Gaining Ground

Health and Human Services

Health care spending consumes more than one-third of the Texas budget, most of it in the Medicaid program, where costs are projected to soar past $20 billion during fiscal 1996-97. State employee insurance currently accounts for another $751 million, and health care for state prison inmates adds another $300 million to the taxpayers' tab. From immunization to AIDS care services, home care for the elderly to services for the blind, drug abuse therapy to workers' compensation, crime victims' compensation and tuberculosis treatment -- state health care spending is on the rise.

Yet, cooperation among state health agencies is a rare occurrence, while duplication of efforts, information hoarding and turf battles are far too commonplace.

Gaining Ground contains a series of recommendations to streamline the state's health care management, provide for more effective planning and allow local communities the flexibility to meet their own needs.

Allowing greater flexibility for local communities. Many communities raise and spend money locally to respond to their own health and human services needs. Sometimes, these fund-raising efforts are directly related to state or federal mandates that allow the communities little flexibility to enact their own solutions.

Money may not always be the issue, either. In San Antonio, when a number of people with mental retardation found evening jobs on a city custodial crew, they found that state rules permitted active treatment, training or work to be performed only during daylight hours. Their job opportunities vanished.

When states develop new approaches to health and human service delivery that require exemptions from federal statutes, they apply for waivers from the federal rules. Local governments have no similar system for seeking relief from the regulatory mandates of state government.

The Legislature should authorize the state Health and Human Services commissioner to grant local flexibility in responding to community needs. If local a petition demonstrates a clear focus, contains a strong evaluation component, improves consumer health and access to services, the commissioner should be allowed to issue a waiver good for up to three years. No waivers should be allowed that would affect public health, safety or civil rights.

In addition, the Health and Human Services Commission should provide technical assistance to local communities to improve their health and human service delivery in innovative ways. The agency should also act as an advocate for needed changes in federal laws or regulations.

Creating a Health Care Information Office. More than four million Texans lack any health care at all. But even those who are lucky enough to have it know that the health care market is one in which many patients leave decisions to their physicians and are in turn shielded from the full costs by their insurers. This lack of useful information limits consumer choice, hinders industry competition and drives overall costs up.

For example, despite the existence of nearly 71,000 licensed beds in more than 450 hospitals in Texas, the state has no system for collecting hospital discharge data -- and is expressly prohibited by law from publishing specific financial information on individual hospitals. By comparison, Pennsylvania collects data on all patients discharged from hospitals, which are also required to report on the cost of care for particular illnesses and the outcome of their treatment. While patient confidentiality is strictly maintained, ordinary citizens, businesses, government agencies and managed-care plans all have access to public information on the costs and effectiveness of their state's hospitals.

Public health officials in Texas could use this kind of information to identify many problems -- regional patterns of specific illnesses, for instance, or areas where certain medical procedures are less successful or more costly than the statewide average. Consumers would be better informed, and hospitals could take actions to improve their services.

That's why TPR proposes the creation of a Health Care Information Office to provide data on the costs and outcomes of patient treatments. The Legislature should require hospitals to report this information to the new office. And independent council of purchasers, consumers and health care providers should advise the office on which types of data would be most useful and provide guidance on other issues.

In addition, the state law prohibiting the publication of financial information about individual hospitals should be changed to allow the distribution of treatment costs for specific illness groups. No one is suggesting making headlines out of hospital profits, losses, total revenues or spending; that information should remain confidential. The purpose of this proposal is simply to provide a history of the costs of specific services and outcomes of the treatment, after adjusting for severe illnesses, levels of indigent care and other special circumstances, so that consumers and purchasers can make more informed choices.

Improving state health purchasing. State government is the Texas health care industry's largest single customer. Much of the money goes for goods and services without effective planning or performance measures in place to determine whether taxpayers are getting their money's worth. The Department of Health (TDH), for example, subsidizes no fewer than 87 local health departments -- and can't say how much any of them pay for a single Band-Aid.

But Band-Aids are the least of the state's worries. The Texas Department of Mental Health and Mental Retardation (TxMHMR) reimburses providers for general medical care based on rates negotiated separately for each state facility. The Texas Commission for the Blind doesn't break down it medical spending by any recognizable category, including who uses what. The Texas Rehabilitation Commission can't report specifically how much its spends for the most basic areas, such as physician care or lab tests. Workers' compensation programs use outdated billing codes, increasing the paperwork burden of providers and making it impossible to make accurate comparisons among state programs. The Attorney General shells out twice as much to provide certain medications to crime victims as the Texas Department of Criminal Justice pays to give the same medications to convicted criminals behind bars.

Pharmacy fees are one of the clearest examples of idiosyncratic rate structures that lead taxpayers to overpay for benefits. State employee health programs pay $4 per prescription, while the state's Kidney Health program pays $4.55 and Medicaid pays an average of $6.26. Sooner or later, you have to wonder why the single largest health-care customer in Texas isn't negotiating the lowest uniform rates by pooling its combined purchasing power.

Part of the problem lies in the fact that many agencies view health care as relatively small components of their missions. "You just don't understand," one agency's executive director told TPR. "We really aren't a health care agency." But every state entity that administers health programs or buys medical services and supplies contributes to Texas' overall health-care costs. To contain spending, the state needs the whole story, not random information about a few programs.

TPR recommends that the Legislature establish a unit in the General Services Commission to design and coordinate the state's health care purchasing and administration. The unit should develop a uniform rate structure, negotiate volume discounts and implement an incentive plan in which agencies and programs share in any savings that result from their own cost-containment measures. During fiscal 1996-97, these actions would save the state at least $68 million.

Expanding one-stop shopping. In 1991's Breaking the Mold, TPR suggested several pilot projects to test the viability of a "one stop shopping" to integrated health and human service delivery. Dallas, Lubbock and Eldorado -- representing large, medium and small urban areas -- were chosen as test sites.

Some of what we discovered was unexpected. The computer software developed as a basic screening tool was deemed "worthless" by employees in all three cities. Most participating agencies had their own database operations and weren't interested in linking up with the new system. One state agency refused to allow any of its caseworkers to cooperate. Moreover, no formal process existed to allow state and local staff members to share information about the range of services available, an important cornerstone of the one-stop shopping concept.

But much of what we found was more positive. The pilot projects allowed for greater local control, planning and innovation. Transportation needs in tiny Eldorado, for example, were handled by using a van that had previously been reserved only for senior citizens, while in the Dallas Metroplex, city bus passes were distributed to clients so that they could get to their appointments on time. Those appointments moreover were scheduled back-to-back in community resource centers, where caseworkers from different public programs were able to save citizens time and frustration. The front-line workers from multiple agencies were also able to compare procedures and learn from their counterparts.

Although results of the initial pilot projects were mixed, the one-stop shopping concept still has great potential. But it won't meet its goals of improved customer service and reduced costs without local support. The Health and Human Services Commission should work with county and local groups individually to implement the systems approach in cities and towns that choose to participate. Local planning councils should develop coordinated health and human service strategies; they know their community priorities and the most effective way to deliver improved services.

Increasing child support collections. Texas is struggling to keep up with its burgeoning need to enforce child support laws. The Attorney General's child support enforcement caseload, now close to 700,000, is projected to surpass one million by the end of fiscal 1997. Even though less than half of current cases are being collected, the capacity of the judicial process is rapidly reaching overload.

In an upcoming report on welfare reform requested by the Lieutenant Governor, TPR will offer a packet of proposals to help improve child support enforcement and increase collections, including the feasibility of revoking the state licenses of chronically delinquent parents.

But Gaining Ground contains some recommendations of its own. One would speed up the state's administrative hearings for child support enforcement through a series of measures designed to streamline and simplify the process. Another would maximize federal funding for Texas counties that maintain local child support programs. A third would allow the state to link AFDC applications with child support obligations, since many children require the federal benefits largely because of the failure of an absent parent to provide support -- and only 9 percent of Texas' current AFDC cases receive child support.

Cutting costs and improving service for the mental health and mental retardation community. The Texas Department of Mental Health and Mental Retardation (TxMHMR) operates 13 schools for Texans with mental retardation, eight hospitals for Texas with mental illness, five state centers to deliver services in local areas, a special residential program for emotionally disturbed youths and contracts with 35 community mental health and mental retardation facilities across the state.

During the current biennium, the agency will spend $2.6 billion to fulfill these important responsibilities. Some of that money will be wasted on duplication, overlapping efforts and ineffective administration.

TPR recommends a comprehensive series of actions the Legislature should take to restructure TxMHMR. These include the creation of local "authorities" to increase the accountability of the agency's contracted community centers; a competitive bid process to provide local services; rules to prohibit the agency from paying for services before they've been provided; and clear performance measures to determine the effectiveness of the community centers' work.

These recommendations would eliminate the inherent conflict of interest that exists when TxMHMR's community service divisions of state schools and hospitals and the contracted community centers across Texas act as both providers and authorities. Injecting competition into the mental health and mental retardation service delivery system would increase consumer choice and save taxpayers money -- more than $19 million over the next five years.

Reviewing the performance of TxMHMR. The Department of Mental Health and Mental Retardation is the second-largest state agency in Texas with more than 28,000 employees in 11 million square feet of facilities and a two-year budget, as noted above, of $2.6 billion. And like any massive bureaucracy, it could almost certainly benefit from a close examination of its operations to identify outdated practices, suggest ways to improve service and cut costs.

The Legislature should request a top-to-bottom audit of the agency by TPR to be completed during the next biennium. The review should include a detailed analysis of all TxMHMR facilities and its high level of workers' comp claims.

In addition, the Legislature should direct the State Auditor or an independent firm to conduct a financial audit of each TxMHMR facility. Lawmakers should require that the agency, in consultation with the Council on Competitive Government, undertake a pilot project to competitively bid the management of at least one state psychiatric hospital with a view toward expanding the pilot to other state hospitals in the future.