No More Valley Carve-Out?

When Texas expanded its Medicaid managed care program in 2003 to cover more than the state’s urban centers, the Rio Grande Valley narrowly avoided being included — the result of last-minute maneuvering by several South Texas lawmakers.

But as state leaders stare down a multibillion-dollar budget shortfall, they say it’s unlikely the Valley will make it through another session without being roped in, despite a fierce lobbying effort by the region’s high-profile physician-owned hospital system.    

“We’re working in that direction,” said state Sen. Juan “Chuy” Hinojosa, D-McAllen. “Different groups, for whatever reason, take uncompromising positions. It’s a give and take, and one size doesn’t fit all. But we’re working toward a compromise.”

State health officials estimate that expanding Medicaid managed care to the 13-county South Texas region would save nearly $140 million in the first five years. In a preview of the debate to come, lawmakers will revisit the so-called “Valley carve-out” — and whether to take legislative action to reverse it — today in a meeting of the House Appropriations Subcommittee on Health and Human Services. If the Valley is pulled into the current Medicaid managed care program, it won't happen until late 2012.

“Given our budget issues, now more than ever we need to consider options to save money,” said House Appropriations Chair Jim Pitts, R-Waxahachie, “and that includes changing statutes to allow for Medicaid managed care in the Valley like the rest of the state.”

Medicaid patients in almost all of Texas’ population centers fall under the state’s managed care program — they use “in-network” primary care providers, who, in theory, facilitate health care and link patients to other doctors and specialists as needed. The goal is to provide Medicaid patients with quality, comprehensive care while cutting down on costs by eliminating unnecessary services and procedures.

Doctors rarely love managed care, even in the private market. It takes a serious toll on their bottom lines. And they argue it forces them to do more with less: to order fewer tests and procedures, to spend less time with patients, to prescribe cheaper — and maybe less effective — drugs. But Medicaid managed care gets its own bad rap. Texas’ program has been criticized for failing to provide adequate access to care and for missing other performance benchmarks. Officials with Doctors Hospital at Renaissance in Edinburg, the staunchest resistors of the program expansion, say it’s not that they oppose Medicaid managed care — it’s that they oppose being roped into something they don’t think will work in the Valley.

“We understand the budget shortfall that Texas has, and we want to be participants in a solution that serves the needs of our community,” said Susan Turley, chief financial officer for Doctors Hospital. “We believe that a locally managed, integrated delivery system, which is really focused and managed by those who live in the community, can deliver better quality at a lower price.”

Supporters say the current managed care program provides a system to help Medicaid patients get better preventative care, including regular checkups so they don’t end up in costly emergency rooms. Yes, they acknowledge, mistakes have been made. But they say the state has learned from them and has built a better and more cost-effective program for it.  

And they say the fact that the Valley has traditionally pushed back so hard to prevent managed care for its 350,000 Medicaid recipients should be a clear indication that it’s needed. The region was exposed in a 2009 New Yorker article as being one of the most expensive health care markets in the country — largely the result of overutilization of tests and treatments.

“Right now, these [South Texas] counties have a sweetheart deal,” said Bill Hammond, president of the Texas Association of Business. “There are better outcomes when providers have someone looking over their shoulder.”

The high-cost, overutilization argument is one Doctors Hospital — a heavy-hitter Democratic fundraiser and campaign contributor featured in the article — has refuted.

“I think you really have to look at a number of different sources for spending on health care and draw your conclusions from a number of sources, not simply focus on the [New Yorker] article,” Turley said.