1995-96 City Budget: Health Care Relief Comes Painfully

An audible sigh of relief can be heard down at city hall this budget season, now that Brackenridge is off the city's books. The imminent merger between city-owned Brack and private, non-profit Seton Medical Center has yet to be signed, but once the deal is done this fall, the city's responsibilities toward public health care will extend only as far as funding the city's clinics, health programs, and the administration thereof, through the health department. The city's health care budget this year reflects three major issues: the Brackenridge/Seton merger; clinic staffing; and new state legislation that will force municipalities to implement managed care programs.

The Brack/Seton merger will certainly simplify things for city staff, and may even result in the elimination of the Assistant City Manager who deals with the hospital. Councilmember Brigid Shea says the elimination of the position will save $120,000. The merger will also allow the city to shed Brack's enormous administrative duties and pay off $25 million of the hospital's $54 million debt, while Seton takes on the financial risk of providing care for many of the city's indigent patients who fall outside the city's clinic system.

The shift of services and administrative duties to Seton and to the City of Austin/Travis County Health and Human Services Department (HHSD) has meant more responsibilities for HHSD, but not more funds. This year the city will provide 49% - $52.5 million - of the agency's budget out of the general fund, slightly less than last year's funding. The agency's services are shared by Travis County, which will contribute $4.4 million toward the budget, 4% of the total. The remaining 47% of HHSD's budget comes from federal or state reimbursements and grants. HHSD oversees the city's primary health care system in eight clinics under the Medical Assistance Program (MAP), with 43,000 eligible recipients enrolled. HHSD also runs five other public health programs: Community Services; Communicable Disease; Environmental Health; Neighborhood Services; and Planning, Assessment, and Evaluation of community needs.

Negotiations with Seton resulted in a commitment from the city to expand a pilot managed care program to 13% of all MAP recipients. According to HHSD spokesperson Dan Pickens, a survey of the managed care patients vs. clinic patients revealed that while the level of service and satisfaction for both programs was similar, the managed care program excelled in both cost savings and efficiency.

The managed care paradigm has swept the health care industry, since it cuts costs by grouping patients together under an umbrella health care provider such as an HMO (health management organization). With large groups of patients under their care, HMOs can negotiate for discounts from hospitals. Expanding the managed care program will keep costs lower for both the city and Seton. After the merger, Seton will be receiving the federal Disproportionate Share (Dispro) funds formerly granted to Brackenridge for the "disproportionate" number of indigent patients the public hospital sees; the amount varies each year between $25-28 million. Primary care, whether through MAP or an expanded managed care program, keeps patients healthier and out of the hospital, which translates into Seton saving Dispro dollars for capital improvements at Brackenridge.

The most heated controversy around the health care budget this year has been the elimination of one part-time and four full-time positions, people who provide referral services for MAP recipients needing counseling, family planning, and other services outside the MAP system. Of the 12 city social workers within the MAP system, eight are Spanish-speaking. All five of those targeted for "reassignment" are Spanish-speaking. That fact sparked an inquiry from Councilmember Gus Garcia, who questioned the reasoning behind the decision by Sue Milam, director of the city's clinics, considering that many of the citizens in the MAP system are Spanish-speaking. Milam's response, echoed by Pickens, is that the reassignments were based on tenure, nothing more. She admits, however, that the loss of those five positions will mean that "some needs will go unmet. Those remaining social workers will have to speed up the interaction with patients, and may not be able to do all the listening they need to. However, the best case scenario is that we streamline our approach, and have a closer team." Milam argues that the cuts were needed because the positions are not federally funded as "core services" under guidelines of the Federally Qualified Health Care program which reimburses the city for MAP services. $1.2 million in cuts in federal reimbursements to the MAP clinics this year, confirms Pickens, means cuts in "non-core service" staff.

Carol Guthrie, who heads up the AFSCME (American Federation of State County & Municipal Employees) union, is organizing a fight to save the positions, asking that the city contribute general funds, or cut vacant positions instead. "It's not a wise cut, and not necessary," she says. "We've identified eight to nine vacant positions that could have been eliminated in order to fund the social workers." Milam presented her suggestions to City Manager Jesus Garza's office last week.

That sigh of relief down at city hall may be a little premature. By merging with Seton, city officials have responded to the changing health care market, but the market is demanding more. As officials at both HHSD and the city's budget office explain, providing health care has never been so competitive or complicated, evidenced by the battle going on over new state legislation that may remove the city and the county from the health care system altogether.

SB 10, passed this session, is an attempt to reform Texas' health care system by requiring municipalities to hand over Medicaid reimbursements to the state, which will then return the money to localities as block grants. These will go to the cities for disbursement to a state-arranged managed care provider, or to the public health care facilities. Officials from several Texas cities, including Austin, are currently meeting to hash out an agreement with the state on how they will participate. According to Mike Abkowitz, financial manager for HHSD, the deal is still up in the air, but a direct disbursement of Medicaid block grants to managed care programs could mean an end to our local clinic system. Under the managed care disbursement scenario, he says, "One of the delivery models the state is trying to do, is implementation of managed care on a statewide basis... The state would administer health care for indigents in the local communities. The city would then be faced with a policy decision on whether to maintain the clinics with local funds. Our main concern is whether there will be availability of care, integration of programs, continuity of service, and links to social programs."

SB 10 implementation is on hold pending the agreement between the cities, and federal approval of several waivers, including lowering eligibility limits for Medicaid reimbursement, which would allow Texas to be reimbursed for care to those slightly above the federal poverty limit of $15,150 for a family of four. Still under consideration are other waivers concerning what services are covered, how they are delivered, how they are funded, and how they are administered. "The feds are interested in capping their Medicaid expenditures," explains Abkowitz. "If the state can show that, in the long run, the cost benefit is there, the feds will be interested." The state's application for the waivers is expected some time next year; if it is granted, the city should expect further simplification in its health care budget process, but perhaps at the cost of hands-on contact with the citizens it exists to serve. n

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