The Beginning, …. chess moves to the middle of the board and a TRO for Texas Therapists

On August 11, 2015, plaintiffs consisting of four therapy providers and numerous Medicaid beneficiaries filed a temporary restraining order (TRO) against Executive Commissioner Chris Traylor (aka the TX HHSC) in order to halt the implementation of therapy rate cuts effective 9/1/2015. In point of fact, legal representation for the TX HHSC at the Travis County court in which the order was filed, stated that  the TX HHSC had “no intention” of stopping the implementation of these rate cuts. Hence, the final rates would have been released this week as is. See the beginnings of the media frenzy here, the plaintiffs’ press release here HearingSet.PR, and a copy of the filed TRO here tro-petition-texas-therapy-2015.

The TRO is actually far reaching in that it does not simply ask for the restraint of implementing those rate cuts across all delivery models, but points to the possible negligence of the state in utilizing an unconstitutional (Texas) Medicaid fee schedule rate methodology and of not utilizing objective means in commissioning a study for the use of appropriate assigning of rates for therapy. Instead, the Tx HHSC commissioned a study (from TAMU-SPH) using limited agenda and scope and incomplete and possibly faulty data, assumptions, and subsequent conclusions that were not part of the study. Further to this, HHSC released a secret communique to legislators during the last legislative session, stating their proposals to meet biennial budget constraints. The affecting Rider 50 language in SB 2 had not been written yet. None of those suggestions were precisely implemented in their final rate proposal.

We now have at least, two smoking guns to ponder in this opera. First, some data that was given to TAMU-SPH researchers, legislators, and therapy stakeholders from 2009 to 2014 may have been faulty or incorrect. Discrepancies exist between the supposed spike from Medicaid therapy utilization increases between 2011 and 2012 and natural Medicaid population dynamics. The numbers cannot be explained from using only natural population and/or provider increases. Extrapolating this increase while holding the number of beneficiaries to their natural increases during that time would have had to have resulted in a tremendous increase in servicing and billing therapists in the thousands in Texas (utilizing then current authorization policies). This means that up to around 10,000 new therapists would have had to have been employed and billing regularly during that year. Contrast this with the total number of employed therapists (OTRs, PTs, and SLPs) during 2014, around 30,720 (11,670 SLPs). That number would have been appreciably less during the period 2011 to 2012. This stretches the possibilities beyond any reasonable scenario or subsequent epiphenomenon.

Second, the TAMU-SPH study was doomed from the start because researchers were told not to collaborate with stakeholder providers about protocols used, nor were they possibly given correct data to begin with. Couple these situations with the fact that the billing protocols from other states were not cleared up in order to do head-to-head comparisons, the study never had a chance of coming close to being objective. In addition, the TX HHSC used the incomplete study (the efficacy and efficient part of the study was never finished) to create their own agenda-based report that TAMU-SPH has distanced themselves from – a not-so-scientific paper to others, including legislators and certain stakeholders.

So, while we have now heard both shoes drop (one from the TX HHSC rate proposal and the other from the stakeholder/advocacy TRO against it), this saga continues to plague the TX HHSC. A TRO will turn into a temporary injunction should the TX HHSC not or ineffectively appeal to the judge on 08/24/2015. If this should happen, then hearings will be scheduled for follow-up appeals and replies from both sides towards a permanent injunction. Consider that the Frew injunctions lasted over 12 years in and out of courts. This TRO can only be filed in the state as SCOTUS ruled last March that an individual cannot sue a state over Medicaid reimbursements in federal court. SCOTUS however, left open the ability to sue (file an injunction) in state courts and to CMS to equalize (interject on behalf of individuals) a state in order to remedy such  disputes based on the conditions of Medicaid amendments to the Social Security Act of 1965.

The TRO contends that the TX HHSC used an unconstitutional methodology to set the current rate proposals, (i.e., it is based on a 2012-2013 Texas median commercial rate fee schedule – 145% on average of them, instead of based on governmental rates such as percentages of Medicare, Medicaid, or combinations thereof, etc.). Additionally, it states that the TAMU-SPH study was at a minimum, based on flawed data and assumptions. In order for these issues to be resolved, the study would need to be deconstructed (once more) and the data re-wrangled by data experts and verified. Also, the TAC (Texas administrative code) pointing to the Texas Medicaid Rate Methodology (TMRM) must be examined to determine the appropriate “formula” to use.

There are two TAC Medicaid fee schedule rate methodologies, one based on non-geographic relative value units or resource-based reimbursement fees (RBRF), similar to CMS’s RVU-based formulary, and the other on access-based reimbursement fees (ABRF) or the ability of a service to be historically rendered in a proper setting based on availability of providers and equipment in the state. See TAC388.8085_rule and also our prior discussion of the state constitutional methodologies that are not being used back on 3/2015, prior discussion on methodology (see the second paragraph after point no. 12)

On the surface, neither one appears to resemble anything TX HHSC utilized to come up with their 145%-Texas-median-commerical-based rates. HHSC used this particular metric because the TAMU-SPH study researchers were asked to calculate such rates (median thereof of all various Texas commercially paid rates for therapy) as a means of comparison with the current Texas Medicaid rates. One would then guess that HHSC used 145% because the ratio 1.45 was an average ratio of  a therapy Medicaid rate to the corresponding median commercial therapy rate or at the least, was a ratio that made sense based on a weighted average ratio using weights that were relative utilization frequencies (based on most used codes) and would achieve the additional $50M savings per year. If this was indeed the approximate methodology used then it would behoove HHSC to publish it. HHSC’s motive might have been that the 1.45 ratio would better serve providers than a ratio based on Medicare rates or the TAMU-SPH study’s Truven 11-state median paid rates. Of course, any small enough ratio of any fee schedule would be damaging and so, what were the alternatives to HHSC using other states’ Medicaid fee schedules (or central tendency estimates of them thereof) or CMS’s Medicare fee schedule (which are used in calculating floors for commercial rates as percentages of the Medicare RBRVS) as baselines (or combinations thereof) for their rate proposals? Also, commercially paid therapy is simply administered differently than government subsidized paid therapy. There is more overhead in administering Medicaid claims than commercial claims (think pre-authorizations and more stringent medical necessity requirements in a 100% managed Medicaid scenario by next year). Therefore, the cost of servicing Medicaid therapy patients may be more expensive than servicing commercial or private therapy patients.

One other question should be asked of these calculations – was all commercial payer data used to calculate these median commercial rates and if so, how was the data wrangled in order to make sense of the gaps and discrepancies in certain data items in commercial claims? The study does explain some of these “data wrangling methodologies”, but it is inconclusive on the uniformity of it, (i.e., some things were sweep under the rug as anomalies that could be statistically smeared out). The plot thickens and the saga continues, but there may be more than just injunctions impressed on the TX HHSC – there may need to be subpoenas issued in order that the data be properly vetted and verified. At this point in its recent history, can the TX HHSC avail itself to objectively vet its own analysis and data collection? These are issues (among many others, including the precarious condition of Medicaid beneficiaries in the state) that the preceding judge will have to ponder over in future interim and final rulings.