The Next Medicaid Therapy Rate Cut and Policy Changes for 2017

Early yesterday the TX HHSC leaked a pre-announcement of its intentions to propose a series of policy changes and adjustments (cuts) to therapy rates slated to be implemented on July 1, 2017. This was done, according to TX HHSC, to comply with the next steps of Rider 50 language from HB1 passed by the 84th Texas Legislation in 2015.

This is a summary of the proposal:

  1. therapy home health untimed CPTs will be reimbursed based on timed units to match the 2017 AMA CMS CPT code designation of untimed or timed and the new unit reimbursement will be based on a “current average” billing amount,
  2. OPT/CORF and independent therapists (general rehabs) timed CPTs will be reimbursed based on untimed encounter visits to match the 2017 AMA CMS CPT code designation of untimed or timed and those CPTs will be reimbursed based on “current average” billing amounts,
  3. uniformly now, assistant therapists-coded CPT services will be reimbursed at 70% of the normal rate (Note: Superior has already been implementing this since July 2016), and
  4. the speech reevaluation code will be reimbursed at a lower rate than the initial evaluation rate for all delivery models.
These were referred to as initiatives 1 to 4. For initiative 3, published rules will be made available on March 24, 2017 and the final rate hearing for all 4 initiatives will be in May 2017, with the proposed rates to be released at least 10 days before that hearing.

However, the devil’s in the detail. First, both the home health and office setting delivery models for Texas Medicaid will match the designation from the 2017 AMA CMS CPT description as to whether they are timed or untimed. In other words, a therapy CPT code that is designated as untimed(timed) in the 2017 AMA CMS schedule will be equally designated as untimed(timed) in the proposed Medicaid rate schedule for all therapy delivery models. The largest effects here will be felt with the speech treatment code 92507, which is an untimed code in the 2017 CMS schedule.

After all of the timed/untimed adjustments are made for CPT codes, the rate changes will depend on what TX HHSC means by “average billed” in their rate adjustments. Normally, TX HHSC is not privy to up-to-date statistics until the end of a quarter or half. The most logical definition of an “average billed” should be based on Q1 2017 (because of the first effects of the last cut on the Medicaid therapy budget), but could also be based on 2016 altogether, to obtain more robust statistical estimates. However, remember that the last cut, implemented in December 2016, is only now showing its full effects.

Part of that effect was, of course, pre-implemented by the Superior discount rate cuts and policy changes of July 2016. So, it would be much more accurate statistically to use January 2015 to the end of Q1 2017 (March 31, 2017) as a basis for that averaging. We have some summary data on 2016 that Commissioner Smith presented to the Senate Finance Committee last year, but it obscures any trends in therapy reimbursement decreases.

Nonetheless, we submitted an Open Records Request to TX HHSC for the most current therapy claims data (1/1/2015 to 3/17/2017), but it could take months to get that data (if it is even available or to be made available) based on TX HHSC’s willingness to release those data, possibly noting other superfluous concerns. We have also put in a request for clarification from the rate analysis team at TX HHSC, as to what time period they will collect from and what averaging methodology will be used. There are no guarantees of anything coming from them at this point.

Once more, the proof is in the pudding – what periods of time will those normalized (averaged) rates be based on and can we rely on HHSC actuaries to give an accurate analysis of those normalizations? There are a number of ways to “average” datum and it comes down to a smeared statistical estimate anyway. For example, if data is collected from 7/1/2016 to present, then the data should reflect the full effects of lower MCO payments that were implemented due to discount rate decreases and policy tightening and the later implemented 12/15/2016 rate reductions. Compare this data to the data that would co-mingle pre-07/01/2016 data with post-07/01/2016 data. The smearing that would average out these effects would reflect a higher reimbursement than from the first example of data. The most obvious way the TX HHSC will probably compute averages for the new rates will be to simply average out all the reimbursements per encounter for each therapy CPT code, regardless of the number of units billed for that CPT code when estimating the most likely encounter-based reimbursement amount for office settings. For home settings, they will average out the same encounter reimbursement amounts and normalize by the effective number of units serviced that have to be reported, which could be 4 units, but could be less based on a sample of surveyed home health therapy treatment documentation from MCOs and the TX HHSC.

We need to know at least two things, (i) the period of time that data is being collected and used, and (ii) what methodology will be used for averaging, (i.e., for office settings, will the untimed average rates be calculated by averaging the total billed amounts per encounter visit or will it be averaged by the total billed amounts divided by the total units billed and then multiplied by 4, and for home health settings, will the average be calculated by averaging out the total billed divided by the number of encounters and then divide by some number of units less than or equal to 4).

As examples, let us say that for CPT x, and for the office setting case; arO(x) = average untimed rate for CPT x, tbO(x) = total billed amounts for CPT x, neO(x) = number of encounters for CPT x, and nuO(x) = number of units billed for CPT x, then we can have two possible scenarios – (1) arO(x) = tbO(x)/neO(x), or (2) arO(x) = [tbO(x)/nuO(x)]enu(x), where enu(x) is an indication of the “effective” number of units serviced, on average, for CPT x per encounter. For the home health setting case, we have the scenario, if arO(x) = average timed rate per unit, then arO(x) = [tbO(x)/neO(x)]/enu(x). In either case, enu(x) is the critical effective number of units that TX HHSC will be assuming in its averaging. For the home setting, the further enu(x) is from 4, the higher the average, arO(x). For the second office setting scenario, the further enu(x) is from 4, the lower the average, arO(x). So, enu(x) is key for the new rate calculations.

UPDATE: As of March 23, 2017, we have been notified by HHSC’s rate analysis team that the proposed new reimbursement rates will be based on fiscal 2015 data and the averaging methodology will be based on the averaged billed amount for each CPT claim line. With this said, we modified our open records request to HHSC to obtain fiscal 2015 data for therapy reimbursements to include the following for each delivery model and encounter: (1) date of service, (2) CPT, (3) units billed, and (4) amount billed. For home health, the units billed will almost always be 1 and so, we are assuming that HHSC will be dividing the billed totals for a CPT by the number of encounter visits and then be a number between 3 and 4 (using an assumption that the Texas A&M study utilized). In our analysis, we will compute a sliding window of reimbursement rates based on the sliding window of 2 to 4 units per home health visit assumption in order to give an indication of the possible rate changes. Additionally, we will be analyzing the therapy rate trends and compare them to other provider type rate trends in Texas and in all other states’ Medicaid programs. These visuals will act as a comparative trend analysis and study of how the legislature has disproportionately affected therapy services in Texas since 2008.

On a slightly brighter note, Rep (Dr.) Zerwas has published and entered into consideration HB 1 and into the Appropriations Committee (since 2/13/2017), the House’s version of the budget bill. In that bill on Section 17.10 – Adjustment of Therapy Rate Reductions, it is proposed to increase the budget for therapy reimbursements by $14M during the next biennial (2018-2019). What this effectively would do is increase the overall therapy budget to $118.8M for 2018-2019 from the current $104.8M that is slated. The corresponding Senate bill SB1, does not specifically contain language for any therapy cuts. Both bills must be reconciled in subcommittee before the final votes are applied in the chambers. In the end, even if HB 1 is passed and implemented, TX HHSC may not adjust the rate schedule up (if at all) until 2018, the beginning of the new biennial. Additionally, how much of that $14M increase would level off the effective rate reduction scheduled for July 1, 2017?

The Real Near-Future of Medicaid, Medicare, the ACA, and Therapy Services

Now that we have been exposed for a mere one month to the new federal administration’s actions, desires, and reactions to the Press, the general curiosity of the public, and the continuance of a presidential campaign into the presidency, we wonder aloud what the future holds (or more accurately, what will hold us up in the future) in healthcare and more relevantly, for therapists in the physical, occupational, and speech domains. The GOP is primed to repeal the ACA, make extensive changes to the Medicare program, and propose a dramatic transformation of states’ Medicaid programs through block grants or per capita federal programs. The current Trump nominee to head the CMS is Seema Verma who assisted VP Pence’s Indiana Medicaid transformation into a program (HIP 2.0) where Medicaid families are required to make monthly premium payments under the threat of dis-enrollment and monetary penalties, prove they are working or can work, while still having some services cut. Apparently, Verma has no idea that $1 a month could make a large difference to a sub-FPL (federal poverty level) family. Most healthcare policy experts, including the Kaiser Foundation, believe that monetary requirements from low-income participants in a healthcare program do not work and force many to use emergency room services without insurance coverage. Verma’s ideas add even more bureaucracy to the already complex Medicaid programs. Tom Price, the new Secretary of HHS, under Trump wants to totally privatize Medicare – providing block payments to seniors to buy their own commercial insurance versions of Medicare – and increase the eligible age to 67. Mind you, both of these individuals had massive conflicts of interests in their dealings with healthcare, making money off of corporations that were contracted in those programs they promoted while either legislating or consulting.

During the advent of the ACA, Texas decided to reject the expansion of Medicaid to adults and to continuously apply for leaky waivers to certain CMS rules pertaining to hospital costs. At the same time, the Texas Legislature found its way to punish Medicaid children and the industry by a series of reimbursement cuts and the expansion of managed care Medicaid through the contracting of regional MCOs and their subsequent therapy network discount rate cuts and the tightening of treatment authorization policies and requirements.

All these cost cutting legislative moves were supposedly pushed to become more responsive to the Texas taxpayer in view of the state budget shortfalls begun since the continuous GOP-lead governor administrations from the middle 1990s to the present. Despite record amounts of tax entitlements and lassiez-faire environmental protection policies towards the state energy industry, their tax payments to the state, continued to dwindle despite a recent industry rebound. The GOP refuses to touch the Rainy Day Fund (Texas ESF), now at an all-time high balance of over $10 billion, to alleviate emergency shortfalls in the budget, despite its true intentions. So, state politicians decided to put the burden of this recession on the most vulnerable of the state in the form of wicked cuts to Medicaid therapy services. Therapy suffered in a disproportionate manner simply because of a deeply flawed and propaganda-ish Texas A&M study that was designed with preconceived legislative bias and misrepresented to the public by those same politicians. Nonetheless, here we find ourselves, the decreased rate of usage of therapy services in the state, regional losses of access to therapy services, an exodus of therapists and businesses, and the facade of budget savings that hide the healthcare explosion that is waiting to happen with children not being treated or having unreasonable and dangerous delays in therapy treatments.

As importantly, where does the change of the federal administration in conjunction with the real agenda of the Texas legislature leave the therapy industry and Medicaid children now and for the near future? Additionally, if Medicare is to change to provide block payments to seniors and Medicare is to be controlled by private insurance companies, will the federal therapy caps be either abolished or decreased because of the decrease in those block monies and the general impression of the insurance industry that therapy is a secondary healthcare service?

With the rocky introduction of the Texas Star Kids program in 2016, Medicaid is now 100% managed care. What that will mean is that all therapists and therapy businesses will be subject to the always changing discount rates offered to them by the regional MCOs, if they can even obtain contracts with them. In this introductory period, MCOs are required to offer contracts to all therapists and businesses. Nonetheless, MCOs have been covertly collaborating with the Texas HHSC to lower those discount rates, even when that is against state law. The added effect of tightening treatment authorization policies and medical necessity requirements also renders therapy services more difficult to do in legitimate cases. Authorization for home health therapy is essentially impossible or at best, very difficult to obtain because the MCOs are applying a policy which dictates an automatic first and second pass home-bound necessity rejection, which is, once more, against current state law.

Throughout the state, the therapy business has been made to be unsustainable in many cases where eligibility criteria are borderline or not clear-cut to non-therapists and non-clinicians. There is no room for flexibility of a child’s requirements for therapy services in Medicaid, while clinically, that threshold for services is much wider. Autism, despite its pandemic effect on Texas children and its symbiotic effects to make worse other ailments, is no automatic ticket for therapy treatment in Medicaid. Behavior analysis is not covered by Texas Medicaid, despite the overwhelming scientific proof of its efficacy in co-treatment with therapies.

Meanwhile, the 85th Texas Legislature is warring over what warrants a new budget in the midst of another record shortfall with the House proposal differing from the Senate’s by just under $8 billion based on different assumptions and starting points about the 2016-2017 budget results. More specifically, the difference in the two proposals in funding the Medicaid program is $4 billion, including both state and federal funding. The Senate proposal does not take into account Medicaid enrollment growth or inflation for 2018-2019 and reduces Medicaid spending from the 2016-2017 biennial by $0.9 billion. The same Senate politicians (Jane Nelson, Charles Schwertner and Lois Kolkhorst) that spearheaded the targeted therapy services cut for 2016-2017, are now leading this defunding campaign for Medicaid for the 2018-2019 biennial. The Texas HHSC, along with other state agencies, were already ordered by the Legislation, to scale back their budget requests by 4% last July based on an overly cautious 2018-2019 biennial revenue projection by State Comptroller Hegar of $104.87 billion. Hegar had been predicting higher revenues as recently as July 2016. Also, the Texas energy industry has been rebounding for the last 6 months using greater automation and fewer humans, so, they are becoming more efficient and hence making more money with less overhead. Their tax revenues should have already increased for the state, but this had not been announced by Hegar and the GOP. Therefore, the GOP narrative of decreased tax revenues is misleading, at best.

UPDATE: This past week, the House released its omnibus budget bill, HB1 with a replacement Rider 36. They proposed to halt further tightening of therapy dollars by excluding much of the wording from the prior session for reducing funding for therapy services. This should alleviate further bug cuts for therapy. However, there is no reversal of the prior cuts. Also, the total Medicaid budget is proposed to be decreased by $100 million. The bill must be accepted by the Senate, as well. Since the Senate’s version of the overall budget is lower than that of the House, that will not be a certitude. The corresponding budget Senate bill, SB1, is still pending in committee. It’s version of the new Rider 36, omits all of Rider 50 language and relabels the Rider as a “cost containment” rider for HHSC to implement. TxHHSC, in its latest report to the Senate Finance Committee on January 30, 2017, requested around $70 billion for all Medicaid-related services, a difference of around $9.7 billion from the Senate appropriations and $5 billion from the House appropriations.

What will TxHHSC cut to meet this decreased Medicaid budget? What will be the scapegoat for their cuts this time? Will it be Medicaid across the board (to include a modest therapy services cut), with a splattering of education cuts or will therapy be spared this time around based on the consecutive cuts suffered since 2009? Additionally, everything also depends on CMS’s next move, under the new administration, to restructure Medicaid funding for the states. Therapy services may or may not be moved based on lower or higher funding from the Feds.

There was some movement to renormalize therapy rates, but those would probably have to be done in the form of a supplemental budget proposal in an appropriations committee, late in the session and it would require passage in that committee and in both houses, absent a veto from Gov. Abbott. All these state budget proposals would go out of the window if the new Fed rules from a new Fed administration significantly change the way Medicaid is funded. In particular, Medicaid block grants or per capita payments, most likely, would mean a decrease in Federal funding of Texas Medicaid with more restrictions on eligibility, if Verma is confirmed by the US Senate.

Reading the tea leaves of who will be in charge of the new federal healthcare structure, coupled with the current state budget shortfall, the perfect storm seems to be brewing against the background of an increased need for healthcare for the disabled and needy in Texas. Tighter eligibility requirements, lower provider reimbursements through MCO discounting, reduced or eliminated services, and the burdening of Medicaid families to pay premiums seems to be the hit list of goals for the GOP party line. Therapists and therapy businesses, in general, will need to become creative in becoming ever more efficient to stay in practice and service the needy and disabled in Texas.

In the face of these continuing state reimbursement cuts and fiscal threats to the therapy industry and the healthcare crisis they are creating for the most vulnerable in the state, our multi-prong strategy for clients in the therapy business has been to (1) diversify the patient portfolio (do not rely on government programs to be more than 50% of your client portfolio, so that your practice survives to service Medicaid and Medicare), (2) create special clinical and educational programs to help clientele achieve therapeutic goals more efficiently, (3) negotiate large-scale insurance contract strategies such as value-based reimbursements in exchange for broader and long-term client bases in insurance networks, (4) market to and collaborate more closely with new geographically narrow sub-network physician group types, such as LPOs (local physician organizations) that are being formed in the healthcare market to create greater provider group efficiencies, (5) stay vigilant and do your due diligence of state and federal compliance rules, lessening or eliminating the risk of future recoupment actions, and (6) restructure staff salaries to match regional economic market trends. These actions will prepare you to lessen the effects of a currently chaotic government healthcare reimbursement system on your practice.

To this effect, SynerImages is presenting a national therapy facility conference in San Marcos, TX on July 14 and 15, 2017 at the San Marcos Convention Center that will center on all of these issues and more. We will know more about the changes made that will affect therapy in Texas by then. See our events web-page at for registration and agenda details. Early bird discounts will apply until March 1, 2017 with further discounts for clients and multiple individuals from the same company.

TX HHSC To Implement 2015 Proposed Therapy Cuts on 12/15/2016

The Texas Health and Human Services Commission (TxHHSC) has proposed that they will be implementing their October 2015 proposed Medicaid therapy services reimbursement cuts to all therapy models in Texas on December 15, 2016. TMHP has also posted the new rates to be effective that date. Download the rates at TMHP rate release. See the Texas Tribune article for the statement released by the TxHHSC. This action follows the lifting of the injunction against TxHHSC by the 3rd Court of Appeals and the refusal of SCOTX to hear the case recently.

More specifically, the 2015 proposal reflected an approximate reduction to speech code 92507 (the most utilized therapy treatment in Texas Medicaid) of 28%, 25.75%, 15.15%, and 8.25% for OPT-CORFs, HH, individual-HH, and individual-office respectfully, a 25% reduction to all therapy evaluations (for all therapy delivery models and disciplines), and a 3.44% reduction to most PT/OT treatment codes. After a preliminary analysis, we have estimated that the weighted average Medicaid rate cut to therapy codes for OPT/CORFs will be 17.45% based on 2015 utilization data from the TxHHSC. For home health agencies, this weighted average is 15.2% and for general rehabs/individuals, the weighted averages are 9.96%/5.9% (home/office).

To make things even more difficult for therapists and Medicaid children needing therapy services and to present a more accurate picture of the true effective reimbursement rate for therapists in Texas, the Texas-contracted MCO provider discount rates being given to therapists in Texas are compounded with these to-be implemented Medicaid rate reductions. One must multiply the TxHHSC rate cut with MCO discount rate cuts to display the effective rate after MCO reimbursement. Since all of Texas Medicaid will be under the umbrella of managed Medicaid MCOs, that effective rate will be the final Medicaid rate. For example, if one has an OPT/CORF clinic contract discount rate with an MCO of 75%, the speech code 92507 will be approximately reduced by 1 – (.75)(1-.28)=.46 (46%) of the current prevailing Medicaid rate (PMR) pre-12/15/2016. Moreover, if speech assistant therapists are utilized to treat patients, an added compounded discount of 70% will be applied to that code reimbursement. In this case, for code 92507 treated by an assistant, the Superior rate would then be reduced by 1 – (.75)(.72)(.70) = 62.2% of the current PMR. These are sub-Medicare and sub-commercial insurance rates for the more severe and work intensive treatment of pediatrics.

To this effect, there are indications from Superior that when the new Medicaid rates are implemented, they will reconsider their contract discount rates with therapy providers that were in place before July 1, 2016 and were above 75% for office clinics and above 70% for home health agencies. However, the compounded discount for utilizing speech assistant therapists was not mentioned. There is no independent and written confirmation of this as yet, but we will continue our investigation of their reimbursement policies post 12/15/2016. Superior did release two notices to that effect in July 2016. See here and here for those notices. Regardless, many providers were at sub-65% discount rates with Superior and other MCOs are issuing sub-90% discount rates before July 1, 2016. For example, most new state home health agencies (Texas HCSSAs) as of 2016, have been issued Superior contracts at the 50% PMR discount rate. United Healthcare is issuing contracts at the 90% PMR discount rate for many therapy clinics.

At this juncture, the only agency with legal authority to intervene in the TxHHSC implementation of cuts would be the federal DHHS CMS (CMS). In order to initiate this intervention, CMS must first conclude their review of the TxHHSC’s SPA (state planned amendment) for the rate cut proposal. To bring credibility to this effort, all interested therapy clinics and agencies should contact CMS via the previously published contacts in this blog to give testimonials and hard statistics about their local access to care (therapy services) problems with Medicaid and the MCO programs. Recently, there have been reported long delays (waiting lists of over 3 months to treat children), and in some cases improper denials of authorization to treat from Superior and other MCOs. This phenomenon has occurred simultaneous to their drastic discount rate reductions implemented on therapists on July 1, 2016.

Firstly, while this may seem to be a difficult task to achieve, all therapy clinics and agencies should insist on MCO contract rate re-negotiations looking to the proposed Medicaid rate reduction on December 15. To initiate this, we have provided a sample letter which you may send to your MCO regional office to request such a re-negotiation meeting. The KEY point to requesting these re-negotiation meetings is to ostensibly display an access to therapy services problem for the MCO patient in your clinic, including reporting long waiting lists to treat because of changes in state agency and MCO authorization policies and a compounded reimbursement rate reduction that will lead to a significant staff contraction thereby creating a reduction in MCO patient population for that therapy entity. Giving hard numbers and statistics to these MCOs is also key to proving your case.

With that said, one must contrast how therapists in Texas must prove beyond any doubt, their statistical worth and that of their Medicaid patients, while the CEOs of the Texas-contracted managed Medicaid MCOs, by issuing terse statements to the public and the courts that their networks are more than adequate with the proposed cuts (Driscoll and Superior specifically) without any evidence displaying adequacy of their therapy provider network to the public, are legitimized by legislators and the TxHHSC. The MCOs are essentially black boxes when it comes to network adequacy transparency and the TxHHSC has not initiated any investigations into examining their network adequacy. Insurance companies such as the managed Medicaid MCOs in Texas are held to a must lower standard of network adequacy by the Texas Department of Insurance (TDI) that is not sufficient using Medicaid requirements.

Secondly, it must be proclaimed that Texas legislators are solely responsible (see the prior blog on the overwhelming vote for Rider 50) for this overreaching problem that will assuredly cause massive access to therapy services problems in Texas. Everyone should aggressively contact their state officials (state representatives and state senators) and demand that they help to prevent the actions of the TxHHSC and the state contracted MCOs in regards to the to-be implemented Medicaid therapy services rate cuts. Many of these legislators are up for reelection in the next two years. Remind them of such.  This grassroots effort must be made in order that the Texas therapy industry and the children of Texas have a fighting chance of survival. UPDATE: The Speaker of the House, Joe Strauss just announced that the cuts were a “mistake” and that the new legislative session will try and reverse the cuts. See the quorum report. This opens up the possibility for a real fight during the next session over therapy rates. Rep. Strauss, were he to keep his word, introduce changes to the rate cut legislation (Rider 50) in the Appropriations Committee during the last stages of the legislative session in June 2017. With that said, any changes could only be implemented later in 2017, best case scenario. Additionally, Lt. Gov. Patrick, Senate Budget Committee Chairwoman Nelson and Senators Kolkhorst and Schwertner would heavily lobby against removing the cuts, as they have continually stated. Governor Abbott could also veto such changes if it was not passed by a two-thirds (2/3) super majority margin.

Finally, this crisis presents with an opportunity for each therapy business to diversify in their clientele by including a wider spread of patient types, including Medicare, Medicaid, private commercial contracts, cash-pay discount programs, Texas Worker’s Compensation program, military insurances, and large employer contracts.

Texas Medicaid Reform or Destruction – The Politics of Texas Healthcare

The last four years have seen an unprecedented attack unraveled on Texas and national therapists (SLPs, OTRs, and PTs) by state’s Medicaid programs. Political pressures have been put on state legislatures to dramatically reduce Medicaid reimbursements to providers. This is no more obvious than what is happening in Texas today. The General Appropriations Act and Omnibus Budget bills (HB 1/SB 1) that were passed by the Texas Legislature during the 2015-2016 biennial session included a provision (Rider 50) that specifically targeted therapy to the tune of over 300 million dollars in state and federal reductions. This legislative initiative and the unbridled and unprecedented political influence brought upon the Texas healthcare agency TxHHSC, by the Texas Lieutenant Governor and Chairwomen of the Senate Finance Committee, triggered a proposal from the TxHHSC, to dramatically reduce reimbursements to Texas therapists in all delivery models – up to a 28% reduction to the most used and common speech treatment code, a 25% reduction to all evaluations, and a 3.5% reduction to all of the most used and common PT/OT treatment codes. Mind you, this huge push brought on and unapologetically held by the majority political party in Texas was entirely based on their narrow perception of massive Medicaid fraud and overpaid therapists in Texas – neither of which have been proven by a peer-reviewed scientific study or general professional consensus. The industry pushed back in 2015 and several therapy home health agencies and Medicaid patients filed a lawsuit against TxHHSC, an injunction against implementing those cuts.

Additionally, and simultaneous to this, Texas-contracted managed Medicaid payors instigated a massive contract discount rate cut to all therapists and implemented TxHHSC-mandated and overly stringent authorization-to-treat policy updates, heavily influenced by the legislation passed and the TxHHSC being held back by the injunction and reducing capitated rate payments to contracted managed Medicaid payors. The discount cuts in Superior’s case (the largest of such contracted Medicaid payors in Texas) were to reduce reimbursements to therapists to as low as 50% of the prevailing Medicaid (PMR) rates, but no higher than 75% of PMR for office visits and 70% of PMR for home visits. Other Texas-contracted managed Medicaid payors are planning to follow suit in early 2017 and have applied their own version of stringent authorization-to-treat policies to curtail increases in therapy services.

The result of these tactics has been to produce an operational holocaust to the therapy industry and Medicaid children in Texas. The injunction was eventually lifted by a partisan Texas 3rd Court of Appeals in July 2016 and an even more partisan Texas Supreme Court refused to even hear a review of the case in September 2016. Nonetheless, the managed Medicaid payors have not planned on adjusting their discount rate cuts. The proposed compounded effect of PMR and discount rate reductions and authorization-to-treat policy tightening will be devastating to access to therapy services in Texas. Even the politicians that voted for such a monstrosity of a piece of legislation are agreeing on this despite the overwhelming vote to pass such a mandate two years ago – the vote for was 30-1 Senate (Sylvia R. Garcia – Houston, the only descending Senate vote) and 115-33 House (actually it was 114-34 after a correction).

The only remaining firewall to this madness is the federal CMS. Nonetheless, CMS can only intervene after such cuts go into effect and manifest themselves as access to therapy services (access to care) problems for the most vulnerable children in Texas. However, there are future firewalls to such partisan acts against therapy and Medicaid children. This is the coveted right of the vote. Come November 8, 2016, you have the choice to vote for those that have shown or are willing to show courage to protect the children of Texas and keep therapy in Texas a striving industry to protect those children.

Ask the candidates for their records on the Omnibus bill (HB 1/SB 1) that caused all of this and on their own stances on therapy as a legitimate means to help support and improve the lives of Medicaid children in Texas. See the voting links above to see how your State Senator and Representative voted. Verify how candidates voted on that bill and how they reacted publicly afterward and before. Additionally, of the unanimous nine (9) Republican judges on the Supreme Court that voted to NOT review the injunction and therefore lift it, three (3) are running for re-election. See the Texas Tribune article on the candidates running in those races and vote accordingly.

Texas Supreme Court Denies Petition to Review Therapy Injunction

Yesterday (9/23/2016) morning, the Texas Supreme Court (SCOTX) denied plaintiffs’ request to review the petition to strike down the 3rd Court of Appeals decision to lift the therapy rate cut injunction against TxHHSC. The plaintiffs can, however, repeal this by filing for a rehearing of this review. They have 15 days (10/8/2016) to file such a request with SCOTX. We have not heard from the plaintiffs as to what their next step will be. The appeal to SCOTX must be based on the evidence presented in the 3rd Court of Appeals with no new evidence allowed. This may have hampered the appeal from the plaintiffs. Additionally, the political aspect of the decision was quite evident. The unanimous Republican SCOTX court presents an apparent appearance of lineage with the majority Republican legislation that spearheaded such cuts, to begin with. Nonetheless, it appears that TxHHSC has, as of now, won its legal defense of those massive cuts to Medicaid therapy providers, 27.93% on speech therapy treatments (92507), 25% on all evaluations, and 3.44% on OT/PT treatments across all therapy delivery models.

The danger to the most vulnerable of children in Texas and to the therapy business is that the double whammy of Managed Medicaid MCO discount rate cuts to therapists, in combination with the proposed rate cuts from TxHHSC will reduce the effective rates to sub Medicare and sub-commercial rates. In many cases, especially in the Valley and South Texas, such as in the largest Medicaid insurance contractor, Superior’s (Centene) contracts, those rates will be 50% of the proposed reduced rates from HHSC. Superior’s massive almost universal 75% to 70% discount rates for therapists means that for speech treatments, the effective contract discount rate will be the compounded rate of (.50)(.72)=.36 or 36% of the current prevailing Medicaid rate. Mind you, that is not a 36% rate cut, but a discount rate of 36% of the current Medicaid rate or equivalently, a 64% rate cut from the current Medicaid rate. The other CPT discount rates follow from the same compounded effect. Many Medicaid therapy businesses have a majority of Superior clients, some well over 65% of their current patient rolls.

As mentioned in earlier blogs, CMS may be the only arbiter in possibly preventing the TxHHSC rate cuts and Managed Medicaid discount rate cuts from happening. For this to happen, there must be evidence showing that the effect of such compounded cuts will cause access to care problems for Medicaid clients in Texas. Medicaid insurers will argue that their therapy provider networks are currently adequate to handle the case loads in their regions of operation. However, there are many assumptions made by them when they utter such claims. One is that their current networks, as dictated by their published provider directories, show adequate coverage. The problem is that the MCOs do not keep those directories evergreen. Many of them reflect old networks and dropped out providers. The second assumption has to do with the rates of Medicaid client growth. MCOs base their actuarial analysis on past growth rates and do not utilize current census growth projections. Finally, MCOs are currently tightening the authorization protocols for home health therapy so that home-bound necessity is co-mingled with medical necessity, a cloudy issue that may be skirting with a direct violation of the Social Security Act of 1964. These issues and others should be presented to CMS as evidence that the compounded cuts will be devastating to the Medicaid population of Texas.

The corresponding arguments from Republican legislators directly responsible for the cuts – the usual gang – put all of their eggs in one basket, the Texas A&M study conducted in 2013 that purportedly showed that therapists in Texas are paid more than other therapists in other states and for Texas commercial cases. There is only one problem here, the school has distanced itself from the study and the head author had to leave the school because of that shoddy work. The study claimed to have harmonized the different Medicaid therapy programs in other states with Texas’. However, on closer scrutiny, it appears that too many bad assumptions were made on the population sample and the billing methodologies. Nonetheless, the same gang of legislators continued to defend it and more egregiously, use it for political justification of the cuts.

In the meantime, in order to score political points with these same legislators, the current commissioner reported recently to the Senate Finance Committee, that even without implementing the cuts, TxHHSC saved over $58 million by the MCOs imposing stricter authorization protocols. In reality, these more stringent restrictions played a minor role as compared to the more deliberate attempts to delay authorizations all together in managed Medicaid. With the Star Kids program commencing this November, the Medicaid population will now be 100% under the umbrella of managed Medicaid and of these restrictive policies. This stranglehold on authorizations coupled with the double whammy of cuts will accelerate the closing of access to therapy services for Medicaid patients as never before. Therefore, it seems that the only tools available to defend the most vulnerable in Texas are a limited Federal government offensive, the voting ballot, and hedging against future cuts by massive diversification (assuming you will still take on Medicaid patients in your practice).

In next week’s blog, we will trace the history of the political war against Texas therapy that has ensued for the last 5 years. Ironically, it all began with the Texas Legislation being legally forced by the United States Supreme Court (SCOTUS) to establish fairer reimbursement rates for Medicaid providers in order to prevent the access to care problems that were prevalent in Texas in the 1990s and early 2000s.