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.