TxHHSC Releases Rate Proposal for July 2017

The new HHSC therapy rate proposal released on Tuesday has the markings of “Lois Kolkhorst” all over it. When HHSC said they would “standardize” therapy (Rider 50 of HB1 2015 Legislation), they apparently meant that they would implement the dropped Kolkhorst House bill of two sessions ago, (i.e., all therapy delivery models will be compensated in exactly the same manner and amounts). The “standardized” language of the 2015 session was meant to reflect a normalization with other states’ Medicaid rates and not to equalize across delivery models (the Kolkhorst House bill).

My preliminary analysis shows the following:

If PTs/OTRs perform 53 mins. of treatment therapy (minimum of treatment from the 8 min. rule to bill 4 units) and SLPs perform 23 mins. of speech treatment (8 min. rule billable to 2 units, but billable now as an entire encounter for all speech treatments in all delivery models), then (all rates adjustments rounded to nearest tenth of percent):

ave rate adjustment:
OPT/CORFs: -7.8%
HHs: +10.2%
Ind (HH): +7.5%
Ind (office): +11.4%

weighted ave rate adjustment:
OPT/CORFs: +32.9%
HHs: +10.5%
Ind (HH): +39%
Ind (office): +42.6%

median rate adjustment:
OPT/CORFs: -12.9%
HHs: +8.0%
Ind (HH): +2.6%
Ind (office): +10.9%

The weighted averages are based on the state utilization percentages as weights on each therapy code. Weights for your specific facility may differ based on your facility’s utilization percentages of each therapy code. You want to compare OPT/CORFs, independents, and HHs servicing ST and what the effects of the rate adjustments would be if you billed 4 units (at least 53 mins of treatment time) of treatment before the rate adjustments, to 23 mins of treatment after the adjustment in order to obtain the full untimed encounter rate. For PT/OTRs in HHs, it is the opposite. You want to compare doing 23 mins. of treatment before the rate adjustment to at least 53 mins. to bill 4 units after the rate adjustment. Obviously, if all disciplines average doing at least 53 mins. of treatment, the numbers change to be less advantageous for OPT/CORFs and independents and more advantageous for HHs. By writing flexible interval frequency, amount, and duration (FAD) specifications in your plans of care (POC), those treatment times would comply and be within the ethical practices of the therapist based on the patient’s condition and tolerance of treatment times.

The numbers change dramatically if delivery models utilize different treatment time strategies in all 3 disciplines. However, one thing is common, independents (home or office) come out with the largest raises. They do not make more than OPT/CORFs or HHs, but the same. So, they can implement the same cost-cutting treatment time strategies..

The advantages of being an OPT/CORF and HHs are in the standard one-revalidation TPI and Medicare certification no. as opposed to trying to herd all therapists in a general rehab to have their own TPIs and Medicare certifications pointing to one entity at every revalidation period, unless they are in solo practice. Additionally, continuity of care is more consistent because supervising therapists can interchange their caseloads in OPT/CORFs and HHs and not in general rehabs or solo practices. Services offered in OPT/CORFs are more diverse than HHs and general rehabs. Also, if an OPT/CORF drops their certification with Medicare and becomes a general rehab, their MCO contracts will probably have to be re-negotiated and there is no guarantee of the same discount rate contracts as before, if you can obtain a contract at all at that point, as a new general rehab entity. Markets are becoming more saturated and consequently, contracts are harder to obtain, at least in a timely fashion.

There are other considerations as well, but in the age of value-based and evidence-based medicine and soon to come to a neighborhood near you, value-based reimbursement, you need to start thinking about tracking and documenting all of your patient outcome statistics and progress rates as a means of showing your value to MCOs and other insurance companies. The MCOs will then be forced to compare you with other facilities that do not do as such or at least do not have consistent statistics on their patient roll. Payors will go with the hard evidence.

The analysis here does not take into account assistant therapists and their role in treating. As you know, their work will only be reimbursed at 70% of the proposed rates. It no longer seems viable to employ assistants doing treatments in a case, unless their compensation is reduced accordingly.

Please keep in mind that everyone, on most codes, received rate cuts on a per unit basis (when pre-adjustment PT/OT timed units were compared to post-adjustment PT/OT timed units, pre-adjustment ST timed units were compared to post-adjustment 4-unit encounters, and on most evaluations and all re-evaluations) and on using assistant therapist (further 30% cut). ST evaluations were cut by 11.5% across therapy delivery models and PT/OT evaluations were cut by 14.6% for OPT/CORFs. while raised 9.8% for PT/OTR individuals doing office evals and 4.2% for all home evaluations (HHs and independents doing home evals). That was part of the price paid by OPT/CORFs for the equalization of rates across therapy delivery models.

One key aspect of this adjustment is that the TxHHSC has put upon the Texas therapy industry, a sort of “incentive for in-fighting” between therapy delivery models. It is a clever strategy to divide the industry up in order to more easily reduce overall reimbursements.  It also greatly simplifies future analysis of rate adjustments for them. The imperative here is the following: you can survive the adjustment or even prosper because of it only if you allow your competitor to have the same opportunity to act on it for equal prosperity. To do otherwise would be to act on an irrational behavioral economic bias. It does put into question, the value of federally certified OPT/CORFs in the eyes of the TxHHSC.

One question to keep in mind during the public hearing is what the MCOs will be doing after this adjustment. Will they renegotiate everyone’s contract to reflect discount rates closer to 100% since these rate adjustments were based on claims submitted to MCOs which have been implementing contract discount rates already and the added 70% assistant therapist discount. To continue such policies would impose a double-cut after 7/1/2017, not what the Legislature intended. Additionally, the Zerwas Rider in HB 1 (not voted on yet by the Senate and could still be reconciled away in a final budget bill) gives $14.7 million back to therapy reimbursement. but that is more than likely not applicable until 2018-19 and is a drop in the bucket compared to the accumulating rate cuts of the past 5 years.

A detailed spreadsheet analysis of the rate adjustments can be obtained as a SynerImages client. Please call (956.618.5300)  or email (alfred.sepulveda@synerimages.com) in our office. This analysis shows a sliding scale for the rate adjustment percentage changes based on facilities performing different treatment time strategies, delivery models, and therapy disciplines. These are all based on using the Texas therapy codes as per their percentage utilization in the state. It is not all bad news here, although the perception is otherwise.