location;
  • the patient's anticipated stay at the location;
  • the visiting hours, if any, of the patient's location;
  • whether the patient needs clothing or other personal items;
  • the professional's opinion regarding the duration of the patient's stay in a facility, if applicable;
  • or the need for commitment of the patient.26

Another bill would remove the requirement for a person to be designated by a court as a personal representative in order to access mental health records for the deceased, and instead allow an executor or administrator of the deceased’s estate, spouse, or relative of first degree of consanguinity to obtain access.27

Identity Theft Protections. A pair of bills address the confidentiality of birth and death records in an effort to combat identity theft and fraud. Under one bill, birth records would be confidential for 125 years rather than 75 years from the date of birth, and death records held confidential for 50 years rather than 25 years from the date of death.28 A related effort would require state and county registrars to notate the date of a person’s death, not merely note that the person is deceased, on the birth certificate for persons born in Texas, and removes a provision that limits the requirement to death certificates of persons younger than 55 years old.29

Hospital Operations.
Advance Directives. A bill that would extend the provision of life-sustaining treatment beyond the current 10 days allowed to transfer a patient to another provider willing to comply with a directive or treatment decision has been filed again this session. The bill as filed extended the timeframe to 14 days, and as the bill has moved through the Senate, the timeframe has expanded to 21 days. The bill would improve notification and appeal processes for families or surrogates when a Do-Not-Attempt-Resuscitation Order is used; provides family members or surrogates with more notice of an ethics committee meeting, as well as access to attend the meetings; and establishes annual reporting requirements for hospitals that hold one or more ethics committee meetings during the year. The legislation also includes exemptions for assisted living facilities and nursing homes; contains provisions to prevent individuals with conflicts of interest from serving on ethics committees; and, per the intent of a separate bill30 considered by the Senate Health & Human Services Committee, directs ethics committees to treat all patients equally without regard to disability, age, gender, race, and other factors.31 A bill that would move from the Civil Practices and Remedies Code to the Health and Safety Code the statutory process by which advance directives may be established for persons with mental illness is intended to help raise awareness about the provisions.32

Abortion provider hospital privileges. A controversial measure was approved by the Republican members of the Senate Health and Human Services Committee while the three Democratic members of the committee were not present for the vote. The bill would require physicians who perform or induce an abortion to maintain admitting privileges at a nearby hospital, as well as provide the pregnant woman with certain information.33 A similar law in Mississippi was temporarily blocked by a federal court after compliance with the requirement threatened to close the sole remaining abortion clinic in the state.34

NICU Level of Care Designations. Legislation in 2011 established the Neonatal Intensive Care Unit (NICU) Council to look into NICU standards and Medicaid payments for services provided by these units. The chair of the House Public Health Committee, Lois Kolkhorst, has made improvement of maternal and neonatal care a priority this session, and filed legislation intended to enhance outcomes and achieve cost savings with the use of levels of care designations for NICUs. The designations would be determined by the executive commissioner of HHSC in consultation with DSHS, and attainment of the related minimum standards would be required in order to receive Medicaid reimbursement. The bill also establishes a 17-member Perinatal Advisory Council to advise the agency on the certification process.35

Other Facility Designations. Other legislation would establish a designation for ST-elevation myocardial infarction (STEMI) facilities that are accredited by a nationally recognized organization. Facilities would also need to apply to DSHS to obtain the designation. The legislation does not tie the designation to reimbursement for services, but is intended to identify hospitals to which patients who experience STEMI heart attacks may be transferred to receive percutaneous coronary intervention (PCI) or thrombolytic therapy.36

Newborn Screening. Several measures have been filed to address screening requirements for newborns. One measure requires newborns to be screened for critical congenital heart disease (CCHD), which was added to the 2011 Recommended Uniform Screening Panel for newborns by the U.S. Department of Health and Human Services. The bill would also replace the 2005 report that the state currently references for newborn screenings with the American College of Medical Genetics report for 2011. Finally, the bill revises the membership of the state Newborn Screening Advisory Committee by increasing membership of specialized physicians, hospital representatives, and affected family members.37 Another measure would replace the current transfer agreement requirement with a simpler referral process for newborn hearing screening.38

Telemedicine in Rural Trauma Facilities. In an effort to improve access to trauma care services, legislation to allow for the use of telemedicine in certain rural trauma facilities is making progress. Specifically, the bill would permit a level IV trauma facility in a county of less than 50,000 to use telemedicine provided by an on-call physician who has special competence in the care of critically injured patients, so long as a physician, advanced practice nurse, or physician assistant is located at the facility with the patient.39

Infection Reporting. A bill related to Healthcare-Associated Infections reporting would require reports to include whether the infection resulted in the death of the patient. This information would also be a required element of summary information made available to the public.40

Identification Requirements for Hospital Personnel. Legislation intended to help hospital patients understand the level of training of the person providing care would require physicians providing direct patient care in a hospital to wear a photo identification badge during all patient encounters. The badge must be of sufficient size, worn visibly, and clearly indicate the provider’s name, department, title, and whether the provider is a student, intern, trainee, or resident.41

The Texas Legislative Compliance Group Task Force continues to monitor and provide regular updates on these and other topics of interest to healthcare providers during the 83rd Legislative Session, which concludes on May 27, 2013. Upon conclusion of the legislative session, the Task Force will begin developing compliance aids for TLCG members. For more information about becoming a member of the Texas Legislative Compliance Group, please review our enrollment form.




1 HB 10 by Pitts
2 The SB 1 conferees are Senators Williams, Hinojosa, Duncan, Nelson, and Whitmire, and Representatives Pitts, Turner, Otto, Crownover, and Zerwas
3 SB 1 by Williams
4 HB 3791 by Zerwas
5 HB 104 By L. Gonzales
6 SB 7 by Nelson
7 SB 58 by Nelson
8 HB 3158 by Zerwas
9 SB 348 by Schwertner and HB 1159 by Kolkhorst
10 SB 1542 by Van de Putte and HB 1389 by Zerwas
11 SB 1, Article II, HHSC Rider 51
12 SB 8 by Nelson
13 SB 1803 by Huffman; SB 1435 by Hinojosa
14 SB 11 by Nelson; SB 21 by Williams
15 HB 2838 by Smithee
16 HB 2700 by G. Bonnen
17 HB 3020 by J. Sheffield
18 HB 2359 by G. Bonnen
19 SB 1106 by Schwertner, HB 1137 by J. Davis, and HB 3262 by D. Miller
20 HB 2657 by Zerwas and SB 1347 by Lucio
21 SB 800 by Van de Putte and HB 1406 by Smithee
22 HB 3269 by Smithee and SB 1544 by Van de Putte
23 HB 620 by Eiland and SB 822 by Schwertner
24 SB 1609 by Schwertner
25 SB 1610 by Schwertner
26 HB 868 by Villareal
27 HB 1561 by Klick
28 HB 3252 by Zerwas
29 HB 3253 by Zerwas
30 SB 675 by Hancock
31 SB 303 by Deuell
32 SB 1752 by Uresti
33 SB 1198 by Taylor and HB 2816 by Burkett
34 “Judge Prevents Closing of Mississippi’s Sole Abortion Clinic,” The New York Times, April 15, 2013.
35 HB 15 by Kolkhorst
36 SB 1177 by Deuell and HB 2128 by Zerwas
37 HB 740 by Crownover
38 SB 793 by Deuell and HB 1471 by Laubenberg
39 SB 830 by Schwertner
40 HB 3285 by Y. Davis
41 SB 945 by Nelson and HB 1782 by S. Davis

For more information about the information in this Bulletin, please contact Michelle Apodaca at [email protected] or any member of the Texas Legislative Compliance Group Task Force team.


The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.




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