Request for Information Interim Charge 5 - Nursing Facilities Medicaid Reimbursements

Table of Contents

1. Texas Health and Human Services Commission

2. AARP Texas

3. Leading Age Texas

4. Teaching Hospitals of Texas

5. Texas Association of Health Plans

6. Texas Health Care Association

7. Texas Silver Haired Legislature

House Human Services Committee – Interim Charge 5

Interim Charge 5: Examine the adequacy of Medicaid reimbursements for nursing facilities, including existing incentive-based payment models and the Quality Incentive Payment Program. Consider and make recommendations to incentivize innovative models of care delivery in nursing home facilities. Study the impact of the STAR+PLUS managed care program on nursing facility care, operations and patient health outcomes, and consider recommendations to improve administrative processes between facilities and managed care organizations.

Overview The Texas Medicaid Nursing Facility (NF) program provides institutional care to people whose medical condition regularly requires the skills of licensed nurses. NF services are available to people who receive Medicaid services or who wish to personally pay for their care. The NF must provide for the needs of each person, including room and board, social services, over-the-counter medications, medical supplies and equipment, and personal needs items. NFs must meet all licensure requirements before providing services. The 74th Texas Legislature (1995) implemented the State of Texas Access Reform Plus (STAR+PLUS) program, a Texas Medicaid managed care program for people who have disabilities or are age 65 or older. A person in STAR+PLUS chooses a managed care organization (MCO) to provide service coordination for their medical and long-term services and supports. The MCO STAR+PLUS staff work with the person, their family and doctor, and other providers to help the person get the services and supports they need. In March 2015, the NF program was added to the array of long-term services and supports in the STAR+PLUS program.

Nursing Facility Payments NFs are paid a daily rate per person per day. The total NF payments consist of a daily base rate, supplemental payments, separate payments for certain services, and optional add-on payments.

1 Texas Health and Human Services ● hhs.texas.gov

Nursing Facility Base Rates When a person is admitted to a NF, he or she is assessed to determine the amount of care they need using the Minimum Data Set (MDS). The MDS is a federally mandated process for clinical assessment of each person’s functional capabilities and health needs. Assessments are conducted on all people at admission to and discharge from a NF, and other time intervals when warranted (e.g., quarterly, annually, and when a person experiences a significant change in status). The MDS assessment is used to assign the person a Resource Utilization Group (RUG-III) score.

The Health and Human Services Commission (HHSC) collects cost data in periodic reports (either a cost report or accountability report) from NFs. This provides HHSC with financial and statistical information to evaluate rates. HHSC collects each NF’s cost data in cost reports. Beginning in 2018, HHSC began collecting cost reports on a biennial basis; the NF cost reports are collected in even years.

HHSC determines individual NF base rates for each RUG-III score as they reflect the level of effort a NF must expend to provide care to a person. Please see Appendix A for the current NF base rates by RUG-III score.

Supplemental Payments for Persons Who Use a Ventilator or have a Pediatric Tracheostomy When a NF provides services to a person who uses a ventilator or a child who has a tracheostomy, HHSC pays a supplemental amount to the NF for the significantly increased costs associated with the specialized staff necessary to provide care to this population. The supplemental payment for a person who uses a ventilator continuously (24-hours per day) is higher than that for a person who does not use a ventilator continuously (less than 24-hours per day). Supplemental payments for tracheostomies are only made for children. The supplemental payments are presented in Table 1.

Table 1. Supplemental Payments for Ventilators and Pediatric Tracheostomies

Type of Service Supplemental Payment

Continuous (24-hour) Ventilator $128.62

Less than 24-hour Ventilator $51.45

Pediatric Tracheostomy $77.17

2 Texas Health and Human Services ● hhs.texas.gov

Customized Equipment NFs may receive separate payments when they provide services to a person who requires a customized power wheelchair or other custom equipment. The separate payments include the cost of the equipment and the required assessment or evaluation by a licensed therapist.

Quality Incentive Payment Program The Centers for Medicare and Medicaid Services (CMS) allows states to draw down additional federal funding for NF provider payment initiatives. The Quality Incentive Payment Program (QIPP) is an optional program that incentivizes NFs to improve quality and innovation in the provision of services.

Participating NFs are given individualized goals and provided incentive payments when they meet performance requirements on specified quality metrics or program specific targets. The metrics and targets are designed to require facilities to make incremental improvements to qualify for payments, which incentivize facilities to focus on the quality components, thereby improving quality across several areas of care. Improvement is based upon several indices of success, including quality metrics that are collected by CMS. In its Annual Report on Quality Measures and Value-Based Payments1 HHSC describes QIPP and initial observations from years one (SFY 2018) and two (SFY 2018).

Most Medicaid recipients who reside in a nursing facility are enrolled in an MCO, primarily in the STAR+PLUS program. In SFY 2018, HHSC added contract requirements that require MCOs to enter into quality-based alternative payment models (APM) with providers. A minimum percentage of their total provider payments must be associated with an APM linked to quality. Most APMs reported to date are agreements between MCOs and primary care physicians, but all provider payments are considered. MCOs have also entered into APM agreements with nursing facilities. As the minimum APM percentages in the contract increase over time, HHSC will continue to monitor MCO APMs and encourage additional agreements with nursing facilities.

Types of APMs vary, but most are incentive payments to providers for achieving agreed-upon performance results on quality measures. In calendar year 2018, MCOs reported paying nursing facilities over $4.2 million in incentive payments

1 HHSC. Annual Report on Quality Measures and Value Based Payments, December 2019. Page 23. https://hhs.texas.gov/sites/default/files/documents/laws-regulations/reports-presentations/2019/hb-1629-quality- measures-value-based-payments-dec-2019.pdf

3 Texas Health and Human Services ● hhs.texas.gov

above the providers’ reimbursement for services. MCOs pay these incentives from the premiums they receive from HHSC (no additional HHSC funds) with the expectation that incentivizing providers will result in healthier and more satisfied members and reduce the rate of growth of healthcare costs.

Participating in QIPP A NF may participate in QIPP if it is either a privately licensed facility with a percentage of Medicaid days of service greater than or equal to 65 percent or owned by a non-state government-owned (NSGO) entity. A breakdown of providers is included in Table 2.

Table 2. State Fiscal Year (SFY) QIPP Participation by Provider Type Percent of Number Number of Number Eligible Provider Total of QIPP- Ineligible Participating Providers Type Providers eligible Providers in QIPP Participating providers in QIPP

NSGOs 548 548 0 548 100%

Private 577 325 256 321 98.8% Providers

Total 1,129 873 256 869 99.5%

To receive the anticipated federal match, CMS requires Texas to fund the non- federal share in advance. The non-federal share of all QIPP payments is funded through an intergovernmental transfer of funds (IGT) from sponsoring NSGO entities. An NSGO provider may transfer to HHSC any non-federal funds within the control of the provider, including appropriated state general revenue funds, as the non-federal share of program expenditures associated with that provider. No state general revenue appropriated to HHSC is available to support QIPP.

CMS has approved Texas for $1.1 billion in funding for the QIPP program for SFY 2021. The NSGOs have declared they will provide approximately $415,250,000 in IGT for SFY2021. The remaining amount of $684,750,000 is the anticipated federal funds. The QIPP payments are based on the number of quality metrics a participating provider meets; a NF provider who has not met all the required quality metrics may receive less than the average payment. The number of quality metrics a NF must meet is different for NSGOs and private providers; this also impacts the QIPP payment. The SFY average QIPP payments are in Table 3.

4 Texas Health and Human Services ● hhs.texas.gov

Table 3. SFY 2021 Average QIPP Payment per Day

Provider Type Average QIPP Payment

NSGO $88.24*

Private Providers $25.24

*The NSGO average payment per day includes $41.35, which represents the NSGO’s share of the IGT returned to the provider for meeting a specific quality metric

In the Fall of 2020, HHSC will convene a stakeholder workgroup to make recommendations for SFY 2022, including more stringent quality measures.

Direct Care Enhancement The NF Direct Care Staff Enhancement (enhancement) is an optional program that provides additional funds for increased staffing of registered nurses (RNs), licensed vocational nurses (LVNs) and certified aides in NFs. NFs that choose to participate in the NF enhancement program can receive a $0.40 per day add-on per enhancement level to the direct care portion of the base rate. There are 27 levels in the NF enhancement program for a maximum add-on of $10.80 per day. A NF chooses the level at which to participate based on their individual business model.

NFs that participate in the NF enhancement program must submit accountability reports in odd years when they are not required to submit full cost reports. HHSC uses accountability reports to collect a NF’s cost data for direct care staff to determine compliance with NF enhancement program staffing requirements. A NF that fails to meet the increased staff requirements is subject to recoupment of some or all of the add-on payments.

In SFY 2020, 80.9 percent of NFs participated in the NF enhancement program. The average NF enhancement program add-on is $4.44 per day.

Liability Insurance Section 3, House Bill (HB) 154, 77th Legislature, Regular Session, 2001, requires HHSC to ensure that the rate determination rules for NFs "provide for the rate component derived from reported liability insurance costs to be paid only to those homes that purchase liability insurance acceptable to the commission." To comply with HB 154, the portion of the general and administrative payment rate component derived from reported liability insurance costs is excluded from NF base rates.

5 Texas Health and Human Services ● hhs.texas.gov

The funds withheld from the base rates for liability insurance are paid as an add-on payment to NFs who choose to purchase liability insurance and provide evidence of coverage to HHSC. A NF may choose to purchase professional liability insurance, general liability insurance, or both. The add-on payments are presented in Table 4.

Table 4. Liability Insurance Add-ons Professional General Liability Total Liability Liability Insurance Insurance Add-on Insurance Add-on Add-on

$1.53 $0.14 $1.67

Currently, 69.8 percent of NFs choose to receive the liability insurance add-on, and all have purchased both professional and general liability insurance and therefore receive the total add-on payment of $1.67.

New Model for Nursing Facility Payments CMS is implementing a new payment model for Medicare skilled nursing facilities (SNFs). Due to changes resulting from this implementation, the MDS data HHSC uses to calculate the current NF payment rates will not be accessible through the current federal source after September 30, 2020. HHSC is using this opportunity to consider revisions to the NF payment rate methodology. In order to develop a payment rate methodology that addresses the concerns of NFs, persons who reside in NFs and their families, and the public, HHSC created the Nursing Facility Payment Methodology Advisory Committee (NF-PMAC).

The NF-PMAC will advise HHSC on establishing and implementing recommended improvements to the NF payment rate methodology and other NF payment topics. The NF-PMAC will also study and make recommendations on the development of an NF payment rate methodology that incentivizes quality care for people served in an NF, and is cost-effective, streamlined, and transparent. This will allow HHSC to benefit from stakeholder knowledge and expertise as HHSC considers possible changes to the NF payment rate methodology. HHSC anticipates receiving recommendations from the advisory committee in the fall of 2021.

Contact Name: Amanda Martin, Director, Government & Stakeholder Relations Organization: Texas Health and Human Services Commission Mailing Address: 4900 N Lamar Blvd., MC 4001, Austin, TX 78751 Email: [email protected] Telephone: (737) 203-7786

6 Texas Health and Human Services ● hhs.texas.gov

HHS Interim Charge 5 – Appendix A

Current Nursing Facility Daily Payment Base Rates

Effective September 1, 2014

RUG-III Total Base Rate RUG-III Total Base Rate per Level per Person per Day Level Person per Day RAD $193.36 IA2 $96.30

RAC $170.79 IA1 $91.32 RAB $160.40 BB2 $111.06

RAA $141.07 BB1 $100.51 SE3 $230.93 BA2 $94.50 SE2 $196.07 BA1 $85.51 SE1 $170.25 PE2 $119.61

SSC $166.27 PE1 $113.06 SSB $157.19 PD2 $114.65 SSA $156.83 PD1 $107.90 CC2 $135.82 PC2 $105.03 CC1 $128.65 PC1 $100.72 CB2 $124.59 PB2 $98.06

CB1 $118.96 PB1 $93.31 CA2 $112.94 PA2 $87.50 CA1 $106.16 PA1 $82.56

IB2 $113.11 BC1 $82.56 IB1 $105.45 PCE $82.56

September 25, 2020

House Human Services Committee via email to Courtney DeBower, assistant committee clerk, at [email protected]

Re: Interim Charge 5- Medicaid reimbursements for nursing facilities and other related issues Chairman Frank, On behalf of AARP Texas, I very much appreciate the opportunity to provide comments to the committee on this charge. Outlined below are recommendations regarding nursing home payment and quality. Also included are some lessons from early research on COVID-19 care in nursing homes that may inform changes needed to the current nursing home model. For many years AARP has been actively engaged in efforts to improve the quality of care in Texas nursing facilities. Nursing homes are an important option in the long term care continuum. AARP believes for older Texans who need a nursing home level of care, this care should be of the highest quality. Unfortunately, many Texas nursing homes struggle to provide quality care. This was true before COVID- 19 and it remains true more than 6 months into COVID-19. While there have been some improvements in quality measures, notably in the reduction of the inappropriate use of antipsychotic mediation, Texas nursing homes continue to face serious quality-of- care concerns. Although the Medicaid daily rate remains an important aspect of the conversation, it is essential that any discussion of Medicaid nursing home payment consider the full payment Medicaid- participating nursing homes receive. Background Undoubtedly, the Texas Medicaid base rate for nursing homes is low. However, it is important to understand that the Medicaid base rate is not what nursing homes in Star+Plus are being paid. In fact, nursing homes have the opportunity to earn additional payments above the base Medicaid rate from several different programs. For nursing homes that are able to earn the additional dollars, these add-on payments can substantially increase the Medicaid daily rate and erase any gap between the facility’s operating costs and Medicaid rate. For example, through the current SFY 2021 Quality Incentive Payment Program (QIPP) program, there is a total of $1.1 billion available for 869 nursing facilities to earn. Participating nursing facilities can net between $23 and $48 per patient day. In addition to QIPP, Star+Plus Managed Care Organizations (MCOs) are required to have alternative payment programs, and payouts to nursing homes through those programs have been substantial. The requirements to earn additional payments and the amount of the payment varies widely across MCOs. In spite of the significant influx of quality-based payments, Texas nursing homes still struggle to provide quality care. The Star+Plus quality measures in use do not support a comprehensive approach to person- centered care, or advance independent living and recovery principles, including LTSS measures. Nor

1 does the current program incentivize strong staffing which is key to improving quality. The QIPP program includes incentives to increase staffing but only a small portion of the total dollars are available to reward facilities for meeting enhanced staffing measures. There is a staff rate enhancement program but it is subject to appropriations and is administratively complex to administer. Quality of Care Staffing levels are often shown to be tied to quality of care. A study by the Centers for Medicare and Medicaid Services found that facilities with staffing below thresholds of 2.78 hours of aide time and 0.75 hours of RN time had a greater probability of having the worst outcome rates for long-stay patients, including pressure ulcers, skin trauma and weight loss.  Texas has among the lowest nursing facility total care staffing levels in the country. Only one state, Louisiana, has a lower average hours per resident day (HPRD) for registered nursing (RN) care staff than Texas. Texas’ average was 0.2 HPRD. The national average was 0.5.

 Texas requires nursing homes to employ one full-time director of nursing RN, one RN for 8 consecutive hours, 7 days per week and one RN/LPN charge nurse 24 hours, 7 days a week. There is also a minimum requirement of one licensed nursing staff member for every 20 residents or .4 HPRD.

 Texas has an average of 2.8 HPRD for average total care staff. Only one other state, Oklahoma, has a lower average HPRD for total care staff.

 Texas has no minimum staffing requirement for direct care staff. Direct care are typically certified nurse aides. These are the staff that are responsible for providing most of the hands-on care such as bathing, dressing, assistance with toileting and changing incontinence products.

In the 2020 AARP LTSS Score released on September 24, 2020, Texas ranks poorly in several nursing home quality measures.  Nursing Home residents with Pressure Sores: Texas’ rate of pressure sores is 7.6 percent while the best state’s rate is 4.8 percent. This places Texas 31st on nursing home residents with pressure sores. Pressure sores are caused by neglect. They typically develop when someone cannot reposition their body over a long period of time.

 Burdensome Transitions: Texas tanked 49th in burdensome transitions which are excessive hospitalizations or other transitions for vulnerable nursing home residents at the end of life. Roughly twice as many Texas nursing home residents experience burdensome transitions (34.0 percent) compared with the top performing state (16.2 percent).

 Nursing Home Hospital Admissions: Texas ranks 44th in hospital admissions from the nursing home with a rate of 19.6 percent. The national average is 16.8 percent and the best state’s rate is 4.7 percent. Although Texas has improved on this measure from the previous score card, Texas nursing home residents are more than 4 times as likely to be admitted or readmitted to the hospital as residents in the top state.

 Successful discharge to the community: Texas ranks 41st in successful discharge of nursing home residents to the community with a successful transition rate of 51.4 percent. This means that just over half of Medicare skilled nursing home residents were successfully discharged back to the community. Only Louisiana transitioned substantially fewer than 50 percent. The best state transitioned 68.5 percent.

Recommendations: Create a strong, cohesive quality management framework for Star+Plus Long Term Care While the state has taken many steps to further quality of care, the Star+Plus program has made changes incrementally, over time. Therefore it has not had the benefit of an overall comprehensive approach to long term care quality measures, including nursing home quality. The state must develop a strong, cohesive quality management framework for Star+Plus longterm care. Quality incentives must be built into the MCO contract as well as in payments to nursing homes.  Star+Plus long term care must have an effective quality management program that includes LTSS measures to support quality of life for members and advance community-based long term care. The current quality management approach is fragmented among various programs, including the QIPP, the Medical P4Q program and the Alternative Payment Model Initiative. The quality measures in use do not support a comprehensive approach to person-centered care, or advance independent living and recovery principles, including LTSS measures.

 Evaluate the QIPP program to establish metrics that would incent staffing quality. Staffing has been a challenge for Texas nursing homes and COVID-19 has only exacerbated this issue. More needs to be done to ensure nursing homes are appropriately staff to ensure proper resident care and safety. Given staffing challenges in nursing homes, the state could use QIPP dollars to incent better staffing in facilities. For example, the state may decide to establish incentives for those facilities paying a higher rate of pay to direct care workers or increase the hours per resident day of direct care and RN care. The current QIPP program includes incentives for nursing facilities to increase RN hours but the portion of funds allocated to this measure are too small to serve as a true incentive.

Ideally any changes to nursing facility quality-based payments would be addressed as part of a larger effort to realign the financial incentives within the Star+Plus program to both improve quality and encourage the provision of care in the most cost-effective and least restrictive setting. To this end, comprehensive recommendations regarding Star+Plus have been outlined in AARP’s response to Interim Charge 4.

Early Lessons from COVID-19 in Nursing Homes Even before COVID-19 hit nursing homes, the market was responding to consumer desires to age in place or in a setting that feels as much like home as possible. This is reflected in the overall decline in Texas nursing home occupancy and the rapid growth in assisted living and home-based care options. From 2014 to 2018, the number of assisted living facilities in Texas grew by more than 20 percent and the occupancy increased 15 percent. During this same period, the number of nursing home beds increased by 2.7 percent and occupancy declined by 2 percent. Texas nursing home occupancy averaged

65 percent pre-COVID-19 and it is likely lower now. Consumer demand will likely continue to force the industry to offer alternatives to traditional large-scale nursing facility care. The state can help to encourage and accelerate this shift through regulation and incentives as well as Medicaid policy.

COVID-19 has certainly highlighted some of the challenges with an outdated nursing facility model that focuses on housing groups of frail elders in large congregate settings, often with shared bedrooms. Infection control is not a new issue for nursing homes. Infection control has been the most frequently cited violation in Texas nursing homes for many years, at least since 2015. While the research into lessons learned from COVID-19 is ongoing, below are some initial study findings that point to some common themes related to the spread of COVID-19 in nursing homes.

Nursing Home Staff Employed in Multiple Facilities. A Cornell University study suggests that eliminating staff linkages between multiple nursing facilities could reduce COVID-19 infections in nursing homes by 44 percent. In addition, a small United Kingdom study published in the Journal of Infection found that nursing home staff who worked in more than one facility were three times more likely to have a positive COVID-19 diagnosis than staff working in a single facility.

Texas does not prohibit staff from working in multiple facilities. Some county and municipal governments have prohibited this practice during this public health emergency and the Governor’s plan for reopening Texas discourages the practice.

Multiple Resident Room Occupancy/Green House Model. A Canadian Study of 618 Ontario nursing facilities found that multiple-resident rooms were associated with higher incidence of COVID-19 infection and mortality, which suggests that reduced crowding in nursing homes could prevent future COVID-19 mortality. Supporting this assertion is a June study led by a researcher at the University of North Carolina that found that 95% of nursing homes following the Green House model of care – which are designed for single-occupancy rooms – reported zero cases of COVID-19 among residents or staff.

Texas nursing homes licensed before April 2018 are allowed to have up to 4 residents per room. Facilities licensed after this date are limited to 2 residents per room. Green House nursing homes are designed to be a house-like setting with a max of 12 residents with private bed and bathroom, shared living and dining, and an open kitchen. There are Green House homes in Longview and San Angelo. In addition, the Watkins-Logan Texas State Veterans Home in Tyler is based on a similar small house model.

Nurse Staffing A June American Geriatrics Society (AGS) study of infections and deaths in Connecticut nursing homes concluded that nursing facilities with higher RN staffing and quality ratings have the potential to better control the spread of the novel coronavirus and reduce deaths. A later AGS study of nursing homes nationwide found that higher nursing assistant and total nursing hours are associated with a lower probability of a larger outbreak and fewer deaths.

As outlined the quality of care section above, Texas has the second lowest average hours per resident day for Registered Nursing care. Only Louisiana was lower. Given Texas’ abysmally low staffing levels, the state should review nursing and direct care staffing requirements for nursing facilities, particularly in the context of any increase in Medicaid payment or development of quality-based payments.

While early findings point to important trends related to the spread of COVID-19, it is expected that additional research will help to identify additional factors that led to the severe impact on nursing facility residents and staff. AARP’s Public Policy Institute (PPI) is working to compile insights from a comprehensive synthesis of state reports that have examined nursing home care provided during COVID-19, with a specific focus on alternative recommendations and solutions to current nursing home infrastructure and policies. We will share that paper when it is available.

Thank you again for your consideration of our comments. AARP Texas stands ready to serve as a resource to the committee on behalf of older Texans. Please don’t hesitate to contact me with any questions.

Sincerely,

Amanda Fredriksen Associate State Director, Outreach and Advocacy AARP Texas

Alyse Meyer, Vice President of Advocacy

House Human Services Committee Formal Request for Information – Interim Charge 5 September 25, 2020

LeadingAge Texas represents the full continuum of mission-driven, not-for-profit aging services providers in Texas. We are committed to assisting our members in providing the highest quality of services possible to the Texans they serve. We appreciate the opportunity to provide recommendations to Chairman Frank and members of the committee on topics including; Health Care Access and Medicaid, Impacts of COVID-19 on Long Term Care Facilities, Interim Charge Four, and Interim Charge Five.

LeadingAge Texas is comprised of more than 350 members, including approximately 200 not- for-profit retirement communities, affordable senior housing, assisted living facilities, continuing care retirement communities, nursing homes, and home and community based services providers.

With regard to financing nursing home care and meeting Texans’ expectations on the quality of such care, Texas is at a crossroads. Texas’ 2020-21 Budget appropriates more than $635 million to nursing facility payments1, but according to CMS’ Five-Star Quality Rating System, Texas has the lowest percentage of four- and five-star nursing home beds in the country.2 Texas’ nursing care funding model has fallen short – and with increasing trends in both the senior population and the cost of long-term care, the problem is likely to get worse.

The U.S. Department of Health and Human Services estimates that nearly 70 percent of people who reach the age of 65 will ultimately need long-term services and supports.3 In Texas, this age group is one of the fastest growing populations in the state and is expected to more than triple between 2010 and 2050.4

"Almost 12 percent of Texans – 3.2 million people – are 65 and older and the number is growing. By 2050 that figure is expected to increase to almost 20 percent. This increase of the older adult population will likely mean an increase in the need

1 House Bill 1 (86th Regular Session), Strategy A.2.4. 2 Available at: https://www.americashealthrankings.org/explore/senior/measure/nursing_home_quality_sr_a/state/ALL 3 Available at: https://aspe.hhs.gov/basic-report/what-lifetime-risk-needing-and-receiving-long-term-services-and- supports 4 Texas Population Projections, 2010 to 2050. Office of the State Demographer (November 2014).

Alyse Meyer, Vice President of Advocacy

for all types of health and human services such as health care, home care, personal care and long-term care." - Texas Health and Human Services Commission5

As of 2017, Kaiser Family Foundation reported approximately 92,000 Texans resided in nursing homes. Today, 62% of care is paid for by Medicaid, 25% is paid privately, and 13% is covered by Medicare (short-term).

Texas must confront the challenge of a growing senior population by reforming the way it funds long-term care to both contain Medicaid spending and achieve better outcomes for patients.

LATX Recommendations: The Legislature should implement market-oriented reforms to Medicaid financing in nursing homes to improve the quality of care and drive down state spending long-term. Specifically, the state should adopt the following reforms to do more with existing Medicaid resources:

● Create market-oriented incentives for STAR+PLUS health plans to invest in high-quality nursing home care by implementing MCO performance metrics specific to nursing home quality and resident outcomes. ● Allow providers and STAR+PLUS health plans the flexibility to test alternative payment models that seek to improve patient outcomes and eliminate administrative burden. ● Directly link nursing home payments to proven quality measures, such as adequate staffing. CMS has acknowledged the importance of adequate staffing by implementing various staff reporting policies. ● Streamline the nursing home reimbursement methodology by directing payment based on the value of care, rather than the quantity of care. The Medicaid rate methodology should align with the Medicare Patient Driven Payment Model where appropriate. ● Restructure capitated payments to health plans so that “Money Follows the Person” and is not calculated to go towards a specific provider type. ● Eliminate unnecessary administrative burdens that shift resources away from resident care, such as excessive claim adjudication, complex billing systems, onerous prior authorization requirements, and inconsistent requirements across managed health plans.

A competitive market-place breeds innovation. Texas’ Medicaid reimbursement model stifles nursing home competition by inadequately providing incentive to pursue alternative models of care such as the small home concept or invest in direct resident care. The current reimbursement model also imposes administrative burdens that drive up costs by reducing the resources available for care. Providing additional care with fewer resources is a constant challenge facing quality providers. After five years of Medicaid managed care, it remains unclear if STAR+PLUS has reduced state spending in nursing homes or improved the overall quality of care, but it is clear providing care has become more expensive.

5 Available at: https://hhs.texas.gov/services/aging

Alyse Meyer, Vice President of Advocacy

In a functioning marketplace, providers are rewarded for delivering high-quality services and discouraged from providing substandard care. The Texas nursing home funding model lacks sufficient market incentives for providers to improve quality of care. Even under STAR+PLUS managed care, payments are determined by an outdated fee-for-service model. The current reimbursement methodology only marginally distinguishes high-quality providers from those struggling to meet the minimum standard of care, and existing programs designed to encourage better resident outcomes are not fully utilized.

As an example, the Texas Legislature has consistently failed to fully fund the only program that ties funding directly to staffing, wages, and benefits – the Nursing Facility Direct-Care Staff Rate Enhancement & Accountability Program. Full funding and greater investment in this program will ensure providers have the resources necessary to offer competitive wages and benefits. Adequate staffing levels will also be promoted and rewarded which could result in a cost savings to the provider by reducing the cost of turnover, and the state through earlier interventions, reduced costly acute episodes, and reduced hospitalizations.

Injecting market principles into Texas’ nursing home funding model will encourage quality facilities to return to providing Medicaid services and ensure Texas’ providers can do more with existing Medicaid resources. LeadingAge Texas recommends the Legislature adopt reforms that will encourage consumer choice, allocate funds to direct-care staffing and quality outcomes, streamline Texas’ nursing home reimbursement methodology, and reduce unnecessary administrative burdens.

LeadingAge Texas applauds the Texas Legislature and HHSC in their continued support and investment in the Quality Incentive Payment Program (QIPP). For participants, QIPP offers nursing home providers the opportunity to earn supplemental payments when established quality metrics are achieved. Overtime, nursing home providers have become dependent on this funding source to alleviate the financial strain caused by inadequate base reimbursement rates. In QIPP Year 1, 514 nursing home participated in QIPP. Today, 869 nursing home participate in QIPP Year 4 at a funding level of $1.1B.

We encourage HHSC and the Legislature to continue QIPP, and the development of future program years to achieve sustainable quality improvement and participation. LeadingAge Texas further supports the inclusion of a staffing component to incentivize investments in direct-care and improved patient outcomes as a result.

Finally, COVID-19 has placed many providers at financial risk. LeadingAge Texas appreciates HHSCs approval of the emergency Medicaid increase for nursing facilities for the duration of the federal emergency declaration. Since the onset of the pandemic, facilities have seen a significant increase in costs for personal protective equipment, testing, and staffing. The cost of antigen testing

Alyse Meyer, Vice President of Advocacy

facility staff alone can range from $5,000 to $10,000 per week.6 Additionally, providers are experiencing overall declines in short-term stay occupancy resulting in revenue falls.

The additional expenses incurred by facilities as a result of COVID-19 response will become permanent to some degree. The Legislature should evaluate these necessary expenditures and allocate an appropriate level of base funding to meet the costs of providing care post-pandemic. The state of Texas should also work with The U.S. Department of Health and Human Services and CMS to develop a sustainable long-term care financing strategy.

6 Available at: https://leadingage.org/sites/default/files/FACT%20SHEET_%20Nursing%20Homes%20Need%20Access%20to%2 0Rapid.pdf

THOT MEMBERS September 25, 2020 AUSTIN Central Health House Committee on Human Services Dell Seton Medical Center at the Texas Capitol - E2.125 University of Texas at Austin Austin, TX 78701

CORPUS CHRISTI CHRISTUS Spohn Health System RE: Interim Charge 5 - Examine the adequacy of Medicaid reimbursements Nueces County Hospital District for nursing facilities, including existing incentive-based payment models and the Quality Incentive Payment Program. Consider and make DALLAS Children’s Health System of recommendations to incentivize innovative models of care delivery in nursing Texas home facilities. Study the impact of the STAR+PLUS managed care program Parkland Health & Hospital System on nursing facility care, operations and patient health outcomes, and The University of Texas consider recommendations to improve administrative processes between Southwestern Medical Center facilities and managed care organizations.

EL PASO University Medical Center of El Paso Chair Frank and Members of the Committee,

GALVESTON Thank you for the opportunity to provide information on Interim Charge 5. The University of Texas Medical Branch The Teaching Hospitals of Texas members include large public urban teaching hospitals and several affiliated non-profit health systems sharing three core HOUSTON commitments. They provide quality care to all, in particular vulnerable Harris Health System The University of Texas MD Texans; are prepared for and provide trauma and disaster services and care; Anderson Cancer Center and supporting Texas’ healthcare workforce and graduate medical education

LUBBOCK as well as clinical and delivery system research and transformation. A few of UMC Health System of Lubbock our members currently participate in the Quality Incentive Payment Program (QIPP) as non-state governmental ownership entities partnering with nursing MIDLAND Midland Health facilities to improve quality and innovation.

ODESSA The Quality Incentive Payment Program (QIPP) began in September 2017 and Medical Center Health System has been successful in aiding nursing facilities to improve their quality and SAN ANTONIO innovation of their services by compensating them for meeting certain goals or University Health System metrics. The program is funded by local intergovernmental transfers and federal matching funding. TYLER University of Texas Health Science The program is currently in its fourth year and focuses on staffing coverage as Center at Tyler well as recruitment and retention of staff. Facilities are also required to meet GME Affiliate national benchmarks demonstrating improvement on length of stay, percent of patients on antipsychotics medications and patient’s ability to move RIO GRANDE VALLEY - EDINBURG Doctors Hospital at Renaissance

Healing, Teaching, Leading: Essential for the Health of Texas 1210 San Antonio St, SUITE 204. AUSTIN, TEXAS 78701. PHONE: 512-476-1497 independently. In addition, nursing facilities can be compensated for infection control programs and certain vaccination rates.

A leading factor in why our members participate in this program is because it has allowed them to close the gap on the care continuum for their uninsured or SSI-pending patients who are in need of nursing home level of care. These members negotiated with their partner nursing homes to accept a certain number of indigent patients who were unable to access nursing home care prior to the QIPP program. The addition of this post- acute strategy has saved bed days within their hospitals and improved care for these patients. This has also allowed for improved care coordination between the health systems and the nursing facilities which has led to decreases readmission rates.

Our members that participate in the program are active partners ensuring their nursing facilities are able to meet their quality goals. For example, starting in April Parkland Health and Hospital System developed a COVID- 19 Action Plan which communicated expectations and responsibilities for coordination with its nursing facilities. Parkland Health and Hospital System also committed to providing support to its nursing facilities during pandemic by:

 Seeking and receiving federal authorization to use excess COVID-19 tests to test nursing facility residents and select numbers of staff each day. This began prior to the Governor’s orders.  Conducting WebEx meetings with all nursing facilities to provide updates on policies, infection prevention practices, and federal, state, and local guidelines.  Parkland’s infection prevention and facilities teams also provide guidance and site visits.  Sharing personal protective equipment and other resources that have been distributed to the hospital or hospital district.

QIPP partnerships help support the continuum of care for patients and provides nursing facilities with the resources and opportunities to improve the quality of care they deliver. THOT supports the program and would advocate for the continuation of QIPP to supplement nursing home reimbursement and improve quality.

Thank you for your consideration of these comments. Please let me know if you have any questions or we can be of assistance to the Committee.

Maureen Milligan President and CEO Teaching Hospitals of Texas

Healing, Teaching, Leading: Essential for the Health of Texas 1210 San Antonio St, SUITE 204. AUSTIN, TEXAS 78701. PHONE: 512-476-1497

September 25, 2020

House Human Services Committee via email to Committee Clerk Courtney DeBower, [email protected]

Chairman Frank,

The Texas Association of Health Plans (TAHP) is the statewide trade association representing health insurers, health maintenance organizations, and other related health care entities operating in Texas. Our members provide health and supplemental benefits to Texans through employer- sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. Thank you for the opportunity to comment on your RFI related to the Medicaid long term services and supports system. Since its inception, the STAR+PLUS program has dramatically improved lives in Texas — improving the quality of care, enhancing access to that care, and providing more choices to beneficiaries — all while saving taxpayer dollars by making sure patients get the right care at the right time and in the right place. STAR+PLUS first began as a pilot program in Harris County in 1998, tested as a new kind of health care delivery model for individuals age 65 or older and individuals with disabilities in Medicaid. The success of the STAR+PLUS program is due in large part to its structure. Through STAR+PLUS, Texas was one of the first states in the country to create a Medicaid health plan that integrates and coordinates long term care and acute care with a focus on ensuring the least restrictive and most appropriate setting for each individual. As of July 1, 2019, 23 states now cover LTSS under Medicaid managed care organization (MCO) contracts.1 Under the previous fee-for-service (FFS) model, Texans with disabilities generally had to navigate services on their own. Today, under the STAR+PLUS managed care program, these Texans have access to a service coordinator who identifies an individual’s needs, helps develop a plan of care, coordinates health care benefits, and facilitates access to community resources — whether those resources are covered by Medicaid or not. This includes coordinating efforts like securing attendant care, meals, home modifications, and participation in activities with peers within the community. These critical resources help members lead fuller and more independent lives, and MCO nurse care coordinators help ensure clients get the right care and the right time, which results in improved health and reduced costs for taxpayers. The integration of health care and long term care services also helps seniors with chronic conditions and individuals with disabilities live independently and avoid hospitalization and institutionalization. When their

1 10 Things to Know about Medicaid Managed Care, Kaiser Health Foundation, December 2019.

1 illnesses do require hospital visits, coordinated care means more appropriate follow-up care is arranged for them at home or as needed to prevent readmission. STAR+PLUS began delivering immediate results for beneficiaries in its initial days. The program made significant strides in reducing the highest cost-drivers in Medicaid and in keeping individuals in their communities, as opposed to long term care facilities. Because of its success and ability to contain costs, the Legislature continued expanding STAR+PLUS. Since Sept. 1, 2014, the program has served elderly and disabled individuals statewide, including acute care for adults with intellectual and developmental disabilities (IDD). Today, STAR+PLUS’ positive trends continue with a dramatic increase in how many Medicaid beneficiaries are able to access community care. Through savings achieved from the shift to managed care, Texas reinvested funding to eliminate the wait time for services for individuals with physical disabilities. Instead of waiting years for community services, these Texans now have access to the services they need when they need them. Between 2004 and 2013, over 60,000 Texans were removed from the wait list and provided access to community care. This means more Texans are able to live independently in their homes and communities as opposed to nursing homes and other institutions. The final evaluation of the 1115 innovation waiver found Medicaid managed care increased access to care for clients in the STAR+PLUS program.2 The STAR+PLUS model has been a win-win for the state and consumers. Increased quality of care and improved access to health care and community care services has reduced hospital admissions and costs while improving the lives of Medicaid clients, including dramatic reductions in hospital stays for diabetes and pneumonia. Between 2009 and 2016, STAR+PLUS experienced double-digit reductions in hospital admissions for major common conditions such as diabetes (24-35%), pneumonia (27%), and UTIs (15%).3 These important efforts place a focus on wellness and prevention, which keeps older individuals out of hospitals where they can become exposed to other illnesses and promotes community-based care alternatives to longer, more expensive hospital stays and institutional care. In 2015, when the state added the Community First Choice program to STAR+PLUS, the wait for community attendant and habilitative services ended for more than 12,000 individuals with IDD and other persons with disabilities. This benefit helps individuals maintain their independence in the community without having to spend years on a wait list, increases federal matching dollars, and reduces reliance on more expensive institutional care. That same year, the STAR+PLUS and Dual Eligible Demonstration programs began providing nursing facility (NF) services to Texas Medicaid recipients. The carve-in of this population has ensured these clients have access to care coordination and assistance transitioning to the community. Last year, TAHP worked with NF associations to initiate a streamlined process that reduces the administrative burden required for credentialing. This initiative resulted in a streamlined process for the submission of credentialing applications, significantly reducing paperwork and consolidating the recredentialing process so that only one application is required from the provider for all

2 (Waiver Years: 2011-2016) - Final Evaluation Report of the 1115 Waiver 3 Analysis of HEDIS results in HHSC’s Portal. Also see Final Evaluation Report of the 1115 Waiver

2 contracted MCOs. This initiative also demonstrates that by working together, MCOs and NFs can bring greater efficiencies to the program. While significant strides have been made, there is more work to be done to ensure older Texans and Texans with disabilities are receiving the highest quality care. Efforts to eliminate remaining wait lists for services and help individuals with disabilities maintain or gain their independence should be continued. The long term care workforce should be strengthened through recruitment and retention efforts, including improving wages for community attendants who serve as the backbone for community care. Providing services that allow clients to live safely in the community can reduce overall Medicaid costs and improve clients’ lives, but it requires having enough attendants. Additionally, long term cost savings could be achieved by reducing reliance on expensive nursing services when attendant services are more appropriate, but that requires an upfront investment in attendant wages to ensure a strong workforce. HHSC was directed to evaluate the attendant workforce via Rider 157 in the 2020-2021 General Appropriations Act. That evaluation should provide the Legislature with an overview of existing issues and potential solutions, and the Legislature should ensure competitive wages to incentivize attendants to participate in the Medicaid program. Medicaid STAR+PLUS MCOs are committed to continuing to find areas for improvement and ways to increase administrative efficiency in the program, but the only way we are going to further reform the system is to stop trying to fit the managed care program into the FFS infrastructure. Payment and administration of the Medicaid NF services that straddle both FFS and managed care involve multiple, confusing, and inefficient processes. For example, NFs submit admission and discharge notices to HHSC instead of to the MCO, which can delay the initiation of MCO service coordination. The Legislature should direct HHSC to fully carve all NF payment and administration processes into managed care. Per statutory requirements — and unlike other services carved into managed care — HHSC sets the NF daily rates for the STAR+PLUS program rather than allowing MCOs to negotiate directly with the NF. The process for developing payments involves HHSC, TMHP (Medicaid FFS), and the MCOs and is extremely cumbersome. The statutory provision mandating this requirement sunsets on Sept. 1, 2021, and should not be extended. This would allow HHSC to improve payment methodologies that create efficiencies for NFs, MCOs to negotiate pay-for-quality contracts, and the state to move toward paying for quality rather than volume. HHSC’s rate methodology uses a complicated set of rules that generates over 1,000 different NF payment combinations based on the client’s level of need, which can change daily, resulting in a constantly adjusting rate, and MCOs must rely on information from TMHP for that rate. This process creates administrative complexity and budgeting challenges for NFs, which are compounded by frequent retroactive payment adjustments based on the constant changing rate and conflicts between TMHP, MCO, and HHSC files and systems. The volume of retroactive adjustments is much higher in Texas’ STAR+PLUS program than in other managed care programs because of these frequently changing rates. Frequent retroactive payment adjustments and inefficient processes result in NFs, HHSC, and MCOs spending countless hours on claims payments, adjustments, and reconciliations. NFs bill anywhere from 300,000 to 350,000 claims per month with over 125,000 of those resulting in payment adjustments. One STAR+PLUS plan analyzed its claims to demonstrate the administrative burden and found that on average, it

3 processed 46,000 NF room/board claims in a given month with 37% of those claims needing to be adjusted, compared to 15% in other markets. And 54% of those adjustments yielded a payment difference of just $10 or less. This example from just one plan demonstrates MCOs’ and NFs’ complaints and concerns with the current processes. Almost every other state has adopted simpler NF payment methodologies. CMS adopted a new NF payment methodology for Medicare called the Medicare Patient-Driven Payment Model (PDPM) — a major overhaul to the current payment system designed to address concerns that current payments are based on the volume of services provided creating inappropriate financial incentives. HHSC also understands the importance of adopting a simplified payment methodology, so created a workgroup to review what Medicare and other states have adopted and to develop recommendations for a new payment methodology. NFs have advocated for a single portal at TMHP as a way to reduce administrative complications and improve payment processes, but this would have a significant cost, move processes back to FFS, and not reduce administrative burdens. Furthermore, HHSC currently allows NFs to submit claims via an existing TMHP portal to comply with language in SB 7, but less than 2% of providers use it because it does not have the same functions as MCO portals, such as allowing for submission of NF claims and clinical data, obtaining electronic admittance advice, and obtaining explanation of MCO payment statements and other standardized reports. It also does not make sense for the state to invest in upgrading the TMHP portal because these services have been carved into managed care, and MCOs have implemented an extensive amount of functionality and changes to their portals to accommodate NF requests. Moving to one portal does not achieve the goal of creating more timely payment — it just moves us back to FFS. The only way to ensure faster payment and reduced burden for both MCOs and NFs is to reduce the number of claims that have to be adjusted. TAHP recommends HHSC adopt a new, simpler, more transparent payment model that leverages best practices from other state Medicaid programs, rewards quality, and achieves administrative simplification for NFs, HHSC, and STAR+PLUS MCOs. In addition to the daily NF rate, the Quality Incentive Payment Program (QIPP) serves as a resource to help NFs achieve transformation. This performance-based program encourages NFs to improve the quality and innovation of their services through implementation of program-wide improvement processes for which facilities are compensated for meeting or exceeding certain goals. Improvement is based upon several indices of success, including quality metrics that are collected by CMS. To assist nursing facilities during the public health emergency in improving infection control protocols and other quality measures, HHSC temporarily increased NF rates and increased the pool size for QIPP for SFY 2021 to $1.1 billion. HHSC had previously announced a pool size for SFY 2021 of $800 million. With the additional funding, NFs can focus on improving quality of care and satisfaction. Another way to improve processes between NFs, MCOs, and other providers is to improve the coordination of benefits for Medicaid and Medicare dual eligible clients. Medicaid MCOs are required by contract to coordinate benefits for STAR+PLUS clients who receive both Medicaid and Medicare coverage (called “dual eligible” clients). The MCOs are also federally required to ensure Medicaid does not pay for certain services that Medicare should cover. As part of the benefit coordination process, MCOs cannot pay for the Medicare-covered service until

Medicare denies the service. While MCOs go to extensive efforts to coordinate the delivery of these services, the process is complicated and often delayed due to the majority of dual eligible clients receiving their Medicaid and Medicare services from different health plans or from Medicaid FFS. Due to the multiple parties involved, Medicaid MCOs cannot see the Medicare payments and denials to track services in a systematic way. Medicaid MCOs are dependent on the cooperation of an external Medicare payor or provider (oftentimes not in network with the STAR+PLUS plan) to coordinate and provide ongoing status and supporting information to the MCO with no incentive. In some cases, per HHSC direction, when Medicare does not pay for the service or fully cover a needed treatment (called “wrap coverage”), TMHP — not the MCO — is responsible for paying for the service. Past HHSC utilization reviews found that some STAR+PLUS clients did not receive certain services. The MCOs are often either unaware of the Medicare or Medicaid FFS claims or may have not received the Medicare or Medicaid FFS denials. As a result, MCOs are unaware clients are not receiving services that should have been covered by either Medicare or Medicaid FFS. Also challenging is the lack of a clearly documented matrix outlining which Medicare services TMHP and MCOs are responsible to cover once Medicare denies the service. The process is confusing for clients, providers, MCOs, and others involved in the process, and it puts access to care at risk for Medicaid enrollees. Last session, the Legislature passed Senate Bill 1207 directing HHSC to improve the coordination of benefits process, but there are still many other complicated processes. The Legislature should direct HHSC to move responsibility for payment of wrap coverage for dual clients from TMHP to MCOs to further align accountability, enable better coordination of services for clients, and streamline processes and payment for providers. Having a single entity responsible for payment of all Medicaid services simplifies processes for providers and further reduces costs at TMHP while improving access to care for members. Thank you for the opportunity to provide these comments. Please feel free to contact me if you have questions or need additional information. We look forward to continuing to work with HHSC, providers, and the Legislature to improve the managed care program.

Sincerely,

Jamie Dudensing, RN CEO, Texas Association of Health Plans [email protected]

Testimony Submitted by Kevin Warren, President and CEO Texas Health Care Association Interim Charge #5: House Human Services Committee September 25, 2020

Mr. Chairman and members: Thank you for allowing me this opportunity to submit testimony on the committee’s interim charge #5 regarding the adequacy of Medicaid reimbursements for nursing facilities, including existing incentive-based payment models and the Quality Incentive Payment Program.

On behalf of the Texas Health Care Association (THCA), representing skilled nursing and post-acute care providers in Texas, we appreciate the continued opportunity to work with the House Human Services Committee on behalf of the long term care profession. We remain committed to working with the Committee and its members on important issues such as Texas Medicaid, Regulatory and Managed Care to find efficiencies, improve business practices and improve the overall care provided to the over 57,000 residents living in skilled nursing facilities across Texas whose care is paid for by Medicaid.

The impact of COVID19 on the long term care profession has been far reaching and its negative effect on the elderly has placed long term care at the epicenter of the pandemic. With restrictions in place at federal and state levels, ongoing mandatory testing requirements and infection prevention and control guidance in place to protect the health and safety of residents and staff, the long term care profession has faced the realization that operations and approaches to providing patient care will be changed for years to come.

Texas Medicaid in Nursing Homes

Skilled nursing facilities in Texas serve a sicker population in 2019 than ever before. Data suggests the goal of keeping patients in the community under Star+Plus is working. As Texans age, they are staying in the community longer, while the performance on “discharge to community” measures by 2018 Days of Service by Payor skilled nursing facilities have remained steady. V.A./Other When residents are in need of nursing home Medicaid, 69% care, they are older and require 24-hour care to Medicare manage new diagnoses, co-morbidities or treatments that are unable to be delivered in Private Pay & Other residents the community. Today, almost 70% of all in non- nursing facility patient days are paid for through the Medicaid program (figure 1). As providers of this care, our members find themselves taking Figure 1 Source: 2018 Cost Report Data

Texas Health Care Association ● 1108 Lavaca St., Suite 500, Austin, TX 78701 ● (512) 458-1257

For example, the Medicaid Shortfall (figure 2) grew by 26% in 2015 over 2014 and then again 30% in 2017 over 2016. The median shortfall since 1994 has been 19%. Further, while the Medicaid shortfall has widened year over year, rate increases from the Legislature have been absent or minimal. While there was a rate increase appropriated in 2009 by the Legislature, it was followed by consecutive rate reductions. While rate increases were provided to aid in the shift into Medicaid managed care in 2013, the six percent rate increase was offset by an eight percent rate increase in providers’ costs to process and administer the program across the Figure 2 Source: 2018 Cost Report Data various MCOs. In addition, there is a noteworthy increase in the length of time for claims to be paid (i.e. accounts receivables), and our members’ cost of care and resource management has continued to escalate. Each year the Medicaid rate stays flat, it is the equivalent of a rate cut.

Quality Incentive Payment Program

One of the most significant value-based payment programs in Texas, and one that impacts the lives of thousands of residents, families, and staff in nursing facilities across Texas is the Quality Incentive Payment Program (QIPP). Notably, no general revenue is used to fund QIPP. Over the course of the past three years, we have continued to see an expansion in the number of nursing facility providers, both public and private, participating in QIPP. HHSC’s efforts to include stakeholders in its development and design over this period to make the program available to additional providers has benefitted both urban and rural communities. QIPP Year 4, effective September 1, 2020 expanded both financially and in the number of participating nursing facilities to over 860 nursing facilities (both public and private) for inclusion in the program, demonstrating the state’s commitment to value based payment programs and incentivizing care improvement. However, even with this significant growth, there remains almost 350 nursing facilities across the state not benefitting under the current program.

While we support the continued growth of the program, it is important to ensure greater predictability in cost coverage for services provided to the residents residing in Texas nursing facilities. We believe the QIPP program is a significant complement to the Texas Medicaid rate methodology; however, without greater predictability in cost coverage, we limit the ability for more significant investment in improving nursing home care; particularly in light of the expense and revenue impact that has resulted as a result of COVID-19.

Texas Health Care Association ● 1108 Lavaca St., Suite 500, Austin, TX 78701 ● (512) 458-1257

Prior to 2020 and the impact of COVID19, Texas nursing homes were already facing financial concerns given the low Medicaid reimbursement impacting two-thirds of their patient population. In 2020, the impact of COVID19 on the financial solvency of the long term care profession continues to be threatened and further exacerbated these concerns. Since the Centers for Medicare & Medicaid Services (CMS) released its initial guidance regarding infection control and prevention expectations (including screening requirements, personal protective equipment, staffing restrictions) and now the recent mandates for staff and resident testing and expanding visitation guidelines, the costs to care for the nursing home population have increase significantly. As an example, early projections indicated an estimated total of $400,000 per day in staffing related costs just to cover screening and communal dining modifications for the over 1200 Texas facilities. This does not include the additional and continued costs of medical supplies, paid leave, overtime, and other staffing costs.

As efforts to prevent and mitigate the spread of COVID-19 in Texas nursing homes, the following costs remain significant and ongoing:

 Workforce Labor and Overtime Costs (including sick leave and potential 14 day quarantine in many cases);  Personal Protective Equipment;  Staff and Visitor Screenings required for all individuals entering the facility each time they arrive;  Regular testing of staff and residents based upon county positivity rates or the identification of a COVID+ resident or staff member in the facility; and,  Any new guidance and costs associated with the new visitation rules compliance

The nursing home profession in Texas is very grateful for the federal financial assistance that has been provided in 2020 as well as the approval of the current temporary COVID-19 add-on rate for Medicaid residents in Texas nursing homes. The temporary add-on is set to expire at the end of the public health emergency (PHE). Nursing facilities will continue to incur ongoing costs and expenses to acquire staffing, PPE and testing supplies. Unfortunately, there are no additional resources appropriated at the federal or state level to cover these ongoing costs into 2021.

In communicating with members of the association regarding expenses related to COVID, we have attempted to quantify the impact, since March 2020. It is important to note there can be significant variation in COVID related expenses. A facility that had a large penetration of COVID within the facility would likely have significantly more COVID costs than a facility that had none or very little. In addition, the availability of staffing, necessary use of agency staff, supply availability of staff in a given community, quantity and availability of testing, PPE resources and other factors are all contributors to current and ongoing expenses.

Texas Health Care Association ● 1108 Lavaca St., Suite 500, Austin, TX 78701 ● (512) 458-1257

“The mission of the Texas Health Care Association is to unite, represent, and support professionals who strive to improve the delivery, quality, and integrity of long term healthcare services.” Initial financial data suggests that median additional expenses have increased to over $50,000 per facility per month thru August 2020. One provider reported a 40% overall increase in expenses since March 2020. It is important to note, these costs do not include the costs that began in September due to mandatory testing of staff and residents. In addition, providers have reported decline in census over this same period of time of 10-15% having a direct effect on patient revenues.

Recommendations

1. To provide a more predictable cost coverage reimbursement, we recommend that an equivalent amount to the current COVID temporary add-on rate be added to the Medicaid base rate once the Public Health Emergency (PHE) ends. The temporary add-on is tied to the existence of the PHE; however, based upon additional testing guidance, PPE requirements, and the additional staffing shortage that has resulted from the COVID19 pandemic, the added cost of meeting both federal and state requirements will continue. In addition, due to local ordinances, visitation restrictions and the limited number of discharges from local hospitals, nursing facilities have incurred significant reductions in revenue and census, while fixed overhead costs remain.

2. While HHSC currently works with the Payment Methodology Advisory Committee to recommend changes to the Medicaid reimbursement model, we ask that HHSC be required to create options to address the structural integrity of the Medicaid program and ensure that providers are not negatively impacted financially with the transition to any new Medicaid methodology. Based on our current survey of members who operate in other states, we are significantly concerned with any methodology that takes from one provider and gives to another without a transitional revenue protection.

3. Our current reimbursement structure pays for the physical, acute-care needs of patients, like congestive heart failure, but not cognitive impairment or behavioral needs. We ask for the development of a per diem add-on for patients who qualify with impaired cognition and the behavioral problems categories, or have been diagnosed with Alzheimer’s disease or dementia, classified in the reduced physical functions or in behavioral problems categories.

Thank you for your attention to long term care. We look forward to working with the Committee as you attempt to make long term care in Texas the best it can be.

Texas Health Care Association ● 1108 Lavaca St., Suite 500, Austin, TX 78701 ● (512) 458-1257

Honorable James B. Frank and Committee Members,

Thank you for the opportunity to submit this written testimony to the Human Services Committee regarding adequacy of Medicaid reimbursement for nursing home facilities.

The elected membership of the TSHL held its 2020 TSHL Legislative Session, July 27 – 29th. During the 2020 TSHL Legislative Session, we adopted Resolution R018, urging the 87th Texas Legislature to Increase general revenue funds paid to Medicaid-certified nursing homes, combined with a payment methodology that includes financial incentives and accountability by both managed care and providers to improve the quality of care provided to Medicaid-eligible residents, focus regulations on resident care, and maintain needed access to long-term care for Medicaid-eligible individuals.

Resolution R018 is ranked as Priority #4 out of 54 total resolutions adopted during our 2020 Legislative Session. A copy of Resolution R018 is attached along with a copy of the TSHL brochure which highlights TSHL’s vision statement, purpose and goals, membership, committee composition and leadership.

To start, Medicaid reimbursement to nursing homes is a serious issue with no cheap fix. Texas pays one of the very lowest rates of Medicaid reimbursement to nursing home providers in the entire United States. The longstanding underfunding of Medicaid nursing home care makes it impossible to provide the needed level of staffing, professional development, culture of full engagement by residents and staff, make upgrades to medical equipment, and renovate existing buildings. In fact, according to LeadingAge Texas, the low rates have forced some nursing homes to either close or reduce the percentage of Medicaid-eligible residents they serve.

TSHL members recognize that revenues coming into the State coffers are significantly reduced as a result of factors associated with the Covid-19 pandemic. But those reductions do not diminish the desperate need to incentivize and pay for enhanced quality of resident care and quality of life while protecting residents, staff, and visitors from Covid-19. TSHL members also recognize that add-on payments have been made to providers to cover the costs of ongoing Covid-19 testing, PPE, and added infection prevention. To ensure continued protections, these payments must continue as long as infection prevention and control guidance continue.

Compassionate, capable staff are needed seven days a week in greater numbers across all disciplines and all shifts if we expect to enhance quality of care and quality of life in Texas nursing homes. The entire Medicaid-eligible nursing home population has medical necessity and a major portion also live with some degree of cognitive impairment, and many have behavioral health needs, and all have emotional, social, and spiritual needs. To more effectively meet these often-challenging care needs, we must increase reimbursement and further incentivize staffing and enhanced professionalism in nursing homes; of direct-care staff in particular. The current level of Texas Medicaid reimbursement does not permit a livable wage to be paid to direct-care nursing staff members. And, in homes serving a high percentage of Medicaid-eligible individuals, the low reimbursement drives down staffing numbers and drives up staff turnover. Resulting staff turnover is a serious problem in Texas reaching 90% and higher according to Texas Health Care Association leadership. High staff turnover is expensive and exhausting for everyone and makes consistent assignment of staff to the same residents extremely difficult. Consistent assignment enhances resident-centered care and staff morale, enables direct-care staff to better know each resident’s unique needs and abilities and offer more individualized care leading to better resident outcomes and improved quality of life. In addition to more money being earmarked for staffing, consistent assignment must be financially incentivized.

Ongoing and effective professional development for direct-care staff is needed on a range of topics from infection prevention and control to person-centered care approaches which recognize and support individual abilities and encourage independence. Excellent training curriculum designed for direct-care staff is available. But, given poor staffing, direct-care staff often do not have time in the day to actively participate in training or return demonstrate what they’ve learned. And, with the high turnover rate, there is little opportunity for follow-up training and coaching and typically, there is little or no financial incentive offered to staff to apply what they’ve learned.

While in-person family interaction in care-communities was largely prohibited during the peak of the Covid-pandemic, we can thank the amazing creativity, compassion, and extra hours worked by Activity Professionals, Recreational Therapists, Nurse Aides, and other nursing home professionals. Despite social distancing restrictions, these professionals strove to comfort residents and engage them in meaningful activities to generate a sense of fun and joy. Isolation, boredom, and loneliness are real problems for residents of nursing homes and have repeatedly been highlighted throughout 2020.

In closing, Texas must address the issue of Medicaid reimbursement for nursing homes and increase general revenue funds paid to Medicaid-certified nursing home providers, combined with a payment methodology that includes financial incentives and accountability by both managed care and providers to improve the quality of care provided to Medicaid-eligible residents, focuses regulations on resident care, and maintains needed access to long-term care for Medicaid-eligible individuals.

Members of the Texas Silver-Haired Legislature (TSHL) are available and ready to work with the Human Services Committee during the 87th Texas Legislative Session on the many aspects of this important and multi-faceted issue.

Respectfully submitted by: Sue S. Wilson, LMSW, CADDCT, CDP Chair, Health and Human Resources Committee Texas Silver-Haired Legislature