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Texas—Report on Healthcare Reform


Email Alert

By Christopher D. DeMeo, Connie R. Crawford, and Amy L. Osborn*

December 8, 2008

The political landscape for healthcare reform moved slightly to the middle in what has been a right-leaning state for over a decade. The changes seen in Texas, however, were not as dramatic as those experienced at the federal level. While Democrats had gains in both the House and Senate, they remain the minority. The Texas Senate now has nineteen Republicans and twelve Democrats, which is significant because it takes twenty-one votes in the Senate to bring a measure to the floor. There is also one seat still contested in a run off for District 17 where the Democrat candidate won but did not garner a majority. The Texas House is more balanced with a 76-74 Republican majority. What does this mean for healthcare legislation? There may be new chairs for the Public Health, Human Services, and Insurance Committees in the Texas Senate, but probably no significant changes in the Health and Human Services Committee or State Affairs Committee in the Texas House.

The new congress will likely expand on the previous session's efforts at healthcare reform. In Texas, the legislature meets every other year. The 2007 Legislative Session passed several healthcare reform measures while leaving others for further debate. The majority of these efforts can be categorized as affecting Medicaid, electronic health records, and greater transparency in the health insurance context.


SB 10, enacted by the 2007 legislature as its signature "Medicaid Reform" bill, calls for improving the Texas Medicaid program by focusing on prevention, individual choice, better planning, modernizing services, and reducing Texas' rate of uninsured. Many of its provisions, however, are contingent on a § 1115 waiver from CMS, which has not yet been granted. These issues will likely be revisited during the upcoming session.

Many legislators, professional organizations, and advocacy groups will be pushing for an expansion of Children's Health Insurance Program (CHIP) and elimination of bureaucratic obstacles to enrolling all eligible children. Proposed legislation could range from changing eligibility criteria to increasing the number of children covered to increasing funding for the program. In addition, there will be pressure on legislators to increase the number of Medicaid Graduate Medical Education slots in Texas. State funding has decreased approximately 60% in the last four years, leaving Texas with fewer slots than California or New York and nearly guaranteeing that many medical students will leave the state to continue their education.

Electronic Health Records

The Texas Legislature addressed issues facilitating the use of Electronic Health Records and the use of technology in healthcare in the 2007 Session. In passing HB 522 and 1060, they acknowledged the efficiency associated with the utilization of Electronic Records and specifically allowed providers to copy patient identification. Additionally, HB 1066 established a public/private sector framework to create common data standards, cooperative arrangements, and interoperability. It is anticipated that there will be more proposals introduced in the 2009 Session to further facilitate the use of the Electronic Health Record.


Legislators introduced several measures during the last session that were designed to increase both consumer and provider access to healthcare information. The congress was able to pass SB 1731, which amended Health and Safety Code, Occupations Code, and Insurance Code as it relates to consumer access to healthcare information and consumer protection for services provided by or through health benefit plans, hospitals, ambulatory surgical centers, birthing centers, and other healthcare facilities and provides penalties. Among other things, the bill authorizes the collection of data and disclosure of insurers' reimbursement rates and actual healthcare costs. The new law became effective on September 1, 2007.

The Senate also introduced SB 414 which would require pharmaceutical companies and marketers to report gifts valued over a certain amount on an annual basis to the Department of State Health Services (DSHS), and requires DSHS to post all reports online. The bill was left in committee awaiting further debate.

Congress also introduced CSHB 839 designed to regulate the secondary market for physician's contractually discounted rates also known as "silent PPOs." Such networks are authorized by Texas statute, but current efforts seek to tighten their regulation. According to the bill's sponsor, one of the bill's main thrusts is to assist individual physicians detect and/or identify how much they are going to be paid for a particular service and by whom. The bill would also allow for patients to determine their share of the cost of their medical care. The bill did not pass during the last session but looks to be a big issue in 2009.

Current Activity and Trends

There is already activity on the healthcare front as Senator Eliot Shapleigh from El Paso has introduced several bills regarding health plan coverage. SB 303 would require uniform applications and written underwriting standards for individual health and accident policies, health insurance policies, and individual HMO coverage. In addition, no cancellation would be permitted unless the application contained a material misrepresentation. SB 207 would prohibit health benefit plans from compensating agents/sales representatives, or setting performance goals or quotas based on the number of policies rescinded, cancelled, or limited. A companion bill, SB 206, would require health benefit plans to report their cancellation and rescission rates and reasons to the Texas Department of Insurance, which would post the information on a website.

On the horizon for healthcare legislation, there are several issues which look to be high on the agenda. The Texas Medical Association has identified several priorities including Frew-type coverage1 for adults and a tax to fund uncompensated care. The Texas Hospital Association has also identified several priorities including relaxing of the corporate practice of medicine restrictions prohibiting employment of physicians in rural areas and appropriations to help pay for care to the uninsured, increase funding for Medicaid and CHIP, and help pay for ER/trauma care. The Texas Association of Health Plans has indicated it wants changes to SB 1731 discussed above, opposes standardization of code sets, and opposes standardization of physician contracts.

*We would like to thank Christopher D. DeMeo (McGlinchey Stafford PLLC, Houston, TX), Connie R. Crawford (El Paso County Hospital District Legal Unit, El Paso, TX), and Amy L. Osborn (Rogaliner Law Offices PC, Frisco, TX) for providing this summary.

1 The issue in Frew v. Hawkins, 2007 U.S. Dist. LEXIS 65843 (E.D. Tex., Sept. 5, 2007) regarding utilization of children's preventive services in Medicaid patients was settled last year. Under the settlement, the state will pay physicians and dentists 25-50% more to see Medicaid patients, hire more caseworkers to help families, and reduce wait times on toll-free phone numbers set up to assist families.

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