State Sen. Tommy Williams, R-The Woodlands, was interviewed by Ron Whitlock Reports about legislation authored by his good friend, state Sen. Juan Hinojosa, D-McAllen. Senate Bill 1623 amends the Health and Safety Code to allow for more local control over funding for healthcare services on the Texas-Mexico border.

“Senator Hinojosa has visited with me about his bill. I know it is very important to the folks in the Valley,” Williams told veteran TV reporter Ron Whitlock.

SB 1623 is expected to be heard by the full Senate on Thursday. It passed out of the Senate Committee on Intergovernmental Relations, which Hinojosa chairs, on a 3-0 vote last week. The bill allows Cameron, Hidalgo and Webb counties to create what is known as a Local Provider Participation Fund. This fund uses fees imposed by local hospitals to draw down even more federal funds under the 1115 Waiver program. The match is 60-40 but hospitals can also recapture the 40 percent they kick in.

According to Hinojosa, roughly $541 million in federal funds should be available to hospitals in Cameron, Hidalgo and Webb counties to pay for uncompensated care. However, he said it is being left on the table in Washington, D.C., because the three counties do not have hospital taxing districts. In the absence of such a district, the counties do not have enough intergovernmental transfer funds to draw down the federal money.

Whitlock posed this question to Williams: Is there a solution that you can identify to help increase the amount of available intergovernmental transfer funds to fully draw down available federal dollars for both public and private hospitals, many of which have lost over $700 million across the state in reimbursement reductions in the last two year period?

Williams responded: “It is an issue and we continue to work with both the private and public hospitals to try to address. But, one of the things that is going to happen is a lot of these special programs are going to go away as the Affordable Care Act is being phased in and so there is going to have to be some plan to transition because those federal funds I do not believe are going to continue to be there.”

Asked by Whitlock if he believes that a continuation of the funding cuts seen in healthcare in recent years will endanger Texas’ safety net hospitals, Williams said: “We are all concerned and we want to make sure that we have an adequate safety net. I think the bill that we passed out of the Senate, as we go into conference committee with the House, has done a lot to address safety net issues.”

All the hospitals in Cameron, Hidalgo and Webb counties are deemed safety net hospitals by the Centers for Medicare and Medicaid Services.

The Guardian interviewed Hinojosa about his bill soon after it was passed out of committee. He said that as things stand Cameron, Hidalgo and Webb counties do not have a mechanism to draw down 1115 Waiver matching funds to help hospitals that provide indigent healthcare.

“One of ways to do that is for the hospitals to impose a fee on their outpatient service. That fee would then go to a special fund that could only be used as an intergovernmental transfer mechanism to draw down federal funds,” Hinojosa said.

“Right now, because we do not have a way of drawing down our share of federal funds we are leaving approximately $540 million on the table that would be available to treat and take care of the healthcare needs of our indigent population.”

Hinojosa said his legislation would also help in keeping property taxes lower in Cameron, Hidalgo and Webb counties because these counties currently set aside eight percent of their annual budget for indigent healthcare.

“They would not have to do that. They would have more discretion and better options in maybe creating more clinics and dealing more with preventative health. To me health care is not a luxury it is a necessity as our population continues to age. We have to find a way to fund healthcare locally,” Hinojosa said.

While Hinojosa is trying to pass SB 1623, state leaders are also trying to come up with a compromise over Disproportionate Share funding. Traditionally, the large public hospitals in the major urban areas would not only take care of the indigent poor in their counties but also use the taxes they raise to draw down matching funds for hospitals in other parts of the state that provide a disproportionate share of healthcare to indigent patients.

“Because the mechanism for drawing down those federal funds has changed those public hospitals no longer want to share those funds with private hospitals. In the Valley we do not have a hospital district to impose any type of tax. So, SB 1623 is a unique and innovative way of coming up with a structure that does not cost the taxpayers any money,” Hinojosa said.

“The hospitals impose a fee on each outpatient that is served but that fee is used to draw down federal funds on a 60-40 match. The reason it is a win-win situation is because the hospitals also get the fee they impose on themselves reimbursed. So, they do not lose any money. On the contrary, they get to use federal dollars that would otherwise go to other parts of the country.”

Hospital chiefs from across the Valley testified in support of Hinojosa’s bill when it was heard in committee. Afterwards a number of them spoke with the Guardian.

“We are leaving $39 million on the table under the 1115 Waiver,” said Javier Iruegas, CEO of Mission Regional Medical Center. “If we can access that federal money it will not only go towards uncompensated care for the indigent but also projects that the community needs. So, we will be able to provide extra care.”

Iruegas said the 1115 Waiver program is a “great” resource. “Unfortunately, it does not hit every area of the state equally. South Texas is affected in a negative way and it has the greatest need. We are the ones being hurt the most. This is a way of leveling the playing field a bit,” he said.

Israel Rocha, an administrator at Doctors Hospital at Renaissance, said SB 1623 will serve as a “good bridge” until a local hospital district is set up. “Being the largest urban county in the country without a hospital district, it is something we have to look at. We are one of the largest uninsured regions in the nation. We have the highest percentage on Medicaid due to socio-economics. So, a hospital district is something we have to think about seriously. But, right now we cannot even consider it because of some of the limitations in place.”

Rocha said Hidalgo County is currently leaving more than $100 million on the table each year due to a lack of intergovernmental transfer options.

Manny Vela, CEO of Valley Baptist Health System, said his hospital is accessing about $10 million under the 1115 Waiver program but is leaving about $100 million on the table. “I do not want anyone to get the impression this is a windfall or gravy for the hospitals. This is the money that would be paid for services that have already been rendered,” he said.

Vela said passage of Hinojosa’s bill, along with a positive outcome in the negotiations over the Disproportionate Share program, is crucial for the survival of hospitals along the South Texas border.

“The passage of SB 1623 will allow us access to federal matching dollars. We have never had access to these funds at this level before. Valley Baptist has a cap of $100 million and we have been able to get $10 million in intergovernmental transfer funding from Cameron County. There are no additional sources in our county,” Vela said.

“Because we do not have a hospital district, we do not have tax dollars that will qualify as IGT dollars. Access to those federal dollars will allow us to expand upon the services we are currently offering as well as help fund the residency programs we currently have in place. So, it will help with the development of our medical school.”

The companion bill in the House is HB 3710. Its author is state Rep. Bobby Guerra, D-McAllen. The bill was heard by the House Committee on Public Health on Wednesday. It was left pending and may come up for a vote next week.