HHSC’s proposed Medicaid procurement changes anger South Texas healthcare leaders, lawmakers

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MCALLEN, Texas – At the start of the month, the Rio Grande Valley healthcare community voiced concerns about state plans to move STAR and CHIP managed care services from Driscoll Health Plan to for-profit national plans.

Now those concerns are being amplified by South Texas lawmakers. Led by state Sen. Juan Hinojosa, 19 South Texas lawmakers have written to Gov. Greg Abbott and Texas Health & Human Services Commissioner Cecile E. Young to not only voice their concerns but also ask that any proposed Medicaid procurement changes be put on hold.

“This is a very important issue in South Texas and across the state as it would disrupt the continuity of care for many of our most vulnerable families and their children. If this Notice of Intent to Award is approved by HHSC, it will inflict irreparable harm and will have a significant negative impact on non-profit health plans in our state that have developed important relationships with health care providers in our communities,” Hinojosa said.

Hinojosa said Driscoll Health Plan currently serves 23 counties in South Texas. He pointed out that Driscoll has its headquarters and leadership based in Corpus Christi, a city the lawmaker represents. Hinojosa said Driscoll operates with nearly 500 employees working across five offices in South Texas.

“I am committed to continuing to work to try to resolve this issue and do what is in the best interest of our children and their mothers,” Hinojosa added.

On April 4, at an AltaCair Foundation “cluster meeting” for healthcare executives and community leaders, Dr. Sheila Magoon, a family practice physician from Harlingen, startled stakeholders in the room with news of HHSC’s plans.

“One thing I want to bring up that might actually make things worse (for the Valley) is a change that HHS has announced: procurement changes for Medicaid. I’m starting my research on that because for our region we’re going to lose Superior and we’re going to lose Driscoll. Driscoll will no longer exist because all of their regions have been absolutely eliminated. About 75% of our population is covered between those two plans,” Magoon said.

“Now they’re bringing in Blue Cross and Aetna. First of all, Blue Cross and Aetna, from my research are not… I shouldn’t be disparaging people but they don’t have the same star ratings (as Superior and Driscoll). And they haven’t had the same level of engagement, at least historically, on other product lines. And so, I’m very, very worried.”

The AltaCair meeting was called to strategize ways to help Valley families living in colonias. Hidalgo County’s public health administrator, Eddie ‘Eddie’ Olivarez, said the proposed Medicaid procurement changes would not only hurt colonia residents. “This will hurt the working poor, the most vulnerable in our community.” Olivarez said.

Todd Mann, CEO of South Texas Health System-McAllen, and Manny Vela, CEO of Texas A&M University Higher Education Center in McAllen, and a former leader of Valley Baptist Health System, co-moderated the AltaCair Foundation meeting. After the meeting, Mann told the Rio Grande Guardian International News Service that neither he nor Vela knew anything about HHSC’s proposed Medicaid procurement changes until Dr. Magoon revealed them.

Asked for a comment on the proposed Medicaid procurement changes, Tiffany Young, HHSC’s deputy chief press officer, told the Guardian:

“The RFP No. HHS0011152 STAR CHIP Managed Care Services is an active procurement. HHSC cannot comment on the procurements until contracts are awarded. The RFP was posted on Electronic State Business Daily (ESBD) on 12/7/2022. Article III of the published RFP explains the proposal evaluation and award process. All proposals were evaluated in the same fashion, using the best value criteria that was advertised in the solicitation. We provided the Texas Administrative Code website for more information on the protesting process.”

Letter to Gov. Abbott

Here is a copy of the letter the 19 South Texas lawmakers sent to Gov. Abbott:

April 3, 2024

The Honorable

Greg Abbott, Governor of Texas

P.O. Box 12428

Austin, TX 78711

Dear Governor Abbott:

The bipartisan legislative delegation from South Texas writes to express our concerns regarding the recent Notice of Intent to Award for RFP No. HHS0011152–STAR & CHIP Managed Care Services issued by the Texas Health and Human Services Commission

(HHSC). We urge you to contact the Health and Human Services Commission (HHSC) Executive Commissioner regarding the decision of this Intent to Award that excludes the Driscoll Health Plan (DHP) and urge her to intervene.

DHP is a non-profit entity dedicated to serving 23 counties in South Texas. These counties are home to the state’s most vulnerable healthcare population, and DHP has served them successfully for more than 20 years. DHP has been pivotal in reducing maternal morbidity, mortality, and improving infant outcomes by funding not only 75 percent of the maternal fetal medicine specialists in South Texas, but also mental health resources for children. What’s more, DHP annually invests more than $10 million in maternal fetal medicine incentives to subsidize physician costs. This investment has helped improve overall birth outcomes and significantly reduced NICU costs, saving the state approximately $1.056 billion between 2008 and 2022. These outcomes and services are a result of DHP’s direct investment in our communities and its stewardship of state resources.

Removing DHP from consideration as a provider of these services would disrupt the continuity of care for the families and children who are our constituents. It could force families to leave South Texas to receive these services. Relatedly, because recruiting and retaining providers in South Texas is challenging, this decision would have a negativeGovernor Greg Abbott peripheral impact on the important relationships built over the years with health care providers in our community.

On a related note, DHP’s headquarters, offices, and leadership, unlike those of the for-profit entities selected, are based entirely in South Texas. Accordingly, they have a significant positive economic and cultural presence in our communities that the newer providers could not replicate.

For these reasons and more, we respectfully request you to urge the HHSC Executive Commissioner to remove the MCO-related procurement caps—those setting the maximum number of MCOs per Service Area and the maximum number of Service Areas per MCO—to create more robust competition among MCOs across the state. Each MCO would benefit from such a decision, but, more important, Medicaid members, providers, and our communities would not be subject to the sizable disruption that is certain under the current course.

If the Commissioner fails to make this change under the authority available under our procurement laws, we ask you to urge the Commissioner to support delaying the final awards. The Texas Legislature will meet in Regular Session beginning on January 14. Through legislative review, any outstanding issues related to developing a broader, market-based approach could be resolved well before the currently intended contract start date of September 1, 2025.

Thank you for your attention to this matter. Please contact us immediately if you have any questions or need additional information.

Respectfully,

Juan “Chuy” Hinojosa

State Senator, District 20

Judith Zaffirini

State Senator, District 21

Roland Gutierrez

State Senator, District 19

Morgan LaMantia

State Senator, District 27

Todd Hunter

State Representative, Dist. 32

Abel Herrero

State Representative, Dist. 34

Geanie W. Morrison

State Representative, Dist. 30

Ryan Guillen

State Representative, Dist. 31

Oscar Longoria

State Representative, Dist. 35

Sergio Muñoz, Jr.

State Representative, Dist. 36

Janie Lopez

State Representative, Dist. 37

Erin Gamez

State Representative, Dist. 38

Armando “Mando” Martinez

State Representative, Dist. 39

Terry Canales

State Representative, Dist. 40

R.D. “Bobby” Guerra

State Representative, Dist. 41

Richard Peña Raymond

State Representative, Dist. 42

J.M. Lozano

State Representative, Dist. 43

Eddie Morales

State Representative, Dist. 74

Tracy King

State Representative, Dist. 80

Letter to HHSC Commissioner Young

Here is a copy of the letter the 19 South Texas lawmakers sent to HHSC Commissioner Young

April 3, 2024

Cecile E. Young

Executive Commissioner

Texas Health and Human Services Commission

P.O. Box 13247

Austin, TX 78711-3247

Dear Commissioner Young:

We write to express our deep concerns regarding the recent Notice of Intent to Award for RFP No. HHS0011152–STAR & CHIP Managed Care Services issued by the Texas Health and Human Services Commission (HHSC). We urge you to postpone the decision on this matter for at least one year due to its significant implications and impact, especially if the Driscoll Health Plan (DHP) is excluded.

DHP currently serves 23 counties in South Texas and has been a steadfast non-profit entity dedicated to the region for more than two decades. Unlike the for-profit entities under consideration, DHP bases its headquarters and leadership in Corpus Christi and operates with nearly 500 employees spread across five offices in South Texas. As a non-profit entity headquartered in Texas, its funding is channeled toward serving our constituents’ needs and keeps jobs in our communities. DHP’s exclusion from this Award would not only disrupt the continuity of care for 180,000 of our constituents, but also sever crucial health care relationships developed over the years.

What’s more, DHP estimates an annual expenditure of $1.2 billion in the service area, with a substantial portion of these resources remaining within the region, instead of directing administrative fees out-of-state, as the new entities would. It is important that the decision-making process acknowledges the significant contributions and expertise of DHP in addressing the healthcare needs of our region. Despite being recognized by HHSC as the top-performing managed care organization in terms of quality, the criteria for this

Award overlooked experience, past performance, and value. It also seems that HHSC did not take into consideration our communities’ needs and preferences, nor did it seek input from legislators, providers, or other stakeholders impacted by the decision.

As a managed care organization with decades of service to the state, DHP consistently has demonstrated high performance and positive outcomes. More important, denying DHP an award would inflict irreparable harm on many of our most vulnerable constituents in South Texas.

Clearly, DHP plays a vital role in meeting the healthcare needs of our communities. It ensures access to subspecialty care for our children and pregnant women. It’s also important to highlight the services and savings DHP provides as a partner with the state: DHP has been pivotal in reducing maternal morbidity, mortality, and improving infant outcomes by funding not only 75 percent of the maternal fetal medicine specialists in South Texas, but also mental health resources for children. What’s more, DHP annually invests more than $10 million in maternal fetal medicine incentives to subsidize physician costs. This investment has helped improve overall birth outcomes and significantly reduced NICU costs, saving the state approximately $1.056 billion between 2008 and 2022. These outcomes and services are a result of DHP’s direct investment in our communities and its stewardship of state resources.

For these reasons and more, we urge you to remove the MCO-related procurement caps—those setting the maximum number of MCOs per Service Area and the maximum number of Service Areas per MCO—to create more robust competition among MCOs across the state. Each MCO would benefit from such a decision, but, more important, Medicaid members, providers, and our communities would not be subject to the sizable disruption that is certain under the current course. If you do not feel such authority to make this change is available under our procurement laws, we ask you to delay finalizing these awards. The Texas Legislature will meet in Regular

Session beginning on January 14. Through legislative review, any outstanding issues to developing a broader, market-based approach could be resolved well before the currently intended contract start date of September 1, 2025.

Thank you for your attention to this request. Please contact us immediately if you have any questions or need additional information.