The Real Near-Future of Medicaid, Medicare, the ACA, and Therapy Services

Now that we have been exposed for a mere one month to the new federal administration’s actions, desires, and reactions to the Press, the general curiosity of the public, and the continuance of a presidential campaign into the presidency, we wonder aloud what the future holds (or more accurately, what will hold us up in the future) in healthcare and more relevantly, for therapists in the physical, occupational, and speech domains. The GOP is primed to repeal the ACA, make extensive changes to the Medicare program, and propose a dramatic transformation of states’ Medicaid programs through block grants or per capita federal programs. The current Trump nominee to head the CMS is Seema Verma who assisted VP Pence’s Indiana Medicaid transformation into a program (HIP 2.0) where Medicaid families are required to make monthly premium payments under the threat of dis-enrollment and monetary penalties, prove they are working or can work, while still having some services cut. Apparently, Verma has no idea that $1 a month could make a large difference to a sub-FPL (federal poverty level) family. Most healthcare policy experts, including the Kaiser Foundation, believe that monetary requirements from low-income participants in a healthcare program do not work and force many to use emergency room services without insurance coverage. Verma’s ideas add even more bureaucracy to the already complex Medicaid programs. Tom Price, the new Secretary of HHS, under Trump wants to totally privatize Medicare – providing block payments to seniors to buy their own commercial insurance versions of Medicare – and increase the eligible age to 67. Mind you, both of these individuals had massive conflicts of interests in their dealings with healthcare, making money off of corporations that were contracted in those programs they promoted while either legislating or consulting.

During the advent of the ACA, Texas decided to reject the expansion of Medicaid to adults and to continuously apply for leaky waivers to certain CMS rules pertaining to hospital costs. At the same time, the Texas Legislature found its way to punish Medicaid children and the industry by a series of reimbursement cuts and the expansion of managed care Medicaid through the contracting of regional MCOs and their subsequent therapy network discount rate cuts and the tightening of treatment authorization policies and requirements.

All these cost cutting legislative moves were supposedly pushed to become more responsive to the Texas taxpayer in view of the state budget shortfalls begun since the continuous GOP-lead governor administrations from the middle 1990s to the present. Despite record amounts of tax entitlements and lassiez-faire environmental protection policies towards the state energy industry, their tax payments to the state, continued to dwindle despite a recent industry rebound. The GOP refuses to touch the Rainy Day Fund (Texas ESF), now at an all-time high balance of over $10 billion, to alleviate emergency shortfalls in the budget, despite its true intentions. So, state politicians decided to put the burden of this recession on the most vulnerable of the state in the form of wicked cuts to Medicaid therapy services. Therapy suffered in a disproportionate manner simply because of a deeply flawed and propaganda-ish Texas A&M study that was designed with preconceived legislative bias and misrepresented to the public by those same politicians. Nonetheless, here we find ourselves, the decreased rate of usage of therapy services in the state, regional losses of access to therapy services, an exodus of therapists and businesses, and the facade of budget savings that hide the healthcare explosion that is waiting to happen with children not being treated or having unreasonable and dangerous delays in therapy treatments.

As importantly, where does the change of the federal administration in conjunction with the real agenda of the Texas legislature leave the therapy industry and Medicaid children now and for the near future? Additionally, if Medicare is to change to provide block payments to seniors and Medicare is to be controlled by private insurance companies, will the federal therapy caps be either abolished or decreased because of the decrease in those block monies and the general impression of the insurance industry that therapy is a secondary healthcare service?

With the rocky introduction of the Texas Star Kids program in 2016, Medicaid is now 100% managed care. What that will mean is that all therapists and therapy businesses will be subject to the always changing discount rates offered to them by the regional MCOs, if they can even obtain contracts with them. In this introductory period, MCOs are required to offer contracts to all therapists and businesses. Nonetheless, MCOs have been covertly collaborating with the Texas HHSC to lower those discount rates, even when that is against state law. The added effect of tightening treatment authorization policies and medical necessity requirements also renders therapy services more difficult to do in legitimate cases. Authorization for home health therapy is essentially impossible or at best, very difficult to obtain because the MCOs are applying a policy which dictates an automatic first and second pass home-bound necessity rejection, which is, once more, against current state law.

Throughout the state, the therapy business has been made to be unsustainable in many cases where eligibility criteria are borderline or not clear-cut to non-therapists and non-clinicians. There is no room for flexibility of a child’s requirements for therapy services in Medicaid, while clinically, that threshold for services is much wider. Autism, despite its pandemic effect on Texas children and its symbiotic effects to make worse other ailments, is no automatic ticket for therapy treatment in Medicaid. Behavior analysis is not covered by Texas Medicaid, despite the overwhelming scientific proof of its efficacy in co-treatment with therapies.

Meanwhile, the 85th Texas Legislature is warring over what warrants a new budget in the midst of another record shortfall with the House proposal differing from the Senate’s by just under $8 billion based on different assumptions and starting points about the 2016-2017 budget results. More specifically, the difference in the two proposals in funding the Medicaid program is $4 billion, including both state and federal funding. The Senate proposal does not take into account Medicaid enrollment growth or inflation for 2018-2019 and reduces Medicaid spending from the 2016-2017 biennial by $0.9 billion. The same Senate politicians (Jane Nelson, Charles Schwertner and Lois Kolkhorst) that spearheaded the targeted therapy services cut for 2016-2017, are now leading this defunding campaign for Medicaid for the 2018-2019 biennial. The Texas HHSC, along with other state agencies, were already ordered by the Legislation, to scale back their budget requests by 4% last July based on an overly cautious 2018-2019 biennial revenue projection by State Comptroller Hegar of $104.87 billion. Hegar had been predicting higher revenues as recently as July 2016. Also, the Texas energy industry has been rebounding for the last 6 months using greater automation and fewer humans, so, they are becoming more efficient and hence making more money with less overhead. Their tax revenues should have already increased for the state, but this had not been announced by Hegar and the GOP. Therefore, the GOP narrative of decreased tax revenues is misleading, at best.

UPDATE: This past week, the House released its omnibus budget bill, HB1 with a replacement Rider 36. They proposed to halt further tightening of therapy dollars by excluding much of the wording from the prior session for reducing funding for therapy services. This should alleviate further bug cuts for therapy. However, there is no reversal of the prior cuts. Also, the total Medicaid budget is proposed to be decreased by $100 million. The bill must be accepted by the Senate, as well. Since the Senate’s version of the overall budget is lower than that of the House, that will not be a certitude. The corresponding budget Senate bill, SB1, is still pending in committee. It’s version of the new Rider 36, omits all of Rider 50 language and relabels the Rider as a “cost containment” rider for HHSC to implement. TxHHSC, in its latest report to the Senate Finance Committee on January 30, 2017, requested around $70 billion for all Medicaid-related services, a difference of around $9.7 billion from the Senate appropriations and $5 billion from the House appropriations.

What will TxHHSC cut to meet this decreased Medicaid budget? What will be the scapegoat for their cuts this time? Will it be Medicaid across the board (to include a modest therapy services cut), with a splattering of education cuts or will therapy be spared this time around based on the consecutive cuts suffered since 2009? Additionally, everything also depends on CMS’s next move, under the new administration, to restructure Medicaid funding for the states. Therapy services may or may not be moved based on lower or higher funding from the Feds.

There was some movement to renormalize therapy rates, but those would probably have to be done in the form of a supplemental budget proposal in an appropriations committee, late in the session and it would require passage in that committee and in both houses, absent a veto from Gov. Abbott. All these state budget proposals would go out of the window if the new Fed rules from a new Fed administration significantly change the way Medicaid is funded. In particular, Medicaid block grants or per capita payments, most likely, would mean a decrease in Federal funding of Texas Medicaid with more restrictions on eligibility, if Verma is confirmed by the US Senate.

Reading the tea leaves of who will be in charge of the new federal healthcare structure, coupled with the current state budget shortfall, the perfect storm seems to be brewing against the background of an increased need for healthcare for the disabled and needy in Texas. Tighter eligibility requirements, lower provider reimbursements through MCO discounting, reduced or eliminated services, and the burdening of Medicaid families to pay premiums seems to be the hit list of goals for the GOP party line. Therapists and therapy businesses, in general, will need to become creative in becoming ever more efficient to stay in practice and service the needy and disabled in Texas.

In the face of these continuing state reimbursement cuts and fiscal threats to the therapy industry and the healthcare crisis they are creating for the most vulnerable in the state, our multi-prong strategy for clients in the therapy business has been to (1) diversify the patient portfolio (do not rely on government programs to be more than 50% of your client portfolio, so that your practice survives to service Medicaid and Medicare), (2) create special clinical and educational programs to help clientele achieve therapeutic goals more efficiently, (3) negotiate large-scale insurance contract strategies such as value-based reimbursements in exchange for broader and long-term client bases in insurance networks, (4) market to and collaborate more closely with new geographically narrow sub-network physician group types, such as LPOs (local physician organizations) that are being formed in the healthcare market to create greater provider group efficiencies, (5) stay vigilant and do your due diligence of state and federal compliance rules, lessening or eliminating the risk of future recoupment actions, and (6) restructure staff salaries to match regional economic market trends. These actions will prepare you to lessen the effects of a currently chaotic government healthcare reimbursement system on your practice.

To this effect, SynerImages is presenting a national therapy facility conference in San Marcos, TX on July 14 and 15, 2017 at the San Marcos Convention Center that will center on all of these issues and more. We will know more about the changes made that will affect therapy in Texas by then. See our events web-page at for registration and agenda details. Early bird discounts will apply until March 1, 2017 with further discounts for clients and multiple individuals from the same company.