Hospital CEO gives update on 1115 Waiver

As Medical Center Health System experienced a turnaround in their executive team with the retirement of a longtime CEO at the beginning of the year, a new team formed to meet a critical deadline for both MCHS and other hospitals in the region.

Vice President and Chief Strategy Officer John O’Hearn, who was formerly in charge of the 1115 Waiver, resigned at the end of December as the hospital faced an April 30 deadline related to the waiver. MCHS President and CEO Rick Napper said that waiver brings in a total gross value of about $146.4 million to the community.

David Garcia, MCHS’ governmental affairs director and executive director of the Family Health Clinic, stepped up to the plate in February, along with CFO Robert Abernethy and MCHS lead attorney Ron Griffin, to help the health system meet the deadline. Napper said during a recent hospital board meeting that Garcia took over what was probably going to take six or seven months in a typical year and got it done in about three months.

“That’s why I consider him a great hero in Medical Center in order to be able to get that done and take on and accept that challenge and do a regular job at the same time,” Napper said. “David was chosen by the executive team to fill that role and has exceeded all of our expectations … we’re actually on track as if nothing happened.”

Board President Mary Thompson said meeting the deadline was a concern, especially since they are responsible for the entire region, but she was glad Garcia was successful.

As the anchor hospital in Region Healthcare Partnership 14, MCHS navigates the 1115 Waiver, not only for itself but for other community hospitals in the area. The waiver was created to help safety-net hospitals like MCHS that are tasked with covering the cost of indigent and uncompensated care.

The wavier faced the possibility of extinction before there was a five-year renewal in December 2017, which Napper said would have impacted them in a significant way.

“Many people will think that it takes complete care of the uncompensated care, but it actually just takes a small portion of that burden away and it also allows us to participate in the Delivery System Reform Incentive (Payment) … It allows us to take care of UC, which is uncompensated care, and that will continue through September 30, 2020 and we want to thank the legislature for allowing that to continue,” Napper said.

Rep. Brooks Landgraf, R-Odessa, advocated for the renewal of the waiver and told the hospital board during a recent meeting he planned to continue that support, seeing how MCHS made good use of it and has seen it’s been successful.

“Unfortunately, every time that we’ve attempted to reauthorize that, we’ve been successful, but at the end of the day it is a temporary band aid. It doesn’t have a long term life; it has to be renewed periodically so we do need to find some long-term solutions, but I’ll continue to support the waiver and I appreciate you all making such good use of it,” Landgraf said.

Through the 1115 Waiver, the health system received about $14 million in net in FY 2017. In previous years, the hospital has used the funds to expand the MCHS campus in hopes of filtering people to clinics rather than emergency rooms.

The original DSRIP projects MCHS focused on for the first five years of the waiver program included:

• A West Odessa Family Health Clinic
• MCHS Healthy Kids Program, which included construction of the Center for Primary Care-JBS
• Women’s Health Initiative
• Interpretation Expansion
• Comprehensive Heart Failure Management Program
• MCHS Severe Sepsis Program
• MCHS Mobility Teams
• Diabetes Outreach: Education and Screening
• MCHS Palliative Care
• Faith-Based Community Care

The list does not include any of the DSRIP projects for the other participating providers in the region, Garcia said. All of the programs listed are still performing internally, he added, and from a waiver standpoint, all projects from the initial waiver have ended or will end on Sept. 30, 2018.

With the renewal of the waiver in December came two major changes: the phasing out of DSRIP and requiring hospitals to calculate and distribute UC payments based on hospital charity costs alone — Medicaid shortfall and bad debt costs are no longer allowed, information from the Texas Hospital Association stated.

“The DSRIP has already been indicated that it will phase out in the next five years and that is a significant issue. You heard Representative (Brooks) Landgraf talk about the fact that they’re gonna be looking at this waiver program and I’m sure that’s one of the things that they will look at. The phasing out of that would be very detrimental to all of the community hospitals in our surrounding areas,” Napper said.

As the anchor hospital, all of the funds get submitted through MCHS which requires Garcia to coordinate with all of the other hospitals to make sure they get their plans in and submitted to the state.

“I used to say back in Kentucky that this was as hard as herding cats, but in Texas I hear it’s cattle,” Napper said. “So this is as hard as herding a bunch of cattle because you’ve got all of these facilities that, you know, it’s not necessarily their priority. They get the money and then, you know, it’s not their priority any longer. It then becomes MCH’s priority to make sure those organizations get that completed.”

Facilities that benefit from the waiver in RHP-14 include: Midland Health, Odessa Regional Medical Center, Texas Tech Health Sciences Center – Permian Basin, Winkler County Memorial Hospital, Reeves County Hospital, Martin County Hospital, Culberson County Hospital and Permian Basin Community Centers.

Napper said there are what are called bundled measures and there are 26 of them. The value of those bundled measures through the program is $95.2 million, which is overt the whole RHP-14 area.

Take those 26 bundled measures, plus all of the other projects that are allowed within it, and he said that generates a gross number of $146.4 million that would not come into the community without the plan.

“So hopefully you’re getting the magnitude of this plan going away,” Napper said.

The health system will be conducting a meeting with all of the hospitals benefiting from the waiver sometime this month in order to talk about the future plans with the 1115 Waiver, as well as for networking purposes, he said.