Texas’ 3rd Court of Appeals Overturns Therapy Injunction

This morning, in a surprise move, the Texas 3rd Court of Appeals (http://www.txcourts.gov/3rdcoa/about-the-court.aspx) overturned the injunction against the Tx HHSC. This court is an all-republican one and overturning the injunction appears to be an attempt to unify their political approach in all things Texas. Because of the nature of the appeals process in Texas and because of SCOTUS’s decision on Medicaid-reimbursement related federal cases, all appeals to the Texas Supreme Court and federal courts may be minimized. The scheduled injunction trial for April 25, has been canceled and the attempt to enjoin Superior in the injunction will probably not go forward as well.

The CMS, however, can be a final arbiter in this case because of their jurisdiction as pertains to all states’ Medicaid programs. They have shown a large interest in this case and the SCOTUS decision also exposed certain compromising attitudes in cases of inadequate states’ Medicaid reimbursement rates. This is a major setback for all therapy providers in Texas and indeed, in the nation. It appears to be political in nature and points to a concerted effort by some to minimize, eliminate or marginalize services for Medicaid children in Texas.

Now is the time to think political. Compromising over this issue has been fruitless as this juggernaut attempt by some in the Texas legislature to dismiss Medicaid in Texas has reached a pinnacle in its insidiousness against Medicaid children and recipients. The general election of 2016 will prove to be pivotal in changing the landscape of the Texas legislation. Medicaid providers must take part in this attempt if Medicaid children are to have any chance of survival. The Texas 3rd Court of Appeals has only two seats that are on the ballot this election year and both are republicans running unopposed. By contrast, both Texas Houses have numerous seats to be decided. When assessing political candidates, ask them what their stances are on Medicaid therapy. Obtain pledges from them (when possible) to help defend Medicaid therapy. When you notice that those who have opposed Medicaid therapy are running unopposed, encourage opposition. Lastly, educate the public about what these cuts will mean for them – even if they are not Medicaid recipients.

Now is also the time to re-think your strategies for your therapy business – staffing, insurance contracting, efficiencies, and your client portfolios. We will have more on this and any appeal attempts. The main point is this – the Tx HHSC therapy Medicaid proposal rates of October 2016 will govern all MCO discount rates and all of your business motives – even if your primary portfolio is not Medicaid because all insurance discount rates will be based on the new prevailing Medicaid rates (PMR).

On the issue of what rate proposal Tx HHSC would be implementing, if final appeals (if any) are defeated or CMS cannot proceed with an order to the Tx HHSC to cease – it is unclear. The Tx HHSC could very easily decide to propose and implement their lower-rated 10/1/2016 proposal, as opposed to their original 9/1/2016 proposal. They may also try and release a brand new proposal. If the Tx HHSC decides to implement the 10/1/2016 proposal or a new one, they would need to have a public hearing – requiring another 2 months or so for notification of and conducting a public hearing. At this point and barring any immediate movement from CMS or the plaintiffs filing an appeal with the State Supreme Court, the Tx HHSC can essentially do anything they want with the rates. They may be feeling a new empowerment as a result of this political assault on Texas children. We will keep you posted on their latest movements.

Finally, there has been a large amount of confusion as to what the Superior deeming letters mean for those that have received them. What about the question of those currently at lower contracted discount rates, (i.e. those at 50%, 60%, etc of the PMR)? Will they get raises to 70% of the PMR for assistant therapists’ coding? Definitely not. What about those getting cut to 75% (70% for HCSSAs)? Will those be for non-assistant therapy billings only? Will the 70% for assistant therapy coding be discounted off their current contracted rates or off the PMR?

As a result of discussions and written communication with some of their regional reps, it seems that Superior is trying to make the following universal policy in their networks:

  • the “preferred” therapy provider will be reduced to 75% (70% HCSSAs) of the PMR for non-assistant therapists’ coding,
  • the “non-preferred” therapy provider will stay under 75% (70% HCSSAs) of the PMR for non-assistant therapists’ coding,
  • all therapy providers (both “preferred” and “non-preferred”) will be reimbursed at the lesser of 70% or the current contracted discounted rate, of PMR for assistant therapists’ coding only.

“Preferred” therapy provider here means therapy providers that are in underserved or “therapy provider-unsaturated” regions. However, all this may be moot because Superior (and other Medicaid MCOs) may let Tx HHSC dictate the final contracted reimbursement rate based on the implementation of their lower-rated proposal after the injunction attempt. The 70% discounted rate for assistant therapists’ codings will probably stand no matter what proposal is implemented.


The Tx HHSC commissioner, Chris Traylor, has announced his resignation effective May 31, 2016. He would have been at the head of the agency for only 11 months and come September when a new commissioner is appointed, will mark the fourth commissioner the Tx HHSC has had in the past 4 years. See the Dallas Morning News article today on his resignation for more detail, including his possible successor at http://trailblazersblog.dallasnews.com/2016/04/chris-traylor-is-leaving-as-texas-social-services-czar-next-month.html/. His resignation becomes especially curious since the decision from the appeals courts against the injunction may cause an anticipated showdown with CMS and others. The TX HHSC has suffered from continual controversies through the reigns of Tom Suehs, Kyle Janek and now, Chris Traylor.