Travis County Commissioners Court

August 7, 2012 - Item 21
Agenda

21, consider and take appropriate action on the Travis County Healthcare District dba Central Health Fiscal Year 2013 budget.

>> Good morning.

>> Good morning.
Trish young brown, president and c.e.o.
Of central health.
I have with me today mr. Larry wallace, chief service delivery officer and mr. John stevens who is our chief financial officer.
We would like to present to you our budget for the -- our proposed budget for fiscal year 2013 and ask for your consideration and approval of the budget.
Does everyone have a copy of the presentation?
Okay.
I would like to make a few comments and then turn the presentation over to john and larry.
We are here a bit earlier than we normally come to see you.
This time of year.
And there is a purpose behind that.
I believe that you've read in the newspaper and have heard from us directly that our board, the central health board of managers is going to be considering a matter regarding calling for a tax rate increase election on August 15th.
And in order for us to -- in order for our board to be able to consider such an action, it -- it would have to consider a tax rate that would be put in place for the fiscal year 2014.
The ballot language required on such an election requires us to state the proposed rate and compare it to the current rate, which would be 2013 rate.
Fiscal year 2013 rate.
So it's necessary for us to bring the budget to you, a little ahead of schedule, and ask that you approve it.
Our board has approved the budget at their meeting last Wednesday, August 1st.
We're going to make a short presentation to you.
We would be happy to answer any questions that you have along the way.
I do want to -- I do want to preface the presentation with a statement that this is for all intent and purposes for central health a transition year.
We are undergoing very significant changes in terms of how we might avail ourselves of some federal funds under the transform -- 1115 transformation waiver.
It is allowing us the opportunity to redesign how we deliver care to the community and we'll have the potential for us to create some structural changes in that care delivery.
So every on the next year, over the next year, we have done our best to predict and essentially present to our board and now to you a budget that is substantially the same as the current year with some known -- some known increases addressed, things that we can predict at this point.
There may be things that -- that happen that we cannot predict at this point because we are dealing on a daily basis with both the state of Texas and the federal government centers for medicare and medicare services for this new program and how it impacts us.

>> Before you go into your presentation, could you kind of explain to the public what the essence of the August 15th meeting is and what -- as far as going forward to -- to the voters, for bond election, on this issue and I know that you kind of went there a little bit, but what is the significance of that?
Because I think the public need to know.
What's coming up and how you are looking at that, per se.
And the reason for it.

>> Is that okay for me to address since it's not posted?
Okay.
We are not contemplating a bond election.
We are --

>> [multiple voices]

>> We are contemplating a tax rate increase election.
I think the term that's being bandied about --

>> I'm still on the other issue.
Bond, bond, bond

>> [laughter] but anyway the tax increase.

>> That would be -- that is related to the 1115 waiver project that I just mentioned in terms of the potential for central health to increase its public funding to draw down federal matching funds that are available under this new waiver program.
And -- and every -- every dollar that we send up from a local -- every local dollar that we send up has the potential to bring down an additional dollar -- at this point $1.46 to bring -- to have a total of funding available of $2.46.
In our community.

>> How much?
What's the ratio?

>> For every dollar, we would -- for every local dollar, we would receive 1.46 in federal matching funds.

>> So every million dollars, it would be a 2.4 -- 3 million-dollar --

>> If we send --

>> [multiple voices]

>> 1.4 million, you are really talking about 2.43 on top, total, right.

>> Okay.
Well, I guess -- I know that that waiver when we also dealt with another waiver type of situation here, that was basically dealing with mcot with mental health aspect of that.

>> That project you approved is part of this waiver, it has multiple components and multiple entities.

>> Right.
I know that November is right around the corner.

>> Yes, sir.

>> My question, though, is with that being right around the corner, asking the voters deciding to go and a few hurdles still to be crossed, the educational aspect of what you are doing, the reason why, and what -- what is contained in the components of the reason of why you placed it on the budget, do you think that you have enough time toll get across -- to get across, to educate the voters, to let them know exactly what next is going on?

>> Yes, assuming that the board makes a decision to go forward with the vote on November 6th, then we would have time between now and then to educate the public on what's being asked and why it's being asked and the expected outcome and benefits.

>> In receipt of what the purpose and stuff like that.

>> Absolutely, uh-huh.
So today, this is -- today we're here to talk about establishing our budget follow the tax rate for 2012.
Which is our fiscal year 2013.
And that will then give us the ability for the board to actually consider a tax rate election on August 15th.
As I mentioned, this is a transition year.
We've attempted our best at progostication, to what -- things are literally changing on a daily basis, we may not have been able to predict everything, there could be a possibility that sometime during the year we might have to come back to you with a budget amendment that said well we got 98% of it, but something else popped up, now we need to amend our budget to address these new issues.
So I just wanted to give you that heads up.
We certainly hope we don't have to do that.
But it's possible this year.
So I would like to turn it over to john stevens and we'll present our fiscal year 2013 budget to you.

>> I'm john stevens, the chief financial officer.
Let me first go over a presentation overview that's on slide two.
Larry is going to talk about service delivery highlights for this fiscal year.
I'll orient you to the current year budget.
Then we'll talk about the issue of structural balance, which was a concern for us last year as we looked forward to a number of expansions that were underway, some of which are still underway now.
Then we'll talk about the current environment, including the 1115 waiver that trish referred to.
Look at the proposed 2013 budget and then lastly give you an update on the waiver and on the seton letter of intent that we entered into back in April of this year.
So let me turn it over to larry first for the service delivery overview.

>> Thanks, john.
Larry

>> [indiscernible] chief service delivery officer.
I want to make a disclaimer, normally we would have the third quarter activity, but because we're early it's not included.
And the third quarter numbers exceed everything that we are showing in quarter two.
I just wanted to let you know that in the beginning.
The first slide reflects our activity with m.a.p.
Enrollment.
When the district was created, we averaged about 8400 m.a.p.
Enrollees annually and currently we are very close to 24,000 m.a.p.
Enrollees.

>> Can you tell the public what the acronym m.a.p., what is that?

>> Medical assistance program.

>> Exactly.
Folks need to kind of know what that is.
Everybody is not as familiar with the acronyms as we may be.

>> Yeah, the mel assistance program.

>> Thank you.

>> We contribute that increase to a couple of things.
One it's being promoted staffed and being able to meet the demand for appointments.
Folks are not having to wait.
We are able to really provide those services in a very timely manner.
So as a result our numbers have really tripled since '04.
The second slides shows a new service that our medical assistance program staff included in their scope of work, that's what we refer to as the state application assistance program.
Basically what we do, because we already have clients that we have in the office and some people qualify for other services and previously we could give them information and send them on their way.
But now we've expanded our care to be able to actually provide assistance, real assistance to the people who are trying to gain access top medicaid or medicare or other services that they may be entitled to.
What it does, it really closes the loop on some of the red tape that people have to go through, making multiple visits and our staff are able to really help with that.
And we think that positions us really for the future.
In the case of -- of other things that will come down with health reform, there will be other people, more people that will be eligible.
We believe for medicaid and other services.
So by doing this within this fiscal year, we're positioning ourselves not only for today, providing valuable services, but we also gear up for the future.
The next chart shows really our total primary care visits that were provided and again these numbers only go through quarter two.
We've already began getting information for the quarter that ends in June and our numbers are up.
But with that being said, this includes all of the patients from all payor sources, which include community care and our contract service providers which it's more than a half dozen non-profits that we work with that service our patients.
And medical visits, behavior, health visits and dental visits, we are really approaching 90,000 visits for this reporting period.
And it continues to escalate.
The next chart is primary care visits for m.a.p.
Enrollees.
And these are services that are provided in the community care network, along with our contracted providers and again just goes through a quarter two and we are -- we are closely approaching 30,000 visits and all of these numbers continue to -- to increase.
The next chart shows primary care visits for unfunded patients.
These are people who are not m.a.p.
Does not include services at community care, but it's our contractor providers and includes both medical and behavioral health visits and we're combining those right around 10,000 visits.

>> How are we taking care of the unfunded type of situations?
And that

>> [indiscernible] situations to deal with, how was that gap to make it whole -- how does that work?

>> In our contracts, with -- with our partners, we also pay not only for m.a.p., but for people who are unfunded.
So we provide a source really of payment.
Like

>> [indiscernible] lone star circle of care.
Some only see m.a.p., others see m.a.p.
And unfunded and there's a category that only treats unfunded.
In every case we work with the providers, provide a funding source so that the unfunded people can have access.

>> Okay.
All right.
Thank you.
The next chart shows our activity in specialty care and again this is for m.a.p.
Patients only.
Some of the changes that are occurring that are not reflected on this report, but you will see them in the future reports is community care is really expanding their network of specialty care that's provided within their clinics, that was one of the things that we had targeted some time ago, with the opening of the new north central clinic there is space to actually provide some specialty services which really offloads brackenridge.
Up until now most of those services were provided at brackenridge.
We know that it's not adequate.
Sometimes we can do a better job in creating a timely access to patients if that service is connected to their primary care home.
We'll continue to build on that and these numbers will continue to increase over time.
Next chart shows the activity around emergency room visits.
It also shows our m.a.p.
Enrollment, growth, and if -- in proportion to m.a.p.
Enrollment increase, our increase in emergency room visits really are not growing at the same rate.
So we can draw at least one conclusion and that is the medical home, the primary care access that we've made available, it does have an impact on emergency room visits.
I wouldn't want to just draw a straight correlation to that.
Because you can have primary care access and you can still have an increase in emergency room visits, but it's for different reasons.
But we do believe that as we establish and continue to build our network of primary care, and urgent care after hour clinics and all of those will impact the er utilization.
So we think that the fact that our growth in er visits is really less than our growth proportionately in m.a.p.
Enroll, that's a good sign.

>> Can I ask you to drill down that a little bit more.
Perhaps this is more from a programmatic standpoint.
I don't know, larry, how you feel about addressing this.
But I know that dr. Hinchey over at emergency medical has been looking at our frequent flier population in the emergency rooms, I know that prehospital emergency care isn't strictly -- isn't part of the health care district.
Strictly speaking.
But it's obviously impacting the health care district service line once they hit the emergency room and we attempt to fold them into a m.a.p.
Clinic ongoing medical home circumstance.
Where are we in terms of our collaboration in terms of the prehospital emergency care world.

>> I think we're making tremendous progress and through the 1,115th waiver and some of the work that is being done in collaboration with brackenridge, we are connected really our services in a real way.
There's a new program that you'll hear in the future, it's really involving intensist interaction and intervention.
Those are people with teams of different disciplines, not all doctors, but other folks that really can help people manage their care in a very real way as opposed to coming to the er or to the hospital for your services.
So it's heavy case management, it's quite a bit of intervention at the grassroots level which we think will really make a difference.
We are connecting our programs with the community care network and really it will expand to all of our contractor providers.
We are very optimistic that it's going to have a huge impact on er visits and how we manage the patients that show up there.

>> That's great news for us because the county and the municipalities in the emergency service districts and the jail becomes the provider of last resort both in mental health care and physical health care.
Some people's medical home is calling 911.

>> Right, yeah.

>> We understand.
The behavior health component is huge because that is also being addressed in this --

>> Thank you for that.
The next chart reflects what's happening in in patient services.
These are folks that actually are admitted to the hospital in medical and surgical disciplines.
And again in proportion to our m.a.p.
Enrollment, these numbers remain relatively flat and for the quarter report it's about 700 admissions.
Admissions the next category deals with in patient psychiatric hospital admissions for unfunded patient.
We have three locations that are reflected in the report.
It's the Austin state hospital.
Private hospitals that are paid by the state and private hospitals that are funded by central health.
Our numbers are -- are pretty consistent across the board.
In fiscal year '11, fourth quarter, there is a decrease there, but that's contribute being to the foreign -- contributing to the forensic patients handled in a different manner, that's it is reason that you see that decrease, that's not really an indication of the pattern.
That pattern is what you see that goes beyond that one reporting period.
The next slide is --

>> What was the difference in the forensic patients?

>> There was a change in terms of the time period in which the patients had to be admitted to programs for restoration of competency, so there's a direct correlation which when those patients were required to be put into the state hospital, the -- the court order and that impacted the capacity available for other patients.

>> Would -- would patients awaiting competency restoration, would their care be eligible for 1115 or would they be considered incarcerated or incarcerator on paper, in which case they wouldn't be.

>> I think it's the latter.

>> That's unfortunate.
We really do have a bias against those who have criminal records.

>> Yeah.

>> And the -- and the last chart shows our activity around in patient, what we call psychiatric alternatives.
Over the past year, we've incorporated and the board has funded some additional programs that really move people to the right level of care at the right place and that includes respite care and so by having a partial hospitalization as well as the intensive outpatient program, it gives you choices and so you are able to really manage people where they need to be managed.
It also I think has a financial impact on how you provide the services and we believe it's a better quality outcome that comes with that.
There's not much reflected.
In future reports you will see more activity.
But in the limited amount of information that we do show, it has increased and we expect that these services will continue to increase over time.

>> Let me ask this question.
You know, as you -- in your presentation, but also within the budget as you move money from your reserve into services that you need to purchase throughout this particular process, I note that your reserve has been reduced.
That's understandable.
The question that I need to -- to get, though, and -- an answer to, if possible, I basically want to go to that end of it where you -- where you use I guess

>> [indiscernible]

>> Sindara?
I guess that's how you pronounce it?
Which it's basically an hmo type of health plan, a certain amount of money had to be transferred to them for their services.
My question, though, is how can you project or what are you looking for to project the future possible increase of that particular services that you are purchasing to -- with the intent and growth of the possibilities of an increase to the -- to the m.a.p.
Population.
How is that being handled?
How can you really put your -- say this much money needs to go there according to this projected possible growth increase to those that need to be served under this program?
How do you do that?

>> We -- we really -- well, two things.
Number one, our growth is really dependent on capacity: and how much we can really provide.
We can only acquire what people make available.
So our process is we have what we call a -- an expansion fund of dollars that are set aside that may go beyond what we have budgeted.
And we have a process where if any of our contractor providers exceed their expectations and they come back to us in the course of a year and say we're saying more people, we're providing more services, we would like to have additional funding, we have a mechanism, it's been in place and again it will carry forward into this new budget, where we have dollars that are allocated specifically for that purpose.
With that I believe we are positioned to handle whatever comes to us, requests, from any of our current providers for expansion services.

>> Reserve basically set aside.

>> Yes, we do have a reserve amount.

>> Take care of the increase.

>> It's actually a budgeted line item that we refer to as expansion, but it is set aside for that purpose.

>> Okay.
Because I know that this is a state-wide health plan hmo type of deal.
Type situation within your budget, okay, thank you.

>> Let me start the discussion of the numbers, looking again at our current year budget, our fiscal year 12 budget on slide line.
You see for the current year both our total sources of funds and uses of funds are 125.5 million.
Looking at the sources of funds, our largest source of funds is property tax revenue.
Our budget this year for that is 75.1 million.
Our second largest source of revenue is from the lease of university medical center brackenridge to seton and that's 28.5 million this year.
We have other revenue of 2.1 million that includes tobacco, settlement revenue, which the county also receives.
And interest revenue and then this year we are using a significant amount of reserves, 19.8 million.
Most of that for one-time expenses that I will go into more detail about in -- in the slides ahead.
On the uses of funds slides, our 118.2 million the largest, administrative program of 7.3 will in.
Our tax rate this year is 7.89 cents per $100 of assessed valuation.
And so let me then move to talk about the discussion of lat year about structural balance.
We did our first five year forecast last year for the period that includes this year and succeeding four years, 2012 through 2016, we projected expenses based on the service expansions that the board had already committed to.
Those include the completion of the north central clinic that we opened this last spring.
The purchase of the v.a.
Facility which the Commissioners court approved last summer.
And then the renovation of the east and south clinics.
Our projections showed that if we stated the effective -- stayed at the effective tax rate that we are going to have a problem, not enough revenue to cover projected expenses and we are going to deplete, essentially go negative on our reserves.
As you know, structural balance in a governmental entity means that you are taking in enough ongoing revenue to cover your ongoing expenses and there are certainly times when you will exceed that and dip into the fund balance, particularly if your fund balance is fairly large, as ours was at the beginning of the year.
That's either to cover one-time expenses that pop up from time to time or it may be as a plan to get to structural balance, which is what we put in place this year.
Our tax rate this year, the 12.89 cents was 6.5% above the effective tax rate.
So we are beginning to work on solving our structural balance problem.
In this current year a lot of that was created just by the use of one-time funds mainly for sindero.
Looking at the current environment, as trish spoke to, we are in the process now of implementing the Texas health care transformation and quality improvement program, also known as the 1115 medicaid waiver.
We've been working on that for several months, as I know your staff have, too.
This waiver is intended throughout the state to improve the experience of care and improve the health of the population and ultimately to reduce the cost of health care.
For the region, the six-county region that we are part of and we are the anchor for, there is up to 689 million in federal and local match funds available through the what's called the delivery system reform incentive payments program.
Dsripp program.

>> At the federal level, do we have any idea of how much money has been set aside for the particular 1115 medicaid waiver?
Do we know how much money they have set aside.
I know it's all matching how much you put up, you get so much out of that as far as matching, but I'm just curious if we have any idea of what the federal government has set aside, per se, and I guess there are other entities that can draw down, also from the same deal.
It's not just for us, it's for anybody else that want to get involved with this.
But do we know exactly how much of that has been set aside at the federal level.

>> For the state as a whole.

>> For the dsripp program I believe it's $3.5 billion.

>> 3.5 billion.
That includes the local match that has to be made at about 40% of that amount.

>> Thank you, I had never heard that figure before, I was trying to figure out how much was set aside for those particular matching scenarios, this is not only for you, we have also looked in another arena, I wanted to point that out.

>> This is a very big deal for the whole state of Texas.

>> A real big deal.

>> $3.5 billion is a lot of money.

>> So our hope is that -- that our planned service expansions, for example, the v.a.
Facility, which we think may begin operation in 2015, that we will be able to fund that either partially or largely through waiver funds that we will receive.
And I just want to point out that the funds from the waiver will not be received through central health.
We expect the waiver funds to go into an entity that we will create jointly with seton under the letter of intent that we signed with them in April.
That will be a 501 c 3 corporation, we are calling it currently the ccc, community care collaborative.
But it will be an entity that has a medicaid number so it can receive these dsripp program funds.
We have been fortunate to have isn't it true watson doing a lot of work with us, including talking to the state officials and federal officials at the centers for medicare and medicaid services in washington, so we believe we have a good plan in place for that.

>> [one moment please for change in captioners] our health care delivery budget is down by 9 million, but this is entirely due to one-time expenses, as you'll see in just a moment, we are actually adding to our health care delivery budget in terms of ongoing expense, as larry said we are continuing to increase the contracts that we have with primary and specialty care providers that help keep people out of the emergency room.
Our administrative program is going up by $1.2 million.
This is mostly to fund additional resources that we think we will need for negotiating and implementing the ccc, the community care collaborative, with seton and for continuing the implementation of the 1115 waiver.

>> When you get an opportunity, can you, I don't have any information at all on the ccc initiative, what we're dealing with --

>> We hope to have some information out on that very soon within the next week.

>> It would be good to see that to see the arms and legs within that opportunity within that program actually works.

>> Right.

>> All right.

>> Are you able to use 1115 waiver funds to cover administrative expenses?

>> We will get reimbursed for some administrative expenses and then there will be some money that's available this year just for submitting our 1115 plan, our rhp plan.
We are planning to put that initial money into the ccc to capitalize it in the beginning.

>> Martinez: the -- are the other governmental entities in region 7 actively involved in trying to come up with projects.

>> They are not actively involved in the ccc itself, but they are actively involved in the waiver.
We've had good cooperation with all of the other counties, some of the cities in those counties, the Travis County with the city of Austin, and --

>> The others are submitting the prongs.

>> Yes.

>> Okay.

>> Thank you.

>> So let's analyze for a moment the change in our health care services budget because again on an ongoing basis it's actually gone up.
Our budget, as we showed you earlier, for health care delivery was 118.2.
The one-time expenses that we had in the budget this year were a capitalization of sendero at 12.5 million, we also paid some further sendero start-up costs of 2.5 million.
And then we made a payment to the --

>> Can you explain that?
Could you explain to me the start-up costs?
In other words you have an entity out there providing the service.
I kind of looked at that start-up costs.
What -- can you just tell me what start-up cost was?

>> Sure.

>> It might be all self explanatory, but here you have an entity we're using, hmo health plan, state-wide I guess.
When I saw that start-up there, I said wait a minute we're paying for start-up costs for somebody to take our deal with indigent -- can you explain that?

>> Sure, we incurred 2.5 million in start-up costs last year actually in 2011 and then 2 point 3 million this queer.
The start-up costs we incurred last year were mostly for consulting resources, legal resources, financial resources, it resources that we had to use in order to get an award from the state of Texas to actually operate an hmo.
We had to propose on the rfp that hhsc had put out and we also had to obtain license sure from the Texas department of insurance.
So there was a lot of work involved that the consultants did really just to -- just to do, cross all of the t's, dot all of the I's that had to be done in order to be able to respond to the rfp and in order to get licensed as an hmo.
And then that work, once that happened, we had to move then very quickly into the actual implementation phase where we actually had to build the administration of the hmo.
We had to hire additional staff at that point, we had to find office space to put them in, we had to get computers in place for them to use, we had to get contracts in place.
Like third-party administrator contracts to pay claims costs, so on.
So there was a lot of work involved in it.
Those were essentially the start-up costs involved.

>> Okay.
That explains it pretty good for me, but thank you.

>> Uh-huh.

>> So our total one-time expenses were 50.3 million, a significant reduction to that budget, but then you see -- 15.3 million.
You see the ongoing expenses, we've added 3.1 million in primary care contracts.
1.1 pharmacy, we are paying sendero $800,000 more for administration of our m.a.p.
Program since that enrollment has continued to grow in the m.a.p.
Program itself.
One of the things that sendero is doing is manage being the medical administration case management and so on.
Of our medicalassistance program, that was something that we did in house formally, but with the creation of sendero that was one of our objectives to have a more robust, fully formed management system for our medical access patients which we have now.

>> All right.
The other increases there are for the high-risk ob/gyn clinic, women's services, increases of 400,000 and we're going to pay the city of Austin 300,000 more for e.m.s.
Transport.
Again as our m.a.p.
Population has grown, their costs to transport our patients have increased and so we have actually increased our health care delivery budget by 6.3 million in ongoing expense.
Looking quickly at the significant changes that are in the budget, we have increased total revenue by 7.3 million, increased the health care delivery services on ongoing services of 6.3 and the 1.2 million increase that I talked about to administration for us to -- to implement the -- the community care collaborative.
We have again as we did in the current year in 2012, we included 3 million in service expansion funds that larry spoke to earlier.
So if there are further increases that we need primary or specialty care contracts, we can consider those through the service expansion funds.
And then lastly, we are reappropriating 202,000 that we took out of current year, this year, service expansion funds, for our project at dove springs, we did not get that project started in time and so we're simply allowing that money to drop to our fund balance this year and reappropriating it next year.
Let me show you the tax rate effect on the average homeowner.
Average single family taxable residents for the current year 218,345 that renders at the rate in place this year that renders a tax bill of $172.
The average value has actually gone down to 214,567, so the total tax bill at the effective rate that this budget is prepared at is 169, so there's been a very slight reduction in -- in the average tax bill.

>> That is why I move approval of the proposed 2013 budget.

>> Second.

>> Seconded by Commissioner Eckhardt, discussion on the motion?
This is a lot of detailed information.
The bottom line is that the tax bill is in effect going down by three bucks.
When it's all said and done, right?

>> Yes, sir.

>> Plus pretty much the same level of service , health care services for our residents.

>> More.

>> In fact the 1115 waiver money we ought to be able to do a lot more.

>> We're hoping.

>> Discussion?
All in favor?
That passes by unanimous vote.

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