Texas Supreme Court Stays Injunction and the New Strategy to Lower Therapy Rates

Last week, the Texas Supreme Court stayed the injunction to halt TxHHSC’s proposed rate cuts slated to be implemented beginning on July 15, 2016. The emergency motion that was put forth to the highest court in Texas by the injunction plaintiffs was accepted to proceed with a trial. Standard protocol in that court would indicate that if the appeal goes through the normal procedure, that process could last at least 4 months and possibly longer, depending on the litigation proceedings.

In the meantime, TxHHSC has reissued their amendment proposal to CMS after initially and surprisingly withdrawing their first one a couple of weeks before. This amendment contains the same sort of flaws that the first one had. However, they have yet to post an announcement of the stay on their website and the postponement of any proposed cuts on July 15, 2016, and thereafter.

While all this legal activity abounded, Superior Healthplan issued a very vague drawing back of their proposed network contract discount rate decreases and the assistant therapists-coded (UB-modifier) cuts on their website to providers. See https://www.texastribune.org/2016/07/08/texas-supreme-court-orders-state-pause-medicaid-cu/. It seems that Superior has reneged on this notice as they have implemented the assistant therapists’ coded cuts beginning July 1, 2016, as they had initially planned. In the notice, they had stated that they would initially send letters to providers that would outline exactly what they were going to do. These letters were never sent.

The consequence of this reimbursement strategy is that many therapy businesses will eventually adopt to this new Superior reimbursement policy in order to stay in business and not cause a localized access to care problem for their patients by shifting their staff utilization, (i.e., assistants will be shifted to non-Superior patients, while masters-degreed therapists will be shifted towards Superior-based patients, to the point of neutralizing their larger salaries). This assumes that their staff is flexible and plentiful enough to achieve this re-utilization. Nonetheless, many assistant therapists will have salary reductions, layoffs, or reduced hours implemented. Superior’s reimbursement policy is effectively disenfranchising 4-year degreed therapists and the therapy boards in Texas should be concerned about the possibility of the state eliminating the effectiveness of those programs.

It so happens that Superior and other managed Medicaid MCOs had their capitated rates decreased by TxHHSC this year, very likely because of TxHHSC’s miscalculation of the length of the current injunction. In other words, TxHHSC decreased capitation amounts to MCOs so that a 100% managed Medicaid industry in Texas could artificially have a reason to decrease contract discount rates to their network therapy providers. Superior being the largest managed Medicaid insurer in Texas, would cover much of the Medicaid population with this process.

In other managed Medicaid MCOs, the authorization process has become more arduous for therapy providers and the period between claims submission and payment has lengthened. In some cases, managed Medicaid MCOs would rather pay a relatively small state fine than pay large batches of claims timely. Combined with lower contract discount rates, these effects reduce access to care in the form of fewer timely authorized therapy treatments per capita in a growing Medicaid population with higher utilization rates based on comorbidities, reduced patient functionalities, and regional epidemics that confound therapy prognoses.

Causally, the process of privatizing Medicaid in Texas and other states has given those states the apparatus to control reimbursement rates for therapy by a possible circumvention of CMS requirements for access to care stability and hedging against potential legal action. In this way, even if the injunction is made permanent, by further reducing PMPM capitation rates to contracted managed Medicaid MCOs throughout Texas, the TxHHSC forces those managed Medicaid MCOs to make their own hedge against such losses by passing them down to their network (therapy) providers in the form of reduced contract discount rates. The managed Medicaid MCOs will cry foul and point to those reductions as a condition for managing a fixed capitation pool that is fully controlled by TxHHSC. The MCOs then minimize their at-risk dollars by utilizing this trickle down reimbursement policy. Managed Medicaid MCOs view capitation from the state as a “grouped premium” would be viewed by a commercial insurer – the lesser the premium paid by the consumer (the state through the taxpayer on behalf of the Medicaid client), the lesser the coverage and/or the reimbursement to the network provider. The legal burden may have shifted to the managed Medicaid MCOs from the state health agencies, at least, in principal.

Hence, the ultra-fiscally conservative legislation by privatizing Medicaid in Texas bypasses having to lower the prevailing Medicaid rates in order to lower the true cost of Medicaid and payments to Medicaid providers. This is all done in the name of a more effective and efficient Medicaid program through things that have names such as evidence-based and quality-based medicine and clinical quality measures. However, the standards for such platforms in physical, occupational or speech therapy are mostly absent or vague at best and not universal. Studies show some statistical results for certain treatment plans, but most are confounded by many surrounding factors involving the patient, provider, and payer. Much more needs to be studied and researched, especially in the world of physical, occupational and speech therapies. TxHHSC is ill-equipped to do such studies and instead has focused on comparing Texas reimbursement rates to other conveniently selected cohorts of states’ rates without any acknowledgment of possible confoundment of treatment types, diagnoses, and access to care stability issues.

So, the gauntlet has been laid down by the state legislators and their puppet-agency, the TxHHSC in how to handle the eventual draconian reduction of therapy reimbursement rates through privatization instead of the constitutionally mandated methodologies to be employed in calculating the Medicaid rate schedule. The majority party in the legislature has seen fit to disproportionately pass deficit reduction responsibility to both Medicaid therapy providers and Medicaid clients via TxHHSC’s reduced capitation rates to MCOs and the proposed Medicaid cuts. This has been done through the veil of artificially reduced tax revenues from the oil and gas industry and from the neo-conservative’s stubbornness to not cut other non-essential programs, reject federal ACA expanded Medicaid monies, and to not touch the otherwise plentiful golden pot that is the Texas Rainy Day Fund.