The 2023 Legislative Session: Building and Rebuilding

Hospitals will push for crucial commitments from the Texas Legislature on hospital workforce enhancement, financial stability, behavioral health and much more as lawmakers convene in Austin for the 88th time.


If the worst of COVID-19 really is behind Texas and the nation, then for hospitals, the 2023 session of the Texas Legislature will be largely about addressing the fallout and rebuilding.

Healthier hospitals mean healthier patients. Unfortunately, the opposite can also be true – and post-pandemic, hospitals are hurting. Their finances are on shaky ground, their personnel ranks are gutted, and training a new wave of health care heroes will require attention from lawmakers. More than at any other point in recent memory, it’s crucial for lawmakers to invest in developing the health care workforce, funding health and human services programs, improve access to care and health equity and so much more.

“What’s most concerning is when you really look at the headwinds that hospitals and health systems are facing coming out of the pandemic,” said John Hawkins, president/CEO of the Texas Hospital Association. “We know, for example, labor costs are much higher, and that’s not likely to reset to pre-pandemic levels. … We still have a high number of uninsured. So the cost-shifting that’s occurring because of the uninsured in the state is added to that. I think when you look at all of those factors, it’s easy to see that it’s a pretty difficult financial road forward for hospitals and health systems.”

THA will be focused on those pandemic-influenced issues and others, trying to find common ground in a polarizing political climate and assist lawmakers in promoting policies aimed at helping the people of their state access and realize health-preserving, life-saving care.

During the 2023 legislative session, THA will have an ambitious litany of policy planks with wide-ranging goals: bolster facility staffing; keep rural hospitals from closing; cover more Texans with comprehensive health insurance; hold insurance payers accountable for undue denials and delays on coverage and payment; bolster behavioral health access; and offer extended Medicaid coverage that can keep more mothers alive and healthy post-delivery. A great deal will be at stake.

Boost the workforce – and protect it

If burnout in the health care industry was a burning concern before the pandemic began, it turned into a four-alarm fire as COVID-19 peaked, dipped and peaked again during 2020, 2021 and the early months of 2022. Nurses, physicians, allied health professionals and others vital to keeping a hospital running safely and smoothly felt themselves stretched and strained to a degree that caused them to rethink their profession. Reaching the breaking point of their own emotional limits, many health care workers left the frontlines.

“I don’t know of any hospitals the pandemic did not affect.”

Brad Holland, president and CEO of Hendrick Health

He noted that shortly before the pandemic, the average turnover rate in Texas hospitals was somewhere in the 16-18% range. “And today, the Texas Hospital Association’s data demonstrate that hospital employee turnover is 26%. So when you start thinking that over one in four employees left your hospital last year, that’s staggering. Any business that you have, [if] one in four employees leave, that’s hard to get positive momentum in continuity of care, hard-wiring excellence in customer service, improving quality and all the other things we focus on in health care.”

Plenty of willing heroes-to-be are waiting in the wings, but are lacking the opportunity. In 2021, Texas nursing schools turned away 15,709 qualified applicants, primarily due to lack of nurse faculty and clinical education capacity.

With these challenges in mind, THA is asking lawmakers to support increased funding for professional training, worker retention and loan payment programs for physicians, nurses, behavioral health professionals and allied health professionals.

“Every hospital has told us that workforce is their number one challenge in 2022 – and that it’s probably been that way for some time. But COVID really exacerbated it,” said Jennifer Banda, THA’s senior vice president of advocacy and public policy. “So what we are looking at is trying to increase the pipeline and the capacity of all the health care professionals.”

Funding to account for pandemic-driven spikes in staffing costs are on THA’s agenda, too, and hospitals will also pursue lawmakers’ signoff on measures to support continued safety in health care workplaces and to reduce violence in the workplace.

A bill THA backed in 2021, House Bill 326, sought to address workplace violence. Among other provisions, it would have required facilities to adopt a workplace violence prevention plan and prohibited the firing or other discipline of a person who reported a violent incident in good faith. The bill stalled after House passage. But THA is strongly supporting a similar workplace measure, House Bill 112, filed for this coming session by Rep. Donna Howard (D-Austin) on the first day of bill filing.

Healthier Minds

The pandemic left virtually no areas of health care and society untouched, but its impact on behavioral health may be its longest-lasting legacy. Stress, fear, isolation and school closures all resulted from the roller coaster of the past three years, leaving Texans of all ages in a less-comfortable emotional place.

One of THA’s top priorities is for Texas to lift a federal limit on Medicaid inpatient behavioral health stays that impedes continued care for many who need it. The federal “institutes for mental diseases” (IMD) exclusion only allows coverage for most adult inpatient behavioral health stays (between ages 21 and 64) for 15 days. Sara González, THA vice president of advocacy and public policy, calls that limit “an arbitrary cutoff.”

“From the hospital perspective, one, it’s a confusing, truncated benefit, because patients often don’t realize that they are limited and facilities may not be aware of services the patient received in other facilities. So it increases [uncompensated care] on any medically necessary inpatient days beyond 15,” González said. “Then on top of that … [IMDs] can’t get supplemental payments for any length of stay for an adult 21 to 64, further limiting their ability to cover the cost of care for Medicaid and uninsured patients.”

During the 2021 session, THA pushed for a waiver from the IMD exclusion, and the state budget ultimately included a rider that would allow the state to pursue a waiver if it would result in cost savings for the state. But state health officials determined it couldn’t implement that waiver at a net savings, so it didn’t apply for one. THA plans to take another approach to waiver implementation during this session and help propose a revised version of such a budget rider.

Also as part of budget discussions, THA will push for other funding to ensure timely and appropriate access to community-based services for Texans diagnosed with a behavioral health condition, both on the inpatient and outpatient sides. THA also will push lawmakers to maintain funding levels for the state’s trauma care network.

Financial stability: Keeping the doors open

The federal assistance that helped hospitals get through the first major waves of the pandemic was a crucial and massive lifeline for facilities everywhere. It also created a perception – still perpetuated by some groups today – that hospitals got rich off the pandemic.

But data show the truth is the opposite. That infusion of federal funds was an ephemeral thing, and when the later major waves of COVID-19 hit – including the ones spurred by the Delta and Omicron variants – widespread help from Washington, D.C. was no longer there.

“I don’t think people realize the toll that was taken upon hospitals completely outpaces the relief that was provided.”

Erin Asprec, executive vice president and COO of Memorial Hermann Health System and incoming chair of THA’s Board of Trustees

A September 2021 report from Kaufman Hall on the state of hospital finances nationwide laid bare that reality: Hospitals are struggling. Researchers found that more than half of hospitals were projected to have negative margins through 2022, as compared to about one-third in the last pre-pandemic year, 2019. Expenses were expected to be about $135 billion more than in 2021, including $86 billion in labor expenses.

“Did [federal financial assistance] help? Absolutely. Did it keep us whole? Yes. But we really see that as a one-trick pony, and hospitals are left holding the bag after all of this,” Mr. Holland said.

So rather than being a given post-pandemic, hospital financial stability is a pain point. Texas hospitals need lawmakers’ help. THA will ask the legislature to provide support for:

  • Hospital payments that hew closer to the actual cost of services;
  • The stability and maintenance of supplemental Medicaid payments that help cover billions of dollars in unreimbursed costs, as well as continued presentation of the Medicaid 1115 Transformation waiver, which provides needed funds for hospitals that serve the uninsured, expanded managed care, and incentive payments for hospital improvements; and;
  • Statewide authorization of provider participation funds at both the local and regional levels for defrayment of uncompensated care costs, Medicaid hospital programs, and 1115 waiver projects geared toward access to care.

THA will also advocate strongly against site-neutral payments and other policies that would serve to decrease hospital reimbursement.

Holding insurers accountable

Reports on health insurance payers’ profit margins continue to show the major payers are far from being in the red. Yet, red continues to be the color of their favorite tape, as they take providers – and, by extension, patients – on a confounding bureaucratic journey that often ends in one of three ways: Slow payment, low payment or no payment.

THA will seek to work with legislators to curb the insurer practices that delay and impede care. A major priority, as it was for THA in 2021, will be an effort to enforce the state’s “prudent layperson” standard for emergency care. By law, health plans are supposed to cover emergency care for a condition that would lead a prudent layperson, with an average knowledge of medicine, to believe they need immediate treatment or risk a serious threat to their health. But some health plans continue to make emergency care payments contingent on a final diagnosis that reflects that the health condition was emergent.

THA-backed legislation to clarify the state’s definition of emergency care – and require insurers to adhere to the prudent-layperson standard regardless of the patient’s final diagnosis – didn’t pass last session. But hospitals will take another run at this important agenda item in 2023.

Insurers’ prior authorization requirements are only getting more onerous and care-impeding as well. THA will work with lawmakers and other stakeholders to find ways to curb those practices and also defend a key piece of anti-prior auth legislation from the 2021 session. House Bill 3459 by Rep. Greg Bonnen, MD (R-Friendswood) allows providers to earn a “gold card” exemption from prior authorization by earning a 90% approval rate on preauthorizations for a given service over a six-month period. THA will monitor that law and any attempts by health plan groups or others to undercut it.

Greater coverage, better equity

By any means available, THA is striving to expand comprehensive health coverage to reach more Texans who don’t have it. The numbers say no state needs it more.

Many of the gains Texas could realize lay in population segments that could benefit greatly from expanded Medicaid coverage. Among those populations are new mothers on Medicaid, who received help from the state through legislation two years ago, but whom THA believes could still use more help.

In 2021, lawmakers passed a measure granting new mothers six months of Medicaid coverage postpartum. While that represented progress over the previous two-month limit, THA believes 12 months of full coverage postpartum is what’s needed to blunt many of the causes of maternal morbidity and mortality, and will push for a new 12-month threshold.

Asprec says Texas pride should be a selling point for hospitals to advocate for coverage expansion: “We have the greatest number of uninsured,” she noted. “That’s not a statistic we should be proud of. And we can show so many examples that the uninsured avoid or delay care, and that only hurts our economy, our individual health and our state as a whole.”

In the public health sphere, health equity – one of the emerging focuses of population health study everywhere – is also on THA’s radar. The pandemic highlighted and further inflamed what were already demonstrable gaps in health care access, morbidity and mortality due to nonmedical drivers of health – such as a person’s socioeconomic status, access to transportation and healthy food and neighborhood or environment. THA will support policies and legislation that would address these health disparities, which often occur at the expense of racial and ethnic minority groups.

“To me it’s even part of the workforce calculus – the fact that we’ve got worker shortages across the board and we ought to be investing in things that make people more healthy because they’re going to be more productive in society,” Hawkins said. “And, and I think the pandemic showed us that the impacts were not uniform across society.”

Look of the Legislature: More of the same

November’s midterm election brought a measure of long-expected volatility when it came to control of the U.S. Congress. But in Texas’ legislature and statewide offices, the faces and balance of power remained essentially the same as in recent elections.

Gov. Greg Abbott won reelection for a third term, as did Lt. Gov Dan Patrick, who will again serve as the president of the Senate. The Republicans’ numbers advantage in both chambers in 2023 will be very similar to last time around: 86-64 in the House of Representatives, 19-12 in the Senate.

Hospitals and their partners in advocacy have found success bending lawmakers’ ears with a similar Legislature breakdown before, and will look to do so again.

“Coming two-and-a-half years out of a pandemic, I just can’t say enough good things about my colleagues and my hospital industry and the providers for the heroic efforts that they’ve all done, and really being able to partner with THA,” Holland said. “Because THA was the glue that really kept us together during that time.

“You just can’t say that enough in this environment. I think our next legislative cycle, we’re going to have our own headwinds over the next couple years. And again, we’re going to lean on THA.”

According to Nordwick, there are also plans to expand behavioral health resources at UMH, which might include adding behavioral health navigators in the emergency room to help guide and follow up with patients who present with mental health concerns.