Texas Reaches Agreement with CHIP Health Plan to Increase Reimbursement Rates

Under an agreement reached Oct. 1, Texas will increase CHIP program reimbursement rates by 29% for the health plan run by the Texas Children's Hospital, a move that will prevent nearly 53,600 Houston-area children from experiencing any "disruption" in health care services, the Houston Chronicle reports. Under the agreement, the state will increase reimbursement for the Texas Children's Health Plan from $93 to almost $120 per beneficiary per month. The agreement also includes a "key cut in drug expenses" because the state Health and Human Services Commission now receives rebates on prescriptions for CHIP beneficiaries through a vendor drug program. The agreement comes after hospital officials in August expressed concern that the state's CHIP program would "collapse statewide" if Texas did not raise reimbursement rates for health plans. Texas Children's Health Plan, which includes an "extensive network" of more than 900 physicians and 14 hospitals, last year had losses of $9.7 million. Texas Children's Hospital President Mark Wallace said that the reimbursement increase will "reduce substantially" a projected $16 million loss for the health plan this year. But he added that even with the new rates, the health plan would still have a loss for this year. According to hospital spokesperson Philip Caudill, the plan would lose no more than $10 million this year with the new rates. The health and human services commission currently is negotiating with other health plans participating in CHIP and expects to be finish by the end of this week, commission spokesperson Charles Stuart said (Hughes, Houston Chronicle, 10/3). For more information about health policy in Texas go to State Health Facts Online.