TX HHSC Swings Back, .. Releases New Therapy Rate Reduction Proposal Redux – Same Data, … Same Story

As was expected, today TX HHSC released their redone Medicaid therapy rate reimbursement reduction proposal to be effective October 1, 2015 with a public hearing scheduled on September 18, 2015 in Austin. Each code reimbursement was reduced based on an over-under 150% of the Truven 11-state median Medicaid therapy rates (T11-SM) methodology as published in the TAMU-SPH study.

Preliminary analysis shows that if a current code reimbursement rate was over that threshold (1.5*T11-SM), it was reduced by anywhere between 25% and 28%. Otherwise, the rate was reduced by approximately 3.44% (ORF/CORFs), 4.68% (HH), and 3.46%  (Inds) respectively. There were a few exceptions for seldom used codes. All therapy disciplines were affected. All evaluations were reduced by 25% across all delivery models and disciplines.

The ave (weighted ave) rate cuts across all disciplines were ORF/CORFs 13.19% (17.49), HH 12.16% (15.18), Inds – home 12% (9.96), and Inds – office 11.36% (5.91) respectively.  The weighted average cuts were calculated based on code utilization in Texas (percentage of total Medicaid therapy budget spent on a code service during the last fully collected fiscal year’s data). On the surface, this reduction appears to affect the ORF/CORF delivery model sector disproportionately. Again, CPT 92507 was cut the most based on a relatively high utilization pattern – 27.93% (ORF/CORFs), 25.75% (HH), 11.12% (Inds – home), and 9.83% (Inds – office) respectively.

If one calculates across disciplines (again for each delivery model), one gets the following ave (weighted ave) cuts: For ST services – ORF/CORF 18.19% (27.93%), HH 17.9% (25.75%), Ind (HH) 16.73% (15.15%), and Ind (office) 15.96% (8.25%). For OT/PT services combined – ORF/CORF 11.96% (6.83%), HH 10.68% (3.5%), Ind (HH) 10.81% (4.68%), and Ind (office) 10.21% (3.51%).

Without regards to delivery models one obtains the following ave (weighted ave) cuts: ST 17.18% (19.27%), and OT/PT 10.91% (4.88%). Finally, across all disciplines and delivery models one obtains the ave (weighted ave) cuts: 12.18% (12.12%). The average median cut across all delivery models and disciplines was 3.76%.

This proposal from HHSC to cut rates is once again, an attempt to equalize across therapy service delivery models without regards to delivery model costs and comparative effectiveness and efficacy. We will be publishing a more thorough analysis of this proposal later next week. In the meantime, it is certain that the prior TRO case will be reopened as the original one was never closed when the judge refused to sign anything that HHSC put forth. Separate from this is the distinct possibility that another TRO will be filed against the proposed benefits policy changes as well. Again, we will be publishing any updates on these developments as they happen, probably by next week.

Let us look at this rate reduction in the perspective of the state and personal budgets. The State Comptroller has estimated that Texas will collect total revenues (general and federal) of approximately $220.9B during the 2016-2016 biennial. The approved budget spending during that same time period is $209.4B. The projected surplus during the next biennial is then $11.5B. The proposed rate cuts, along with the proposed benefits policy changes are projected to save at least $150M during that time period. The percentage of the projected surplus that the therapy savings will be is approximately 0.013%. By losing less than “14 thousandths of one percent” of the surplus already projected, we would preserve and/or improve the health maintenance of over 144,000 Texas Medicaid children that received therapy care in the past year. This would equate to less than $1,042 per Medicaid therapy beneficiary to cover two years or an average of less than $43.40 per Medicaid therapy beneficiary per month during that period. If just half of the current Texas census (not even counting tourists and visitors) each bought approximately $173.35 more in sales-taxed consumables in the state during the next two years or less than 23.75 cents per day for the next two years, this would more than cover that $43.40 Medicaid state therapy PMPM (per member per month) cost. Even when accounting for proportional Medicaid therapy roll increases due to natural population increases during the next two years, that per diem amount would stay well under 25 cents. This perspective should be enough to display the ludicrous nature of this attack on therapy providers and Medicaid beneficiaries in Texas.

Please keep in mind that these rates are a proposal only, subject to scrutiny by the courts, the public, and the politics, and to the first point, the TRO will be reopened because of it. You can download the new rate proposal packets at https://www.hhsc.state.tx.us/rad/rate-packets.shtml.