Back to the Drawing Board

By Tom Banning

It is time for TAFP members to start making your voices heard about taxes again. The Texas Supreme Court’s late-November decision in the public school finance lawsuit got the tax reform snowball rolling and picking up steam in Austin again. The court gave lawmakers a June 1, 2006 deadline to come up with a new way to fund Texas’ public education system.

Most Capitol observers expect a late spring special session — after the party primary elections — to enact new state taxes or increase existing ones to pay for cuts to local property taxes. Gov. Rick Perry’s Texas Tax Reform Commission, which held its first meeting the day before the court ruling, has scheduled regional public hearings across the state. With the clock ticking, TAFP and the other medical specialty societies in the state are, once again, educating legislators and elected officials on the public policy implications of taxing physician practices and services.

During the 2005 regular legislative session and this past summer’s two special sessions, the message of TAFP and medicine overall was simple: taxing patient care is neither good public policy, nor is it in the best interest of Texas. Unlike other businesses, physician practices cannot pass on a tax increase to their customers because their revenue is largely determined by fixed payments from government payers and non-negotiable payments from health plans. Moreover, physicians already provide $1 billion in charity care and significantly subsidize Medicare, Medicaid, the Children’s Health Insurance Program, and other public programs that pay substantially below market rates.

Unfortunately, physicians have yet to escape being included in any proposed new taxing scheme. During the regular and special sessions, both the House and Senate proposed extending business taxes to include professional services and/or partnerships. TAFP joined the TMA and numerous other specialties to call for tax credits to partially ameliorate the impact of any new taxes. Both the House and Senate versions of the tax bill included tax credits for physicians participating in public programs. The House version offset the tax impact on physician practices by allowing tax credits based on the practice’s Medicare, Medicaid and CHIP revenues, but only if those programs comprised 15 percent of the physician’s practice. In the Senate, the 15-percent threshold was eliminated, but the bill would have allowed a tax credit equal to 20 percent of any physician’s total revenues from Medicaid and CHIP only. Medicare was excluded.

As we all know, the tax debate ended in an anti-climactic standoff between House and Senate leadership. TAFP fully expects to be locked in this same debate during the impending special session, come when it may. Rest assured that TAFP will continue to advocate for the best interest of family physicians, their patients and the health of all Texans.

Congress Fails to Fix Medicare SGR

Despite an overwhelming effort at the physician grassroots level, Congress failed to complete final action on the budget reconciliation conference committee agreement, meaning a 4.4-percent scheduled Medicare physician reimbursement cut went into effect for dates of service beginning Jan. 1, 2006.

To avoid the scheduled cut, Congress had to pass a bill before the end of the year. They didn’t do it. Both the House and the Senate passed mid-December fiscal measures that would have eliminated the cuts, but for the legislation to make it to the president’s desk, changes in the Senate version needed one last House vote that never came. That inaction forced CMS to enact the payment reduction on the first of the year.

The House is not scheduled to return until Jan. 31, 2006, but since Medicare payment updates are generally effective for the full calendar year beginning January 1, the freeze at 2005 levels should be retroactive to January 1, whenever the bill finally makes it to the House of Representatives and is signed into law by the President.

AAFP President, Larry Fields, M.D., had harsh words for the congressional inaction. “Letting petty politics and red tape stand in the way of adequate health care for these 43 million Americans is an unconscionable abrogation of responsibility.”

The AAFP and TAFP worked at a fevered pace during December to reverse the payment reduction and despite the outcome, Congress heard our message. Both AAFP and TAFP have vowed to redouble their efforts and to fight for retroactive payments to cover losses experienced after January 1.

House Appoints Interim Studies

This will undoubtedly be a very busy interim for members of the Legislature. With an impending special session (or two or three or … well, you know the drill) on school finance reform waiting in the wings, House committees have also been tasked to study and make recommendations on a variety of other issues that will likely generate debate in the next legislative session. These interim studies are designed to provide more in-depth discussions of emerging issues.

Interim studies have yet to be assigned by the Lt. Governor, but the Speaker has given the House its marching orders. Here is a sampling of health care related issues that TAFP will closely scrutinize and monitor to ensure that the concerns of physicians and their patients are adequately addressed.

House Committee on Appropriations

• Analyze and compare Medicaid cost containment strategies in other states. This study should consider how effective these strategies are at reducing costs in the Medicaid program while taking into account how these strategies effect quality of care, ongoing services and the availability of federal funding sources.

House Committee on Public Health

• Examine the selected scope of practice issues related to health professions that maintain the safety of patients through demonstrated competency and education, and balance improved cost efficiency within the health care system.
• Consider the state’s role and approach to Medicare Part D and evaluate the impact on Texas Medicaid clients.
• Study the emerging practices for the prevention of hospital-acquired infections, and develop effective policies for incorporating these best practices into the delivery of health care in Texas.
• Review issues relating to Chapter 166.046 of the Texas Health & Safety Code, and assess if patients and/or their loved ones have a sufficient opportunity to obtain transfer to an alternate facility and subsequent care in end-of-life situations.