EDINBURG, March 26 - Hospitals in South Texas are battling with the Texas Conference of Urban Counties over how healthcare funding for the indigent poor is managed.

The hospitals would like to use taxpayer-generated county funds in order to leverage even more money from the federal government under the 1115 Medicaid Waiver. The Conference of Urban Counties says it is strongly opposed to counties being forced to send money to the state under terms dictated by private hospitals.

“The Conference of Urban Counties has taken a position that would basically destroy the DSH system for the Texas Mexico border region,” said Carlos Zaffirini, Jr., a healthcare consultants representing counties along the South Texas border region.

DSH stands for Disproportionate Share Hospital program.

“I am very upset with the position taken by the Conference of Urban Counties. In conjunction with the lack of funding and infrastructure along the border, it could have a very damaging impact on the safety net system,” Zaffirini said.

Under the DSH program, the federal government provides funding to hospitals that treat indigent patients. All 11 hospitals between Eagle Pass and Brownsville are deemed Major Safety Net Hospitals by federal and state government and receive DSH funding.

“An estimated $96 million is at stake to South Texas border counties,” said Zaffirini. “I think Webb, Hidalgo and Cameron counties are all members of the CUC and they did not know what the Conference of Urban Counties was doing. I think certain people in other areas of the state pushed for this. The Conference of Urban Counties has expressed its desire to disrupt the DSH formula across the state.”

Not so, said Don Lee, executive director of the Texas Conference of Urban Counties. Lee hand delivered a letter on Feb. 18 to Gov. Rick Perry, Lt. Gov. David Dewhurst, and Speaker Joe Straus titled “Please Don’t Misdirect Local Hospital District Tax Dollars.” Copies were sent to every member of the Legislature. A copy of Lee’s letter is posted at the end of this story.

In an interview with the Guardian, Lee said his group is opposed to any mandatory transfer of funds, whether the money is for DSH, the 1115 Waiver, or Medicaid Expansion. He said his group is trying to protect the tax dollars of Hidalgo County taxpayers and those of other counties along the South Texas border.

“We understand there is an issue with DSH funding but it is not of our making. We don’t have any control over that,” Lee said. “There are developments that have taken place that have impacted counties all over the state. Private hospitals have responded by wanting to mandate that counties must give money to fund DSH. We believe that any transfer of money to the state to fund Medicaid programs needs to be done under voluntary agreements like it has been for the last 20 years, not through mandates. We think they are constitutionally infirm and make for bad public policy.”

Zaffirini counters with statistics showing that the South Texas border region is losing out on federal health care funds.

“If you look across the state the average regional health partnership is accessing approximately 89 percent of the money available to them. In Hidalgo, Cameron and Starr counties it is only accessing 45 percent. In Webb, Zapata and Maverick counties it is only accessing 39 percent. So, we are at about half of what the rest of the state can access,” Zaffirini said.

“In Hidalgo County that means about $500 million for a five year period. If we do not access the funds available to the Texas-Mexico border region they will leave this region and go to other parts of the state to subsidize those regional health partnerships.”

The Texas Conference of Urban Counties includes Webb, Hidalgo and Cameron counties. However, judging by the comments of Eduardo Olivarez, Hidalgo County’s chief administrative officer for health and human services, the Conference is not representing Hidalgo County on this issue.

“The Conference on Urban Counties has made a recommendation and put a letter out in reference to reformulating or restructuring the way Disproportionate Share Funding in Texas is distributed. The Conference on Urban Counties is recommending that the majority of funding be directed to the big public hospitals or hospital district entities,” Olivarez said.

“This is all fine and good if you are a metropolitan area like Dallas, Houston or San Antonio. For us in the Valley it is detrimental because we have no public hospital infrastructure, we have no health district as of yet. What would happen if the Disproportionate Share Funding is reformulated is that we would risk losing millions of dollars that is being used for indigent services, for either uninsured or under insured clients.”

Olivarez said Hidalgo County Commissioners are in the process of sending letter to the Conference of Urban Counties. “Basically, we are saying that in our county it would be uneconomically harmful to change things because the medical community is our largest employer and taxpayer. It would also be harmful to the residents of the county because they would lose the opportunity to get the health care services needed.”

Asked how the Conference of Urban Counties could be kept at bay, Olivarez said: “We feel we have a good legislative delegation from South Texas. I feel confident about how they would guide this decision. They have done tremendous work for already. I really feel that a lot of the counties in Texas may stand to get hurt by this.”

Related to the arguments between the TCUC and the Valley hospitals is legislation filed by state Sen. Juan Hinojosa. Zaffirini applauded the McAllen Democrat for filing Senate Bill 1623. He said it would provide more local control over funding for healthcare services on the Texas-Mexico border by allowing counties to create a Local Provider Participation Fund. The legislation limits use of the new fund to services for the indigent care and could not be used for Medicaid expansion, Zaffirini said, He said it would not require any funds from general revenue.

“Implementation of the Local Provider Participation Fund becomes dramatically more important if the DSH program disappears, as proposed in a recent letter by Don Lee of the Conference of urban Counties,” Zaffirini said. “My hope is that Mr. Lee will propose a productive solution to preserve and protect the healthcare safety net in South Texas.”

Zaffirini predicted other counties far from the South Texas border region would also be negatively impacted by changes to DSH. He listed Randall, Jefferson, Brazos, McLennan and Smith counties.

“The 1115 Waiver was designed to improve access, availability, delivery and funding for safety-net hospitals,” Zaffirini said. “Failure to allow these 11 hospitals to fully participate in the Waiver will fracture the South Texas health care safety net and will undermine the core principles behind the Waiver.”

Zaffirini predicted counties along the South Texas border region would have more flexibility to fund health care services, uncompensated care payments, and Disproportionate System Reform Incentive Payment projects if SB 1623 is passed.

“Failure to allow the South Texas Border Region to create the Local Provider Participation Fund will increase disparities, and will thus greatly harm an area of the state most in need of health care support via the Waiver.”

Here is Don Lee’s Feb. 18 letter in full:

Dear Governor Perry, Lt. Governor Dewhurst and Speaker Straus,

The Texas Conference of Urban Counties respectfully requests that you reject calls by private hospitals to hijack and misdirect county hospital district tax dollars. This private hospital initiative is not in the best interests of local taxpayers. It could be proposed soon as an amendment on HB 10 or another appropriations or Medicaid related bill.

For over two decades a few large hospital districts in Texas have provided local tax dollars, at nearly one-half billion dollars per year, to draw down additional federal Medicaid dollars for hospitals across Texas, both public and private. This program is known as Disproportionate Share Hospital program or DSH.

The local tax dollars are available through voluntary transfer agreements between the State and the large counties. These voluntary agreements are necessary so that proper fiduciary responsibility is exercised over these tax dollars. Further, a compulsive transfer of funds would be subject to challenge as a State property tax.

Recently, the State and counties have embarked on an effort to improve Medicaid service delivery with greater accountability and increased federal matching funds over what is available through DSH. It is the 1115 Waiver process. This requires use of local dollars to fund these new efforts – at an increased benefit to local taxpayers – but results in less funds available for DSH.

Nevertheless, a group of private hospitals is demanding that urban counties be forced to prioritize transferring funds for DSH even though local officials have determined it is not in the best interest of local taxpayers. In fact, it is unavoidable that local property taxes will have to be higher under the private hospitals’ proposed mandate.

We have reviewed the financial and statistical claims where private hospitals claim that they are not receiving public subsidy equal to their contribution of uncompensated care. They incorrectly count local county taxpayer dollars as compensation for care rather than the public subsidy it is. This apples-to-oranges comparison leaves their analysis flawed.

Any effort to remove local control of these transfers will be a big step towards mandating all counties transfer funds to the State. All urban counties whether directly impacted by the current debate or not, stand as one against this private hospital effort to hijack local tax effort.

Please contact me if I can respond to any concerns or questions you may have.

Thank you for your service and assistance.

Sincerely,

Donald Lee
Executive Director
Texas Conference of Urban Counties