With a new county-administered funding arrangement, Williamson County private hospitals—including two in Georgetown—are set to take in more federal dollars next year to help cover costs for Medicaid patient care.

Known as a local provider participation fund, the arrangement requires hospitals licensed in Williamson County to make annual payments equal to 3.89 percent of their net patient revenues into a pool of money that will be matched by the federal Centers for Medicare & Medicaid Services.

The fund, which could generate up to $75 million annually for Medicaid patient care, will help Williamson County hospitals mitigate financial losses when providing care to people who are not able to pay their medical bills, said Carlos Zaffirini, CEO of Adelanto Healthcare Ventures, a consultancy that helped develop the county’s fund.

“The entire ‘safety-net’ system for the region is strengthened by these additional investments,” Zaffirini said. “Everybody’s benefiting, because when you’re able to offset your uncompensated care costs, that’s a positive for patients and for the community.”

Williamson County hospitals’ costs

Nine hospitals in the county will pay into the fund beginning in fiscal year 2018-19, including two Georgetown psychiatric hospitals: Georgetown Behavioral Health Institute on South Austin Avenue and Rock Springs on SE Inner Loop.  Other providers include Baylor Scott & White Health, St. David’s HealthCare and Seton Family hospitals in Cedar Park, Round Rock and Taylor.

St. David’s Georgetown Hospital is not a participant in the fund as it is licensed in Travis County.

The number of Williamson County residents enrolled in publicly funded health insurance programs has increased along with the county’s total population since 2012, according to the U.S. Census Bureau’s 2012-2016 American Community Survey data. At the same time, the number of county residents without health insurance fell from 14.3 percent to 11.1 percent.

Hospitals are obligated to provide emergency medical care to anyone regardless of a person’s ability to pay a hospital bill. While there are several avenues to help hospitals pay costs for people without health insurance or people covered by Medicaid, the hospitals usually end up paying some costs themselves, said Don Gilbert, an Adelanto consultant.

“When the state funds Medicaid payments the payment typically covers only about half of the cost of services,” Gilbert said. “The difference between the cost and the payment is not the responsibility of the Medicaid patient; it simply represents a loss to the hospital.”

How a local provider participation fund works

The county’s involvement in the process is prescribed by Texas House Bill 3954, which was passed during the 85th Legislature and requires the county to administer local provider funds and initiate money transfers to other agencies in order to receive matching federal dollars. Money collected through payments moves through several agencies before being used to pay for medical care.

After hospitals make their annual payments, the county will transfer the funds to the Texas Comptroller of Public Accounts, which will notify the federal Centers for Medicare & Medicaid Services that funding is available for matching dollars. Zaffirini said the federal match is expected to be about $1.50 for every $1 paid by hospitals.

With matching funds secured, the money is credited to the Texas Health and Human Services Commission, which distributes funding to Medicaid managed care organizations, or MMCOs, in Williamson County such as Amerigroup. The MMCOs can use the money to help cover hospitals’ costs when caring for Medicaid patients.

The county will take an annual administration fee out of the fund equal to 4 percent of the payments contributed or a maximum of $20,000.

Payments are expected to generate about $30 million annually for the local fund, a total that should be able to pick up an additional $45 million from a federal match, Gilbert said.

Leveraging Medicaid money

Geronimo Rodriguez, chief advocacy officer for Ascension Texas—which is the parent organization of Seton Healthcare Family and Seton Medical Center Williamson in Round Rock—told county commissioners in April that the new fund will enable more money to go to local hospitals without requiring an expansion of Medicaid, more state funding or an increase in county property taxes.

The arrangement of using hospital payments to leverage federal dollars was questioned by several people who spoke to county commissioners during public hearings on the local fund held in April.

Bill Kelberlau, a county resident and member of Texans 4 Truth, a politically active citizens group in Williamson County, told commissioners that while the fund does not require additional county property taxes, the federal government’s money still comes from

“There’s a lot of ways of talking about how all of these funds get transferred and moved around,” Kelberlau told commissioners. “[The] bottom line is money goes into this and a bigger chunk of money comes out; the [federal government is] matching it, but that money comes out of our pockets.”

Precinct 3 Commissioner Valerie Covey, who represents constituents in a swath of central Williamson County that includes Georgetown, said she supported the creation of the fund in order to help the county meet a state mandate to provide care for residents without adequate health insurance, a group known as the indigent population.

Covey said there are broader questions surrounding the federal government’s role in funding local health care. But with federal money available, she said creating a mechanism to allow local hospitals to leverage matching dollars would be more of a positive than a negative for Williamson County.

“There is a benefit to both the county and to the hospitals,” Covey said.