Every Memorial Day during odd-numbered years, the Texas Legislature adjourns from its 140-day legislative session. But, this Memorial Day was unlike those in the recent past. It was calm, cool and collected. By sine die, the 86th Legislature already had passed the leadership’s priority items — the 2020-2021 budget and property tax reform and school finance bills. Unlike the 140th day of the 2017 legislative session, discussions of lawmakers returning to the pink dome for a special session were decidedly absent.
The 86th Texas Legislature had worked remarkably well together. Chamber-to-chamber rivalries simmered but never boiled over, and unlikely friendships formed across party lines. The body that recently has been described as the “kumbaya legislature” passed several bills of particular importance to Texas hospitals and managed to avoid a number of poor policy choices.
Following the 2018 midterm election, the Texas Legislature, while still majority Republican, looked slightly less red. Notable Republican losses included Rep. Jason Villalba (R-Dallas), Rep. Matt Rinaldi (R-Carrollton), Rep. Ron Simmons (R-Carrollton), Rep. Rodney Anderson (R-Irving), Rep. Wayne Faithcloth (R-Galveston), Sen. Konni Burton (R-Burleson) and Sen. Don Huffines (R-Dallas). Democrats gained 12 additional House seats and two Senate seats, not enough to set the agenda but enough to have a bit more influence than in recent years.
After the long-serving Speaker of the Texas House Joe Straus (R-San Antonio) opted not to seek re-election in 2018, a host of House lawmakers vied to take his place. Rep. Dennis Bonnen (R-Angleton) ultimately prevailed, and he promoted a number of hospital-friendly lawmakers to higher posts. Rep. Senfronia Thompson (D-Houston) took over the House Public Health Committee from former chair, Rep. Four Price (R-Amarillo), who was selected to oversee the influential House Calendars Committee that decides which bills get scheduled for a vote before the full Texas House and when. Rep. Jeff Leach (R-Plano), an early supporter of Bonnen, was chosen to chair the House Judiciary & Civil Jurisprudence Committee, which regulates issues such as liability protections for volunteer health care professionals and hospitals’ ability to attach liens to a financial settlement or judgement an injured patient receives from an at-fault party in order to recover the costs of care provided.
In the Texas Senate, Sen. Lois Kolkhorst (R-Brenham) replaced Sen. Charles Schwertner (R-Georgetown) as chair of the powerful Health & Human Services Committee.
Caps on Property Tax Revenue
One of the holdover issues that the legislature failed to resolve in the 2017 legislative session was the governor’s and legislative leadership’s priority to limit local governments’ ability to raise property tax rates. Passing a bill to reduce residents’ property tax burden was nearly as important for the legislature as passing the state budget. The legislation proposed in the very early days of the legislative session sought to reduce the amount by which local governments, including hospital districts, could increase property taxes from 8 to 2.5 percent. Such a reduction posed a significant threat to Texas hospitals’ ability to generate revenue to provide the state share of hospitals’ supplemental payments and support indigent health care programs. Ultimately, lawmakers came to understand the devastating consequences the legislation could have on Texas hospitals’ ability to support the health care safety net and exempted county hospitals and hospital districts from the new, lower caps.
Health Care Spending
Going into last session, Texas Comptroller Glenn Hegar (R) projected a 2.7 percent decrease in state general revenue, after accounting for a voter-approved diversion of sales taxes to highways. When the 86th Legislature convened in January, Hegar notified budget writers of a sunnier fiscal forecast for the two-year budget — $9 billion more in state general revenue. More good news came in mid-May when lawmakers were finalizing the 2020-2021 state budget, and Hegar announced a revised fiscal forecast — thanks to more robust tax collections — that included an additional $518 million in state general revenue for lawmakers to spend on public programs.
The 86th Texas Legislature ultimately passed a $250.7 billion two-year budget — a preliminary amount that will change slightly after the governor’s June 16 deadline to complete line-item vetoes in the budget and approve all the other bills. With an allowed 16 percent spending increase over the 2018-2019 biennium, state lawmakers could cover existing expenditures and fund new items for 2020-2021.
Health and human services spending totals $84.4 billion in state and federal funds — up just 1 percent from the last two-year budget cycle. Since Texas secured a higher federal match rate, the state can put up fewer state dollars to draw down more federal funds. Changes in the federal match rate this session allowed budget writers to invest $1.9 billion less in state general revenue for Texas Medicaid.
Overall, Texas hospitals fared well, securing funding for most of the industry’s key budget needs. Budget writers maintained level funding ($720 million in state and federal funds) for Medicaid rate enhancements for trauma, safety net and rural hospitals. They also, significantly, appropriated new funding to support Medicaid rate enhancements for particularly vulnerable hospitals:
- Rural hospitals’ inpatient services ($35 million in state funds).
- Rural hospitals' labor and delivery services ($6.2 million in state funds).
- Children's hospitals ($50 million in state funds).
Lawmakers even dipped into the state’s savings account, the Economic Stabilization Fund, better known as the “Rainy Day Fund,” to provide $15 million in grant funding to support infrastructure improvements for designated trauma hospitals.
Behavioral and maternal health also saw legislative commitment in the form of new funding. In addition to providing $6 million in state general revenue to integrate the mandated Prescription Monitoring Program for certain controlled substances with hospitals’ electronic medical records, lawmakers invested nearly half a billion dollars to improve access to inpatient and outpatient behavioral health care. They also provided $7 million in state general revenue for statewide initiatives to reduce maternal mortality and morbidity and $19.9 million in state general revenue to help reduce the nursing workforce shortage.
Nonetheless, despite the new investments in health care, the legislature maintained its common practice of underestimating Medicaid cost growth — a practice that almost always creates a Medicaid budget shortfall that lawmakers will have to pay for during the next legislative session in 2021.
New Source of Trauma Hospital Funding
One of the biggest winners of the 2019 session is access to trauma care. Rep. John Zerwas (R-Richmond) and Sen. Joan Huffman (R-Houston) passed landmark legislation that repeals the much-maligned Driver Responsibility Program — the primary source of revenue for the state’s trauma fund (Account 5111) —while maintaining funding for the state’s more than 280 designated trauma hospitals. Repealing the DRP and replacing its lost revenue for trauma hospital funding is an issue Texas hospitals, lawmakers and other stakeholders have worked to address for more than six years.
Revenue in the state trauma fund, when combined with federal funds, provides $176.4 million to offset just over half of Texas trauma hospitals’ more than $320 million in unreimbursed trauma care costs. In addition to trauma, the trauma fund also supports funding that, when combined with federal funds, provides $150.8 million for safety net hospitals to provide care to indigent and vulnerable populations.
Eliminating Surprise Medical Billing
In response to consumer — and constituent — concerns, health care pricing and disclosure received more attention by legislators than in years past. Lawmakers on both sides of the aisle and in both chambers were determined to eliminate surprise medical billing of Texas patients, and Texas hospitals supported those efforts early in the session and often. With bipartisan and bicameral support, Sen. Kelly Hancock (R-North Richland Hills), Sen. John Whitmire (D-Houston), Rep. Tom Oliverson (R-Cypress) and Rep. Trey Martinez Fischer (D-San Antonio) successfully passed legislation to protect patients from surprise medical bills for emergency or unplanned out-of-network health care services, while maintaining mediation for hospitals and health plans to negotiate a fair payment amount, free from government-set rate parameters. As the issue of surprise billing gains increasing attention in the U.S. Congress, Texas’ new surprise billing law can serve as a model for the nation.
Bills That Did Not Become Law
In a state built on limited government, stalling legislation is the name of the game. Many bills never get a hearing, sometimes intentionally and sometimes because the calendar conspires against them. This session was no different, and even some well-intentioned bills found themselves victims of limited time. Among the THA-opposed bills that failed was one that would have restricted the ability of local governments, including hospital districts and county hospitals, from engaging in issue advocacy for the betterment of their communities. Another bill failed that would have undermined Texas’ strong medical malpractice law by increasing the current limits on payments for non-economic damages. On the other hand, a THA-supported bill that would have created a maternal mortality registry to improve the state’s data collection and reporting of maternal outcomes also failed at the 11th hour.
Texas hospitals fared particularly well in the 2019 legislative session, but the work doesn’t stop now that state lawmakers have adjourned. The Texas Hospital Association will monitor the state agencies’ activities to implement and enforce the legislature’s laws, especially through rulemaking. THA’s political action committee, HOSPAC, also will continue to fundraise through the fall to support hospital-friendly candidates in the March 2020 primary election.
Additional information on the 86th Legislature and the outcomes for Texas hospitals is available at www.tha.org/2019legislativesession. THA’s Health Law Manual summarizing the new laws and implications for Texas hospitals will be published in August.