Medicaid Waiver Fosters Collaboration, North Texas Hospital CEOs Say

In addition to restoring funding that could have been lost, the Texas Medicaid Waiver 1115 has fostered collaboration among local providers and encouraged them to identify gaps in care, according to North Texas healthcare executives.

The health system chief executive officers discussed the challenges and opportunities of the waiver at a symposium Monday sponsored by the Tarrant County Hospital District.

The Texas Medicaid Waiver 1115 is formally known as the Texas Health Care Transformation and Quality Improvement Program. The waiver was a response to the expansion of Medicaid managed care during the 2011 legislative session. The federal government reduces upper payment limit funding under HMOs, and UPL payments were designed to help compensate for the fact that Medicaid only pays hospitals about half of the cost of care. The program pays Texas hospitals about $3 billion annually.

The waiver creates two funding sources to replace the UPL system. The first pool of money will reimburse hospitals for uncompensated care and the cost for physicians, clinics, and pharmacists affiliated with the hospitals. That fund will distribute an estimated $17.6 billion over five years.

A second source of funds—called the Delivery System Reform Incentive Payment Pool—will pay based on care delivery improvements reported by Regional Healthcare Partnerships. According to a Texas Health and Human Services report, the pay-for-performance model “embodies the principles of Centers for Medicare and Medicaid Services’ overarching triple aim: improving the experience of care, improving the health of populations, and improving costs.”

The state’s 20 RHPs created more than 1,300 projects, most of which have earned CMS approval or are pending approval. The combined projects are valued at $10 billion over the next four years.

“Parts of this really are just about preserving UPL funding,” said Baylor Health Care System CEO Joel Allison. “It’s another way to draw down federal dollars. But this started collaboration, where we all look at improving the overall health of the community. There is an opportunity from DSRIP to find ways to get more people covered because some may qualify under [the program] rather than the Affordable Care Act.”

Michael Williams, president of the University of North Texas Health Science Center, said the waiver allows them to correct what was overlooked in the ACA.

“We still have 30 percent [healthcare spending] waste and disenfranchised populations,” he said. “This is the first time we have had comprehensive collaboration that allows us to address things that needed to be addressed.”

Robert Earley, CEO of JPS Health Network—the anchor for the Region 10 RHP—said more than 40 percent of emergency department traffic represents overutilization of that venue, and that the 1115 waiver is not well understood.

“Healthcare finance is incredibly complicated,” he said. “I don’t think stakeholders understand [the waiver] or what it does or the transformation that can result from those dollars. These are federal dollars coming home.”

Earley added that the rigorous accounting for health outcomes would push providers to improve. You can’t fake the numbers, he said; Either you hit the mark or you don’t hit the mark.

Texas Health Resources CEO Doug Hawthorne said the challenge for waiver participants would be to share the results of successful projects.

“These [successes] are no good on a shelf,” he said. “We need to push each other and share the outcomes so others can learn. This is an opportunity to share best practices.”

Allison called the 1115 waiver a “pretty fragile funding model.” Baylor previously used UPL funds to support its Diabetes Health and Wellness Center in south Dallas, and it is now a DSRIP project. The center, he said, has cut ED visits by 42 percent in that neighborhood. Baylor would not be able to fund those kinds of projects if the waiver funding goes away in 2016.

Steve Jacob is founding editor of D Healthcare Daily and author of the book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at


Posted in Hospitals, News, Physicians.
  • Thank you for an excellent recap. I was fortunate to attend this conference. As a taxpayer the transformational nature of this new waiver (value based spending not just paying for encounters) bodes well for lowering the Texas healthcare burden. As a team member of the healthcare provider world, the collaboration and transparency show by the host Tarrant County Hospital District was outstanding and commendable. All the comments and commitments for collaboration on these new wavier projects as given by the greater metroplex healthcare leaders is refreshing and when acted out will again benefit all – making us healthy, wealthier and wiser.