Texas Supreme Court Denies Petition to Review Therapy Injunction

Yesterday (9/23/2016) morning, the Texas Supreme Court (SCOTX) denied plaintiffs’ request to review the petition to strike down the 3rd Court of Appeals decision to lift the therapy rate cut injunction against TxHHSC. The plaintiffs can, however, repeal this by filing for a rehearing of this review. They have 15 days (10/8/2016) to file such a request with SCOTX. We have not heard from the plaintiffs as to what their next step will be. The appeal to SCOTX must be based on the evidence presented in the 3rd Court of Appeals with no new evidence allowed. This may have hampered the appeal from the plaintiffs. Additionally, the political aspect of the decision was quite evident. The unanimous Republican SCOTX court presents an apparent appearance of lineage with the majority Republican legislation that spearheaded such cuts, to begin with. Nonetheless, it appears that TxHHSC has, as of now, won its legal defense of those massive cuts to Medicaid therapy providers, 27.93% on speech therapy treatments (92507), 25% on all evaluations, and 3.44% on OT/PT treatments across all therapy delivery models.

The danger to the most vulnerable of children in Texas and to the therapy business is that the double whammy of Managed Medicaid MCO discount rate cuts to therapists, in combination with the proposed rate cuts from TxHHSC will reduce the effective rates to sub Medicare and sub-commercial rates. In many cases, especially in the Valley and South Texas, such as in the largest Medicaid insurance contractor, Superior’s (Centene) contracts, those rates will be 50% of the proposed reduced rates from HHSC. Superior’s massive almost universal 75% to 70% discount rates for therapists means that for speech treatments, the effective contract discount rate will be the compounded rate of (.50)(.72)=.36 or 36% of the current prevailing Medicaid rate. Mind you, that is not a 36% rate cut, but a discount rate of 36% of the current Medicaid rate or equivalently, a 64% rate cut from the current Medicaid rate. The other CPT discount rates follow from the same compounded effect. Many Medicaid therapy businesses have a majority of Superior clients, some well over 65% of their current patient rolls.

As mentioned in earlier blogs, CMS may be the only arbiter in possibly preventing the TxHHSC rate cuts and Managed Medicaid discount rate cuts from happening. For this to happen, there must be evidence showing that the effect of such compounded cuts will cause access to care problems for Medicaid clients in Texas. Medicaid insurers will argue that their therapy provider networks are currently adequate to handle the case loads in their regions of operation. However, there are many assumptions made by them when they utter such claims. One is that their current networks, as dictated by their published provider directories, show adequate coverage. The problem is that the MCOs do not keep those directories evergreen. Many of them reflect old networks and dropped out providers. The second assumption has to do with the rates of Medicaid client growth. MCOs base their actuarial analysis on past growth rates and do not utilize current census growth projections. Finally, MCOs are currently tightening the authorization protocols for home health therapy so that home-bound necessity is co-mingled with medical necessity, a cloudy issue that may be skirting with a direct violation of the Social Security Act of 1964. These issues and others should be presented to CMS as evidence that the compounded cuts will be devastating to the Medicaid population of Texas.

The corresponding arguments from Republican legislators directly responsible for the cuts – the usual gang – put all of their eggs in one basket, the Texas A&M study conducted in 2013 that purportedly showed that therapists in Texas are paid more than other therapists in other states and for Texas commercial cases. There is only one problem here, the school has distanced itself from the study and the head author had to leave the school because of that shoddy work. The study claimed to have harmonized the different Medicaid therapy programs in other states with Texas’. However, on closer scrutiny, it appears that too many bad assumptions were made on the population sample and the billing methodologies. Nonetheless, the same gang of legislators continued to defend it and more egregiously, use it for political justification of the cuts.

In the meantime, in order to score political points with these same legislators, the current commissioner reported recently to the Senate Finance Committee, that even without implementing the cuts, TxHHSC saved over $58 million by the MCOs imposing stricter authorization protocols. In reality, these more stringent restrictions played a minor role as compared to the more deliberate attempts to delay authorizations all together in managed Medicaid. With the Star Kids program commencing this November, the Medicaid population will now be 100% under the umbrella of managed Medicaid and of these restrictive policies. This stranglehold on authorizations coupled with the double whammy of cuts will accelerate the closing of access to therapy services for Medicaid patients as never before. Therefore, it seems that the only tools available to defend the most vulnerable in Texas are a limited Federal government offensive, the voting ballot, and hedging against future cuts by massive diversification (assuming you will still take on Medicaid patients in your practice).

In next week’s blog, we will trace the history of the political war against Texas therapy that has ensued for the last 5 years. Ironically, it all began with the Texas Legislation being legally forced by the United States Supreme Court (SCOTUS) to establish fairer reimbursement rates for Medicaid providers in order to prevent the access to care problems that were prevalent in Texas in the 1990s and early 2000s.