Where Art Thou – Therapy Rates War – and the Consolidation of Texas Health Agencies

We have reported that therapy rates were under seize based on a TAMU study and HHSC’s skewed interpretation of it. As it turns out, TAMU is not so enamored with HHSC’s use of that study and has distanced itself from it. More to the point, the study is slightly more favorable to OPT/CORFs with respect to cost per beneficiary per year statistics. This does not necessarily mean that home health (therapy-only HCSSAs, for example) or general rehabs are being singled out. HHSC regional differences were also pointed out. It must be said that HHSC cannot discriminate based on regional issues per the Texas Administrative Code (TAC). However, MCOs, in their contracting patterns with therapy businesses may differ from one HHSC region to another or for that matter, within one HHSC region by provider type and Medicaid client population censuses within that region.

Additions to the Rider language used in HB 1 or SB 2 potentially affecting therapy are being suggested by therapy advocates to include phrasing such as: travel time, costs of compliance maintenance, and maintaining access to therapy care. Based on the phrasing used, it would likely nudge HHSC to more deeply “consider” (I would suggest the words “operationalize”, “actionize”, “incorporate”) the therapy industry’s distinguishing cost structure using compliance and travel as the main culprits for cost escalation. “Incorporate” will be suggested. These additions may then be presented to the respective committee members before a bill can be brought for a vote in the Senate. The Senate bill has not yet made it out of committee for a vote in the Senate chamber.

These are the issues surrounding any HHSC adjustments to the therapy fee schedule:

  1. cost containment – how can the State save approximately $200M (GF) in the next few years through changes to policies and/or fees for therapy?
  2. Would one do a “carve out”, (i.e., a subset of codes to be fee-adjusted more than the others) and to which subsets of codes?
  3. Would one start with the most used and paid codes (proportionality) in a carve out such as 92507, etc?
  4. Does one even consider in whole or part the TAMU study and HHSC interpretation given all the problems with its methodologies, assumptions, and limitations, and data collection and scrubbing methods (we have found inconsistencies in bundled vs unbundled claims, units used, and sampling from a subset of other states and not from the complete set of other states, etc)?
  5. Does one consider a potential decrease to access to therapy care based on approximating how much an average therapy business would lose in revenues or by using a more suitable metric such as gross profit margin (GPM) (I gave this talk a few years ago) if therapy rate cuts are implemented? It turns out that according to my recent research over the transition period from 2011 to now, a sustainable GPM for an ORF/CORF rehab is around 6%, (i.e., for every dollar made, the organization profits by 6 cents after all costs). That same metric standard for therapy-only HCSSAs in Texas is around 4%. For general rehabs or individual therapists, this standard is closer to 3%. In that same research, those GPMs are very sensitive to therapy rate cuts, as one would imagine. How sensitive is a matter of cost containment elements in the business, but on the average, the GPM is directly proportional to a rate cut. I can reproduce copies of my research paper for your perusal per your request by email.

Based on our recently completed collection and analysis of all other states’ published therapy rates (there were 40 states that offer Medicaid therapy reimbursements, TAMU only considered the Truven 11-state sample), and assuming that published and harmonized paid rates are highly correlated (they are), speech treatment codes compared to both the mean and median of other states are lower to the tune of around 20% and 34% respectively on average. Code 92507 is particularly favorable to Texas Medicaid/MCO.

OT and PT treatment codes compare less favorably with the other states published rates, coming in about 40% above median of other states.

Evaluations are also less favorably comparable to other states rates. Nonetheless, because treatments are invariably included with evaluations in Texas, this statistic should include the cost of at least 2 units of treatment. If this is done, then the cost of evaluations does compare favorably with other states’ rates, reaching within a few percentage points of the other states’ median paid rates.

Since the TAMU study found authorization processes in Texas to be more than comparable and in most cases superior to and stricter than other states’ policies, the combination of the published rates comparison above and the TAMU study’s authorization comparisons put Texas therapy in a good light – saying something entirely opposite to that postulated in the HHSC interpretive report.

Politically, the study is probably not going to be further debated and used as an issue. The real statistics do not support HHSC’s interpretation. Nonetheless, the $200M savings will still be upheld as a savings metric by HHSC. In this vein, changes will have to come. It is also important that a unified front be used when dealing with HHSC and the legislators, (i.e., the same types of language, wording, and suggestions should be put forward to them) and that one service delivery model not overwhelm the other as this will alienate everyone and make a divided house much weaker against the anti-therapy troops in Austin and elsewhere. We continue to propose that everyone become involved in this tug-of-war and participate in a well structured and meaning political process.

Today, the Senate in the 84th Legislature passed a bill (SB 200) that would propose the partial consolidation of Texas health agencies, specifically, HHSC, DADS, and DARS by next year. The consolidation of the remaining two agencies, DSHS and DFPS would be considered by committees later. We have discussed this possibility earlier citing the current problems within HHSC with application processes and the like and what a consolidation may mean in a decreased HHSC payroll and juggling of personnel. This coupled with the upcoming deadline for re-enrollment into Medicaid (per the ACA) and the 100% MCO control of Medicaid, all early next year, may introduce further complications with the transition.

As a final notice, SynerImages is announcing our 11th Annual Rehab Facility Conference to be held this year in San Marcos, Texas on July 10 and 11, 2015. An all-star team of presenters will be giving the talks this year including counsel from the top healthcare law firms in the country, top CPAs, analysts, State and Federal compliance experts, government healthcare agencies, and MCO representatives. See the Events calendar tab in our website www.synerimages.com for brochures and registration. Our rates have dropped for attendees while retaining all the advantages of attending such as therapist CEUs and home health administrator units, special giveaways, and the latest announcements and news for the industry.

Original TAMU Therapy Study Received by QDR

Yesterday HHSC released to QDR as a result of a Texas Open Records request: (1) the original TAMU Acute Care Therapy Study, (2) the contract between HHSC and TAMSPH (Texas A&M Health Science Center School of Public Health), and (3) the report given to legislators from HSSC proposing changes based on the TAMU study and the targeted $200M reductions in Medicaid therapy.  Our very preliminary analysis has revealed many conceptual and practical gaps in the TAMU study that HHSC relied on unscrutinized and that was selectively reported directly to legislators resulting in Rep. Bonnen’s HB 1 amendments to reduce therapy reimbursement rates to “industry standards” and its subsequent partisan passage in the State House. It is now poised to be passed in the State Senate and in the followup Senate/House conciliation committee. We will be releasing our extended study of true national published therapy rates, in conjunction with a critical analysis of the orginal TAMU study later this week.

In the meantime, a preliminary analysis of the TAMU Therapy study reveals:

  1. It was assumed that (re)evaluations do not need pre-authorizations in Texas (wrong). This fortunately did not change their overall opinions about the authorization process in Texas (it was favorable compared to other states), but it could have further shown that Texas’ authorization process for therapy services is stricter than other states’ authorization processes.
  2. Bundled claims were not unbundled for Texas therapy claims when pitted against other states’ claims, especially with respect to ST service bundles, (i.e., CPT 92507 was not unbundled from other ST codes in Texas Medicaid claims and was essentially treated as one whole ST CPT code cost, see item 3 below).
  3. Claims summary cost was not unbundled as claims line costs (per CPT code billed) and were compared to other states’ unbundled claims line costs giving the gravely mistaken impression that certain Texas therapy codes were paid more than other states corresponding codes.
  4. Gross margin analysis, (i.e., estimating the net profit made by a therapy business per CPT service billed) was done based on 2013 labor data (therapist wages, etc.) against older 2010 to 2012 claims data in some analysis – therapists were paid more in 2010, 2011, and 2012 than in 2013, 2014 and now in 2015! FYI, I published a paper (and talked about this in our 2012 conference) directly showing the mathematical effect on a therapy businesses’ gross profit margin (GPM)  from rate reductions, as a percentage, not as a net profit – the percentage is a better overall indicator of the profitability and health of a business.
  5. Their conclusions about what Texas HHSC regions bill more for certain CPT codes was antedoctal based on their assumptions about rural vs urban populations, with no information used on regional differences in cost-of-living, childhood epidemics of autism, diabetes, obesity, etc., (i.e., it is flawed based on an incomplete and possibly naive view of regional economic and health issues). Particular prejudice was applied to urban and border regions.
  6. Their own conclusions state that ORF/CORFs doing ST services will lose money to the tune of negative net gross revenues  if either a 1% or 5% rate reduction is executed. The same does not hold for PT/OT services and for independents doing HH or HHAs (they would still remain with positive net gross revenues). In fact, had TAMU used percentage gross margins (the better indicator of business health), all delivery models would suffer severe decreases in GPM, to the point of disfunctionality, with any modality type receiving rate reductions and hence a universal decrease in access to Medicaid therapy care.
  7. Overall, the TAMU study points to several results favorable to the Texas therapy industry that were not mentioned by the HHSC interpretive report on it, (i.e., the good news was not mixed in with the bad news in the HHSC report) and to that given to legislators who in turn, based their flawed legislation (budget bill amendments) on it.
  8. HHSC heads and anti-therapy legislators are not interested in debating the merits of either the TAMU study or of the HHSC interpretation report of it. They simply want to use the $200M budget reduction number as a means to an end in placating to rate reductions and corresponding decreases to access to Medicaid therapy care. Medicaid dollars are simply being shuffled between physician and therapist coffers in the real budget flow. This is the sad case of legislators trying to break up any alliance between Medicaid providers on behalf of the most vulnerable in the State – Medicaid and needy children and women.

Again, we will continue to analyze the results of the TAMU study with a more comprehensive and alternative approach to measuring therapy modalities, place of service effectiveness, delivery models, and utilization patterns, with an overall critique of the study. In the meantime, it is put up or sh** up time for your respective legislators. HHSC is in discussions with therapy advocates and they are targeting a rate reduction unless enough pressure is put on them and legislators to reconsider this pointless action and the effect on access to therapy care in Texas. As responsible therapy business owners and advocates for Medicaid children, it is vital that you contact your representatives and HHSC and speak out against these seemingly proposed cuts. Is is now or never and then 9/1/2015 (the usual rate reduction effective date for HHSC) will be here and it will be too late to talk to anyone, advocate or not.

Therapy Advocates Negotiating With HHSC and the State Still Not Sticking with Stick

Since yesterday, therapy advocates from OPIRA, TAHCH, and others, have been meeting with HHSC officials to clarify the amendments that were added to HB 1 and of which were designed to reduce funding for Medicaid therapy reimbursement codes. HHSC replied with several of their answers to questions pertaining to the A&M study from therapy advocates, including, it seems, some of our own.

In our judgment, these answers were inadequate and inaccurate. For example, rather than address the limitation of the 11-state Truven data, HHSC deflected back saying that those 11 states were representative of the US Medicaid population, in general, and were considered along many demographic factors including geography and race. Since Truven cannot release the names of the states involved in such a subgroup, we have no way of scrutinizing this claim, nor does HHSC, as they admitted. The 11-state Truven data-set represents a stratification of only 27.5% of the states offering Medicaid therapy services. Without knowing the 11 states in this data-set, this stratification may be skewed and/or biased and may indeed not statistically represent the US Medicaid therapy population adequately. While effective stratification sampling may be done, we do not know how this stratification sampling was done and with what statistical expertise and to what ends. It turns out that the California rates were extreme low outliers in this study. Nonetheless, the report continued to showcase California’s rate ratios with Texas even though HHSC points out that they used the median indicator to do exactly the opposite.

HHSC pointed out that of the states’ data-sets that were used, the full Medicaid claims populations were collected and hence, no statistical estimation was needed nor appropriate. While this may be true (there still may be gaps in the collected claims data), unfortunately, using 15 out of the 40 states offering subgroups Medicaid therapy services is not a full Medicaid population for the nation and may indeed skew and/or bias the selection if that stratification was not adequately representative of the national  Medicaid therapy serviced population. Our full national published rates data bears this out if projected to the actual paid claims data.

HHSC also reiterated that the median was used to better indicate the central tendency (location) of the distribution of paid claims per therapy code among the 11-state and 4-state individual data-sets. Nonetheless, the use of a median does not, in and of itself, guarantee a more robust central tendency of the distribution since we cannot see the distribution itself.

The mean, median, and mode indicators of central tendency depend on the type of metric function that measures the distance between any two points in the distribution. The use of one type of metric over the other is oftentimes not based on practical or even scientific reasons and is mostly chosen based on convenience of calculation. It may also depend on the shape of the distribution itself to be robust. Each central tendency estimator can be expressed in terms of another and so, there is a mathematical precedent to compare why one would use one over the other based on the shape (skewness, kurtosis, and modalities), sparseness, and dynamics of a distribution.

The median is a sledgehammer approach, as we had previously indicated in a post. Both high and low outliers are ignored equally (50% cutoffs on each side) without knowledge of the amount they differ (differential or pseudo-variance) individually from a central tendency location using the appropriate metric function. We had suggested a more surgical approach utilizing alpha-Winsorized or non-parametric approaches.

What is more interesting is that our own complete 40-state published rates data-set median showed a significant difference from the 11-state Truven published rates data-set median. In their own summary, the paid and published rates tendencies were similar. Hence, a 40-state paid claims data-set should show significant differences from the 11-state Truven A&M study results.

In any case, we are trying to gather EOBs to demonstrate real (and bundled) reimbursement patterns among Texas that reimburse more than (managed) Medicaid. We are asking for two things:

(1) EOB copies (with PHI and prov ID removed) for any commercial insurance  (variety please) for any services performed with bundled codes (for example 92507 + 92526 used on same date of service) or bundled eval + therapy performed on same date of service.

(2) We also need EOB’s for commercial rates in excess of $70/visit.

Send by these EOBs to: adam.cole@colehealth.com. We need these emailed in by end of business day today.

If you have any questions you may call us at (281) 734-1549 or reply to this email. The purpose of this data collection is to demonstrate to HHSC a better indication of how (managed) Medicaid stacks up against commercial rates in Texas and with respect to these particular codes to start things out.

Another approach would beto rank therapy codes based on their utilization in the state (both in frequency billed and collected on), project a truer Medicaid population for 2017-2018, anduse those numbers to weigh each code for a distributed reduction scheme, one in which access to therapy care will not be statistically significantly lowered, while still achieving the state’s targeted saving of $200M.

On a last note (a repeating story), the state auditor made it official yesterday when their office released a report stating that Jack Stick steered a pre-determined action to pick 21CT as the contractor of choice for Medicaid fraud software, without going through proper contracting procurement processes. This represents the final rock dropped on this episode. since this was paid with federal dollars (CMS), it would be a federal violation and hence the FBI investigate.


Amendments Adopted to Consider A&M Study/HHSC Report on Therapy for Adjusting Reimbursement Methodology

Amendments 86 and 87 were added and adopted into HB 1 yesterday to allow for the inclusion of the Texas A&M study and subsequent HHSC report to consider reforming the reimbursement methodology for therapy to meet “industry standards”. The author is Rep. Greg Bonnen from the Galveston County District 24.  Rep. Bonnen is a neurosurgeon from Angleton, TX and had simultaneously introduced amendments to increase physician Medicaid reimbursement rates. He is also a graduate and advocate of Texas A&M, the origin of the therapy study. Obviously, his goal is to shift therapy dollars to physicians. Rep. Bonnen is also considered to be an ultra-conservative based on his rankings from conservative associations (voted for a bill to require narcotics testing for all potential recipients of government aid, including children).  Rep. Zerwas followed these amendments with another one (88) that mandates that HHSC consider stakeholder input and access to care issues in making those adjustments. It is now part of the bill to be considered for a vote. The Senate must now consider it in their amendments and adjustments to their budget bill for consolidation.

While Rep. Zerwas laid down a conditional on Rep. Bonnen’s amendments, it is a band-aid since HHSC may simply redefine: (1) who is a stakeholder and what form of input will be appropriate (whom will they listen to – TAHCH, OPIRA, other independent therapist organizations, individual therapists, Medicaid advocates, including family members and patients, and in what form will they accept suggestions and/or contrary evidence, testimonials, and alternative academic or analytics studies), and (2) what is an “access to care” issue, (i.e., what statistics are needed to demonstrate that Medicaid children are not receiving proper access to therapy care as dictated by their primary care physician in conjunction with the case supervising therapist). The last issue should include a creditable estimate on the growth of Medicaid population during the next biannual, the needed amount of therapy (per code), and the corresponding fiscal amount to cover those services.

Two things were accomplished with this action – first, we know who Texas therapy’s adversaries are or at least those less sympathetic to Medicaid therapy, in this go around of the Legislature, and second, the A&M study is not going to be scrutinized unless by force of a possible legal action or reconsideration of the study by HHSC through stakeholder input with proper statistical analysis presented. Again, we know the numbers presented by the HHSC report on acute care therapy services. We know that from the 83rd Legislature, $200M is targeted for therapy for the next biannual. Evaluations are most likely first on the chopping block, but it will be a numbers game because one should consider utilization patterns on each therapy code as paid by Medicaid.

The logical thing to do (and who will be logical at this point) is to consider the weight applied to the utilization rank of each code paid. This weight could be applied to the total of $200M (or whatever will be their target). Consideration of the delivery model fee schedule should also be executed utilizing the real relative value unit (RVU) of work for each model as applied to that code service. Old and used arguments for each delivery model are known to all – ORF/CORFs are scrutinized for being a class of hospital/clinic in a fixed setting with added costs of administration and compliance imposed as such, home health agencies are also scrutinized by DADS for administrative prowess and for the cost of travel and certain other compliance issues, and independents (general rehabs-multi-specialty or individuals) are flexible in doing both, albeit within the confines of an individual therapist’s NPI but with little scrutinization for administration and clinical settings. How would one then apply the appropriate RVUs and weights? No empirical studies exist that compare the effectiveness and efficacy of each delivery model. You will hear anecdotal testimony from many at hearings and in closed door meetings with the HHSC. Additionally, very little peer and editor-reviewed research is done and released to the public for therapy regimens to begin with. Therein lies a problem with putting therapy care on the same ground with medical care or at least as an integral part of the continuum of care for Medicaid children in need. The therapy industry must face these issues directly in practices, schools, and research and hospital institutions.

The game is once again afoot. QDR has not yet received news of being able to receive the A&M study and contract, but the State has until next Monday (4/6/2015) to decide. In the meantime we are finalizing our own complete study of all states Medicaid therapy rates and weighting scheme for each therapy code.

Write to your state representative and senator informing them of the gravity of the situation with therapy care in Texas and to the effects that these amendments would have on the Medicaid population and businesses in Texas, in general. Also inform them of the Zerwas Amendment that mandates that HHSC must have input from stakeholders of the industry (including and especially yourself) through letters to and correspondence with the HHSC and the Legislature and needs to consider the effect any rate reduction on therapy codes would have on access to therapy care in Texas. Offer viable alternatives to the amendments and the proposed cost containment plan for therapy such as consideration of a more scientific study of therapy in the US rather than the deprecated A&M study. This is ground-zero for therapy now.