Supporting the Injunction … Fighting Back and Protecting Texas Children and Therapy Providers

This week marks the beginning of the most important month for Medicaid therapy in Texas and possibly in the nation. At stake is the very fiber of the therapy industry in Texas Medicaid and hence for most other payor options. The amended injunction that now includes Superior Healthplans as a co-defendant will be ruled on by the injunction presiding state district judge, Tim Sulak tomorrow. On April 25, the injunction will be finally ruled on as well.

At this point, in a united front, therapists and therapy businesses in Texas should consider the uniform support of this injunction. There is a website dedicated to the support of Texas Medicaid children receiving therapy and the injunction. Visit the website HTTP://PROTECTINGTEXASKIDS.COM to support this cause.

Texas legislators, including state Sen. Jane Nelson, R-Flower Mound and state Sen. Charles Schwertner, R-Georgetown who have supported the Tx HHSC and managed care MCOs to reduce the reimbursement rates for Medicaid therapy services, have justified these actions as being a stop-gap effort to curb state overspending on an increased number of therapists in the state.  Additionally, they remain defiant in their claim that therapists in Texas are overpaid – this despite the debunking of the Texas A&M study that the school itself has distanced itself from and is now in the midst of proving the opposite in another study.

Consideration of the effect of the markedly increased Medicaid market in the state which would most assuredly have caused the increase in therapists was not investigated as a cause-and-effect by the Legislature nor in any of its healthcare subcommittees. Moreover, the loss of therapy services because of a reduction of therapists through the implementation of these rate reductions, either through Tx HHSC’s base rate reduction proposals or the discounted rates being offered by Texas MCOs for Medicaid therapy services, will mean only one thing – the future deterioration of the health of Texas Medicaid children and hence the long-term debt in spending to relieve that highly probable health epidemic. The so-called $135 million gap produced by the sustainment of the current Medicaid therapy rates would easily be paid by a small fraction of the Texas Rainy Day fund.

The underlying political question emanating from the microcosm of this reimbursement struggle appears to be the will of the legislators to continue to maintain and support the Medicaid therapy program in Texas, (i.e., reimbursing for any therapy services for Medicaid recipients).

As Predicted … Medicaid Therapy Reimbursement War Shifts to Medicaid MCO Landscape

Last year (2015), we had predicted that because the TxHHSC was finalizing the shift from Medicaid Fee-for-Service to near 100% Managed Care Medicaid per the Legislature’s mandates, the reimbursement wars would likewise shift from TxHHSC rate reduction proposals to MCO-contracted discount rate policies. TxHHSC is in the midst of a landmark injunction against its latest rate reduction proposal with a more-than-likely final trial period set for April 25-29, 2016. This trial, so far, has not gone well for TxHHSC. Repeated appeals from TxHHSC have been vehemently denied by the presiding judge. In a reimbursement strategy that appears to endeavor to circumvent legal requirements, the Texas contracted MCOs, including now, the largest Medicaid MCO, Superior, have proposed to dramatically reduce the effective reimbursement rates for many Texas Medicaid therapy operations to come in line with the range of 75% of the prevailing Medicaid rate (PMR) for office settings (OPT/CORF/independent clinics) and 70% of PMR for therapy home health.

Effectively, if one has an operating MCO contract that reimburses above 75% (for office settings) or above 70% (for therapy home health) of the PMR respectively, discount rate reductions are being proposed to put current rates on par with the 75% (70%) of PMR range. For those that have contracts reimbursing below those figures, no change upwards is forthcoming. It appears, therefore that Superior (and other Texas Medicaid MCOs) is targeting to contract Texas therapy providers in the range of 49% to 70% of PMR for therapy home health and 50% to 75% of the PMR for therapy office settings (ORF/CORF/independent clinics) since the smallest contract discount rates we have observed have been 50% of PMR. It remains to be seen if all contracted Texas Medicaid MCOs will follow suit as many have had a policy of larger reimbursements, but harder to obtain authorizations and slower follow through with smaller networks and therefore, closed networks to new providers entering the market in most Texas HHSC regions.

Additionally, in an attempt to distinguish the usage of personnel who do render therapy care, the new policy requirement of special coding for therapy assistants’ work in treatment billing, the assistants’ work will be reduced a further 70% of those new contracted rates. The irony of such circumstances is that these reductions for assistants will be far worse than the reimbursement proposal of 10/1/2015 from TxHHSC that is currently being blocked by the injunction – the equivalent of 49% (52.5%) of the PMR respectively for home health (office settings) for those to be at 70% (75%) of the PMR for regular billing. For those already below those contract rates, say at a discounted rate of R% of the PMR, assistants’ work will be reimbursed at 70% of those rates or (0.7)R% of the PMR.

There may be a double irony here as well. MCOs who contract with the TxHHSC (and the Texas taxpayer) are obliged to keep access to care open and clear for Medicaid recipients in Texas. This is partially achieved by having adequately sufficient provider networks and coverage throughout Texas and to provide Medicaid recipients with the quality of care and access to it with sufficient education towards that end. However, by dramatically reducing provider reimbursement, MCOs endanger access to care by the threat of reducing the size of those provider networks through unreasonable reimbursement contracts. The question of adequate access to care was at the center of the arguments in the current injunction proceedings. Will this argument then be shifted to the apparent apparatus being proposed by Texas Medicaid MCOs’ reduced reimbursement contracts?

This new potential argument becomes confounded by the state requirement that a contracted MCO cannot profit beyond a certain net margin (2%) with a simultaneous ceiling on administrative overhead. If the TxHHSC’s intention was to shift the burden of therapy services overhead back to the provider, despite any potentially favorable outcome of the injunction towards the provider, through the actions of the MCO, then that action may represent a usurping of that injunction. How is managed care power displayed by the anti-business effects on providers from instantaneous MCO contract adjustments balanced fairly by the market and our social safety net of Medicaid rules?


The plaintiffs in the injunction have amended their suit to now enjoin (added as a co-defendant) Superior. The presiding injunction judge will be hearing arguments to this amendment next week. It appears through various interviews with providers and others, but not proven conclusively, that Superior may have taken their cue from the TxHHSC’s insistence on lowering therapy reimbursements rates in exchange for continuing their state contracts as a Medicaid MCO. Additionally, there is anecdotal evidence and personal discussion that Superior may have been informing therapy providers that TMHP had told them to lower their reimbursements in conjunction with the roundup of new policies that would include the new modifier code for utilizing assistant therapists.

The two allegations against Superior sighted above, if true, may point to a collusion to circumvent the current injunction. While presently, these allegations are unsubstantiated from lack of clearly written and oral evidence from Superior, TxHHSC, and TMHP, they would, nonetheless, represent a grave legal usurpation of the injunction and subsequent development in the Medicaid therapy reimbursement struggle in Texas.

Additionally, the flat 70% discount rate for utilizing therapy assistants seems to be a uniform change among all new participating MCO contracts. It remains to be clarified if the 70% discount is towards any new reduced contract rates or to the PMR. We have received conflicting information on this interpretation. This is an important distinction since the difference between these two interpretations could be up to 22.5% of the PMR for therapy office settings and 21% of the PMR for therapy home health at the 75% (70%) new rates respectively. For those at the lowest contracted rate of 50% of the PMR, the new assistants’ billing will be at (.7)(.5) = .35 (35%) of the PMR. This lowest reimbursement would be one of the lowest Medicaid rates, if not the lowest rate, in the nation and substantially lower than the Medicare rate, in any event. It would, in all likelihood, represent not only an unreasonably low reimbursement for the therapy business but a clear indication of an intent to endanger access to therapy care, that is a crucial concomitant treatment for children, for Medicaid recipients in Texas.


Strike Two … Judge Upholds Temporary Injunction on HHSC’s Therapy Rate Cuts

On Monday, the State, for the HHSC, filed an appeal to the state court in Travis County to both dismiss the TRO and to have the judge rule that he could not preside over the case because of jurisdictional purposes. The judge, Tim Sulak, refused both appeals. Then on Tuesday, in the continuation, the judge ruled on upholding the temporary restraining order as a temporary injunction, further damaging HHSC’s case for going forward with the therapy rate cuts. The State will almost surely appeal, but this process, because of the evidence and clarifying data needed and of possible restrategizing, will be a long haul, anywhere from 3 to 9 months. The burden of persuasiveness to the court is now fully on the side of the State on behalf of the HHSC in its defense against a permanent injunction, which the plaintiffs are requesting.

At least two things were made clear in this round of judgment, (1) the State did not bother to display any real quantitative evidence of access to care impact problems as a result of implementing the cuts – throwing that back to the plaintiffs to prove and (2) the State threw back the blame for this lack of evidence to the TAMU-SPH study. As reported by others, TAMU fought back and said it was not told to do that in the study parameters provided by HHSC. In addition the rate analysis methodology was still questioned by the judge – there was no clear display of how the cuts were calculated using any of the appropriate and allowed means in the Texas Administrative Code (TAC). As pointed out here in an earlier article, rate methodology can be access-based or resource-based. The HHSC implemented neither of these two approaches when first using state commercial median rates and then a random (and unknown) 11-state Medicaid median rate panel.

The most ostensible part the State’s defense of HHSC’s tactics was their insistence that therapists should be the ones to show access to care impact and not their own analytics teams. This means that the therapy industry, not given timely access to all raw data by HHSC for the last few years, had to have figured out if the numbers pointed to economic instability in the industry and therefore access to therapy care shortfalls in the state without adequate state data being made available to them – essentially shooting in the dark with the HHSC not bothering to give a mere flashlight to look for the data. This is not what prior injunctions have told the HHSC to do – they themselves must show that no access to care problems would persist under certain rate conditions – as the past court-upheld series of Frew injunctions directed.

This brings to the front now, the issue of the second cost-cutting proposal that the HHSC has put forth – the so-called therapy benefits policy changes slated to be implemented in January 2016. HHSC has established a second stakeholders meeting to look at four specific items in that proposal, including the medical necessity bar of a std dev. of 1.2 in standardized testing in order to qualify for some therapy regiments (ST). None of the home health changes were mentioned and hence the timed unit conversion is still “on the books” to be implemented. This will likely trigger another TRO on behalf of the home health therapy industry.

In the meantime, the State has various options to go forward with their rate cut proposal. They could appeal to the court based on some other issue that may challenge the court’s jurisdiction in fiscal matters (not likely since that one was struck down) or they could do another retreat and proposal another rate reduction package using a legal methodology, but with large cuts. The later will be hard to do without an access to care impact study and these types of studies take a lot of time as they are dependent on long-term causes and changes within the communities affected.

In the midst of all our analysis of the situation, it stubbornly and simply comes down to our humanity, to what was pointed out to me yesterday by a client (and has been pointed out in this blog before), a “tragedy of the commons” economic problem and to the mistaken notion by many politicians and analysts that it is a zero-sum game. No one wins when many that are less advantaged than us go the way of the forgotten. It haunts both our internal appeals to goodness and fiscal responsibility. The cost of noncompliance, of neglect, in this case, the well being and maintenance of less advantaged children, is magnitudes of orders larger than the cost of implementing their care, especially put in the light of our plentitude in our state coffers. Those not wanting to know that cost by their apathetic view that it will either not or should not affect them, do not know the dynamics of the complex economics of our society and how it intrinsically ties back to their existence on the streets and in their places of occupation. By letting others fork the “bill” for such things leads to their own demise in the form of a less passionate and functioning society within the realms of commerce.

While visiting a client in Austin yesterday and as we awaited word of the TRO trial, just minutes away in a state courthouse, as I approached my car, I was greeted with a scenario in which a very determined mother of two disabled children was struggling to prepare them to be wheeled into the rehab. Without a thought (as any of you would have done), I ran to offer my help, in any small way she would accept. Her proudness had forced her to say she was fine (as she certainly was – as she had done these tasks countless times and was a regular part of her life struggles). At that point, we both made a silent determination that I was merely a very small and temporary extension of her and my help was as much for me as it was for her and her two children. She accepted my offer and we both wheeled those two extraordinary young people up the ramps and into the rehab. Among the many things that impressed me was her preparedness – she had all the children’s notes, props, and tools on the wheelchairs, ready to take out and use during their therapy regimens. She then thanked me, but the thanks had to go to her and her children instead for their continued fight to be part of all our lives, wherever we are and whom we are. They are the opposite of burdens – they are essential to our own saneness and self-worth. They are necessary for us to go forward in our own lives, facing our own very small challenges. This is the essence of the fight to keep therapy care going for them and really, a vital mental and psychological therapy for us to conquer our bumps in life. We are all evidently syneristic in our internal struggles. Therapy is a large part of our future investment for our own survival.

Letters to Write to Both the Texas LBB and the Federal CMS About Proposed Rate Cuts

With the recent activity of the rate cuts, it is as important now as anything else to write to those who can influence outcomes, regardless of the final rates that will be released, negotiated, or settled in court. Have your patients (parents of Medicaid beneficiaries and/or friend/advocates of them) and your working therapists write letters to CMS (email below) and the Texas Legislative Budget Board (LBB) (website below) with testimony about how a rate cut will endanger access to care for them on a personal level or to their patients.

Members of the LBB were the individuals, that with the approval and guidance of the legislative compromise committee members handling the final budget bill passed (SB 2), crafted behind closed doors, the language of SB 2 Rider 50, which in turn, gave the TX HHSC guidance on how much to cut from the Medicaid therapy services budget for the 2016-2017 biennial.

CMS contact:

Bill Brooks

CMS – Region 6

Associate Administrator for Medicaid and Children’s Health Operations
1301 Young Street, Suite 1124
Dallas, TX 75202

Letters to LBB:

Also, if you are not going to attend the public hearing on the latest rate proposal from the TX HHSC, you can instead submit electronic testimony (just as effective as in-person testimony) to:

We do, though, encourage all to attend and testify to HHSC about these this latest rate cut proposal:

TX HHSC Swings Back, .. Releases New Therapy Rate Reduction Proposal Redux – Same Data, … Same Story

As was expected, today TX HHSC released their redone Medicaid therapy rate reimbursement reduction proposal to be effective October 1, 2015 with a public hearing scheduled on September 18, 2015 in Austin. Each code reimbursement was reduced based on an over-under 150% of the Truven 11-state median Medicaid therapy rates (T11-SM) methodology as published in the TAMU-SPH study.

Preliminary analysis shows that if a current code reimbursement rate was over that threshold (1.5*T11-SM), it was reduced by anywhere between 25% and 28%. Otherwise, the rate was reduced by approximately 3.44% (ORF/CORFs), 4.68% (HH), and 3.46%  (Inds) respectively. There were a few exceptions for seldom used codes. All therapy disciplines were affected. All evaluations were reduced by 25% across all delivery models and disciplines.

The ave (weighted ave) rate cuts across all disciplines were ORF/CORFs 13.19% (17.49), HH 12.16% (15.18), Inds – home 12% (9.96), and Inds – office 11.36% (5.91) respectively.  The weighted average cuts were calculated based on code utilization in Texas (percentage of total Medicaid therapy budget spent on a code service during the last fully collected fiscal year’s data). On the surface, this reduction appears to affect the ORF/CORF delivery model sector disproportionately. Again, CPT 92507 was cut the most based on a relatively high utilization pattern – 27.93% (ORF/CORFs), 25.75% (HH), 11.12% (Inds – home), and 9.83% (Inds – office) respectively.

If one calculates across disciplines (again for each delivery model), one gets the following ave (weighted ave) cuts: For ST services – ORF/CORF 18.19% (27.93%), HH 17.9% (25.75%), Ind (HH) 16.73% (15.15%), and Ind (office) 15.96% (8.25%). For OT/PT services combined – ORF/CORF 11.96% (6.83%), HH 10.68% (3.5%), Ind (HH) 10.81% (4.68%), and Ind (office) 10.21% (3.51%).

Without regards to delivery models one obtains the following ave (weighted ave) cuts: ST 17.18% (19.27%), and OT/PT 10.91% (4.88%). Finally, across all disciplines and delivery models one obtains the ave (weighted ave) cuts: 12.18% (12.12%). The average median cut across all delivery models and disciplines was 3.76%.

This proposal from HHSC to cut rates is once again, an attempt to equalize across therapy service delivery models without regards to delivery model costs and comparative effectiveness and efficacy. We will be publishing a more thorough analysis of this proposal later next week. In the meantime, it is certain that the prior TRO case will be reopened as the original one was never closed when the judge refused to sign anything that HHSC put forth. Separate from this is the distinct possibility that another TRO will be filed against the proposed benefits policy changes as well. Again, we will be publishing any updates on these developments as they happen, probably by next week.

Let us look at this rate reduction in the perspective of the state and personal budgets. The State Comptroller has estimated that Texas will collect total revenues (general and federal) of approximately $220.9B during the 2016-2016 biennial. The approved budget spending during that same time period is $209.4B. The projected surplus during the next biennial is then $11.5B. The proposed rate cuts, along with the proposed benefits policy changes are projected to save at least $150M during that time period. The percentage of the projected surplus that the therapy savings will be is approximately 0.013%. By losing less than “14 thousandths of one percent” of the surplus already projected, we would preserve and/or improve the health maintenance of over 144,000 Texas Medicaid children that received therapy care in the past year. This would equate to less than $1,042 per Medicaid therapy beneficiary to cover two years or an average of less than $43.40 per Medicaid therapy beneficiary per month during that period. If just half of the current Texas census (not even counting tourists and visitors) each bought approximately $173.35 more in sales-taxed consumables in the state during the next two years or less than 23.75 cents per day for the next two years, this would more than cover that $43.40 Medicaid state therapy PMPM (per member per month) cost. Even when accounting for proportional Medicaid therapy roll increases due to natural population increases during the next two years, that per diem amount would stay well under 25 cents. This perspective should be enough to display the ludicrous nature of this attack on therapy providers and Medicaid beneficiaries in Texas.

Please keep in mind that these rates are a proposal only, subject to scrutiny by the courts, the public, and the politics, and to the first point, the TRO will be reopened because of it. You can download the new rate proposal packets at

TX HHSC Therapy Policy Changes – Some Further Interpretations and the Hearing

The proposed changes to Medicaid therapy policy changes released by TX HHSC last week and of which public hearings are being conducted for today in Austin include dramatic changes to the authorization process, periods, and requirements, home health limitations and personnel tracking. Many were not discussed with stakeholders prior to their release.

Previous blogs discussed these major changes. However here we go into some detail and interpretation.  The most prominent and affecting changes pertain to therapy home health. Home health therapy timed units are proposed supposedly to better equate work done between the delivery models. However, no equalization was mentioned for transportation involved in such delivery of therapy.  Also no at-risk component was given. Furthermore, equating therapy in such manners may violate certain statutes of home care given in prior injunctions and the TAC. Therefore timed units for home therapy will be problematic.

Additionally, home-bound medical necessity was, once more, vaguely outlined, solely put in terms of the medical necessity of such limitations, to be dictated by the referring physician.  The “inconvenience” of the family or beneficiary was exclusively eliminated as a legitimate reason for home therapy. Does “inconvenience” include all degrees of socio-economic disadvantage such as lack of funds, transportation or extenuating family circumstances involving multiple family members that would need other types of simultaneous supervision and/or care?

Assistant therapists are now required to use a special billing modifier (“UB”) when they render services. Obviously, the motive for this was to track their usage in the eventual hope of revealing any type of usage pattern in the state towards more economical healthcare, (i. e., reimbursing less for those services). Ironically, therapy businesses have needed to utilize assistants more because of rate cuts. This is a circular and insidious argument used by HHSC to track assistants usage. Instead, one could simply utilize the NPI of the supervising vs assistant therapists rendering those treatment services.

Co-treatment scenarios have been more clearly defined and tightened, and requirements for billing such services assigned. The modifier (“U3”) must be used in co-treatment scenarios.

The threshold for medical necessity for authorization under chronic cases for speech therapy in developmental delay now becomes a std dev. of 1.6 or below from a “norm” (using norm-referenced standardized tests) on at least one subtest of the assessment test rather than the more inclusive 1.2 std. dev. range. Is this requirement now based on the “therapy expertise” within HHSC, (i.e., practicing therapy within Texas without a therapy license on behalf of all of HHSC actuaries and analysts)? Even when the beneficiary is tested below this new threshold, the referring physician must review and approve it as a means to prove medical necessity.

Authorization periods were shortened so that the therapist is now relegated to obtain more frequent referral source signatures and checks for therapy service extensions. Without good referral source liaisons, this will burden the continuity of therapy care process in legitimate cases, further making it difficult to retain the beneficiary’s plan of care compliance.

HHSC’s public hearing on the therapy benefits changes proposal has come and gone with, once again, impassioned and deliberate testimonials. One can still submit your electronic testimony to HHSC by September 11, 2015. Although we are all aware of the lower weight that HHSC is now giving public hearing testimonials under their rigor of a budget cut ransom versus more direct methods such as legal and federal interventions, we highly encourage all to submit your thoughts and more importantly, your alternative solutions to HHSC by that deadline.


TX HHSC Drops Appeal to Therapy Rate Proposal TRO, but …

Yesterday, in less than 10 minutes in court, lawyers for the TX HHSC declined o continue their appeal to the plaintiffs TRO and injunction merit case. What this essentially means is that TX HHSC will restart their rate analysis in order to come up with a suitable rate reduction proposal for therapy services in Texas Medicaid – one that, mind you, must not result in an access to therapy care problem for Medicaid beneficiaries and must use a constitutionally appropriate methodology. In addition, according to a steadfast HHSC spokesperson yesterday, will meet legislatively mandated budget cut requirements in full. This will be a tall order since all those financial, numerical, and social policy constraints are inconsistent and counterintuitive.

In an immediate pushback from TX HHSC and some legislators, it was made clear that a subsequent new therapy rate cut proposal will include the use of other states’ Medicaid rates and historical trends. There is only one problem with this plan – these data were inconsistently collected and abused by the TAMU-SPH study and the follow up HHSC interpretive summary report – the same means that were challenged in court by the TRO.  In order to meet the LBB’s stringent and last minute budget constraint specifically targeting therapy, a corresponding rate cut would have to lead to access to care problems via a massively reduced therapy workforce in Texas – proved by none other than the TAMU-SPH study. This presents with a circular conundrum for HHSC. This time around, will a new and truly scientific study be done with the input of relevant therapy industry experts? This smacks of a reasonable logic and throwing a small amount of money towards finding a non-biased answer to the truth behind the worth of therapy for Texans, hence, no such announcement of such future action was made by the TX HHSC.

Additionally, in a pounding-of-the-chest, bravado moment for HHSC, after the court adjournment, an overzealous announcement was made that the full force of the budget cut would be used for the next redo of a therapy rate cut proposal. This was clear politically motivated rhetoric – something that a supposedly politically neutral state agency should, at least, not be exposing so venomously (internal politics are human nature). As a state agency, it should directly serve the states’ constituency and not a handful of politicians and their staff. Alas, this is fantasy in our currently charged policy-biased environment.

What holds for the future of therapy in Texas after this initial tug-of-war? Will HHSC once more, test the will of the courts, the therapy industry, and it’s people against the force of a majority party backed and hastened LBB requirement? One must observe that the LBB is not a publically elected body and its credentials are not clearly shown to that public. The therapy cut budget was crafted in little less than one night under the pressure of a legislative deadline. A special session could have been called for in order to give sufficient time to display a more actuarially responsible budget proposal for the Medicaid therapy budget. Instead, it was hurried up to force the therapy industry and Medicaid beneficiaries to haul a large disproportional  brunt of the state’s budget deficit – the sins of years passed overspending in other nonessential areas and favors given to others.

Texas Therapy HHSC TRO/Injunction Hearing Postponed and the Real Reasons Behind the New Therapy Benefits Policies

The hearing in the Travis County TX District Courts to decide on the therapy TRO-to-temporary injunction status against TX HHSC has been postponed until Wednesday, 08/26/2015. This comes as no surprise as the courts have had a large caseload and the parties involved are holding large amounts of information in their dealings with each other – nearly 2,300 documents of which one was the alleged redo of the therapy rate reduction proposal from TX HHSC.

To the point of the new proposal from TX HHSC on therapy benefits policies, the real hit comes to home health therapy services because the bar to prove medical and home-bound healthcare necessity was raised, as well as billing in timed units. In terms of equating untimed to timed units codes and billing, home health therapists would now have to service a beneficiary for at least 53 minutes to recover a full untimed code reimbursement. Because of these added obstacles to home therapy care, there may be more legal wrangling to come with respect to these therapy benefits policies. The public hearing scheduled for these policy changes in Austin on 8/31/2015 can produce quite different takes on these issues and once more, present with a division within the therapy services industry in Texas and elsewhere. More directly, adding these restrictions to the benefits policy changes, more than therapy stakeholders had suggested earlier in their talks with TX HHSC, may add another schism in the industry between therapy delivery models – a divide and conquer strategy.

TX HHSC on different therapy cuts, sort of, comes back with double whammy for therapy

This week two interesting and curiously timed announcements emanated from TX HHSC – released therapy benefits policy changes and a disclosed internal memorandum submitted to the courts pertaining to a redo of a proposal for Medicaid therapy rates in relation to the current TRO in effect, first reported by Quorum Reports ( and scheduled for a hearing on 08/24/2015 for a ruling to impose a temporary injunction against the release of the current proposed therapy rate cuts.

TX HHSC has scheduled therapy policy benefits changes that were crafted based on a mandate from the State Legislature (SB 2 Rider 50) to specifically reduce the therapy Medicaid budget by $25M per year for the next biennial. There were ten recommendations that were submitted by stakeholders including SynerImages, of which many managed Medicaid MCOs are already implementing. There were, however, a few surprises including no further reimbursements for re-evaluations and home health timed unit billing. Recommendations were made for both acute and chronic caseloads. One may download these new proposed therapy benefits changes at

What actually transpired with the therapy benefits changes was that TX HHSC used the most stringent therapy benefits limitations imposed by all other states and combined them producing this new therapy benefits policy. Texas was already implementing one of the most stringent therapy benefits policies in the nation. These changes will essentially overshoot achieving the annual $25M annual savings. More specifically, this change alleviated much of the risk that TX HHSC was facing with assuming budget savings from these therapy benefits changes, shifting that risk to therapy providers instead, (i.e. therapy providers must now implement more stringent overhead processes for the continuation of authorizations and subsequent treatments).

Authorization periods were shortened from 180 days to 120 days (total) and 90 days to 60 days (initial). More stringent definitions of acute and chronic cases and medical necessity, were also given. Re-evaluations will no longer be reimbursed. Home health billing will be based on timed units. Further requirements involve limiting high frequency and duration criteria for cases, use of assistants, and new co-treatment description requirements. In general, for the average therapy case, authorizations will be tighter and their periods shrunk.

Notwithstanding TX HHSC’s denial of a new rate proposal emanating from a disclosed internal document submitted to the courts this week, the alleged memo points to a new methodology to be used based on the TAMU-SPH study’s median of the Truven 11-state Medicaid paid rates (T11-SM). Firstly, the TAMU-SPH study does not mention median rates, only mean rates for comparisons. Secondly, the alleged interim memo is inconsistent with the TAMU study and HHSC’s own first interpretive report of it, citing different payment comparative ratios between the current Medicaid rates and the T11-SM rates.

In the alleged interim proposal, speech code 92507 would be reduced by 10.48% and 8.48% respectively for ORF/CORF/ind(office) and home health/ind(home).  All other codes would be reduced by 15% if the resultant amount would be above the T11-SM rate. Otherwise, the code rate would be reduced by 3.75%. The main difference between the 9/1/2015 effective proposal and the alleged interim one is that all codes will now be reduced. We will follow up with a more detailed analysis between the two proposals and if anything has been gained or lost from the hearing testimony, and political and legal pressure.

The TRO hearing on whether to implement a temporary injunction against HHSC is still scheduled for 08/24/2015. All these issues and more will be presented to the preceding judge to interpret and rule on.

The Beginning, …. chess moves to the middle of the board and a TRO for Texas Therapists

On August 11, 2015, plaintiffs consisting of four therapy providers and numerous Medicaid beneficiaries filed a temporary restraining order (TRO) against Executive Commissioner Chris Traylor (aka the TX HHSC) in order to halt the implementation of therapy rate cuts effective 9/1/2015. In point of fact, legal representation for the TX HHSC at the Travis County court in which the order was filed, stated that  the TX HHSC had “no intention” of stopping the implementation of these rate cuts. Hence, the final rates would have been released this week as is. See the beginnings of the media frenzy here, the plaintiffs’ press release here HearingSet.PR, and a copy of the filed TRO here tro-petition-texas-therapy-2015.

The TRO is actually far reaching in that it does not simply ask for the restraint of implementing those rate cuts across all delivery models, but points to the possible negligence of the state in utilizing an unconstitutional (Texas) Medicaid fee schedule rate methodology and of not utilizing objective means in commissioning a study for the use of appropriate assigning of rates for therapy. Instead, the Tx HHSC commissioned a study (from TAMU-SPH) using limited agenda and scope and incomplete and possibly faulty data, assumptions, and subsequent conclusions that were not part of the study. Further to this, HHSC released a secret communique to legislators during the last legislative session, stating their proposals to meet biennial budget constraints. The affecting Rider 50 language in SB 2 had not been written yet. None of those suggestions were precisely implemented in their final rate proposal.

We now have at least, two smoking guns to ponder in this opera. First, some data that was given to TAMU-SPH researchers, legislators, and therapy stakeholders from 2009 to 2014 may have been faulty or incorrect. Discrepancies exist between the supposed spike from Medicaid therapy utilization increases between 2011 and 2012 and natural Medicaid population dynamics. The numbers cannot be explained from using only natural population and/or provider increases. Extrapolating this increase while holding the number of beneficiaries to their natural increases during that time would have had to have resulted in a tremendous increase in servicing and billing therapists in the thousands in Texas (utilizing then current authorization policies). This means that up to around 10,000 new therapists would have had to have been employed and billing regularly during that year. Contrast this with the total number of employed therapists (OTRs, PTs, and SLPs) during 2014, around 30,720 (11,670 SLPs). That number would have been appreciably less during the period 2011 to 2012. This stretches the possibilities beyond any reasonable scenario or subsequent epiphenomenon.

Second, the TAMU-SPH study was doomed from the start because researchers were told not to collaborate with stakeholder providers about protocols used, nor were they possibly given correct data to begin with. Couple these situations with the fact that the billing protocols from other states were not cleared up in order to do head-to-head comparisons, the study never had a chance of coming close to being objective. In addition, the TX HHSC used the incomplete study (the efficacy and efficient part of the study was never finished) to create their own agenda-based report that TAMU-SPH has distanced themselves from – a not-so-scientific paper to others, including legislators and certain stakeholders.

So, while we have now heard both shoes drop (one from the TX HHSC rate proposal and the other from the stakeholder/advocacy TRO against it), this saga continues to plague the TX HHSC. A TRO will turn into a temporary injunction should the TX HHSC not or ineffectively appeal to the judge on 08/24/2015. If this should happen, then hearings will be scheduled for follow-up appeals and replies from both sides towards a permanent injunction. Consider that the Frew injunctions lasted over 12 years in and out of courts. This TRO can only be filed in the state as SCOTUS ruled last March that an individual cannot sue a state over Medicaid reimbursements in federal court. SCOTUS however, left open the ability to sue (file an injunction) in state courts and to CMS to equalize (interject on behalf of individuals) a state in order to remedy such  disputes based on the conditions of Medicaid amendments to the Social Security Act of 1965.

The TRO contends that the TX HHSC used an unconstitutional methodology to set the current rate proposals, (i.e., it is based on a 2012-2013 Texas median commercial rate fee schedule – 145% on average of them, instead of based on governmental rates such as percentages of Medicare, Medicaid, or combinations thereof, etc.). Additionally, it states that the TAMU-SPH study was at a minimum, based on flawed data and assumptions. In order for these issues to be resolved, the study would need to be deconstructed (once more) and the data re-wrangled by data experts and verified. Also, the TAC (Texas administrative code) pointing to the Texas Medicaid Rate Methodology (TMRM) must be examined to determine the appropriate “formula” to use.

There are two TAC Medicaid fee schedule rate methodologies, one based on non-geographic relative value units or resource-based reimbursement fees (RBRF), similar to CMS’s RVU-based formulary, and the other on access-based reimbursement fees (ABRF) or the ability of a service to be historically rendered in a proper setting based on availability of providers and equipment in the state. See TAC388.8085_rule and also our prior discussion of the state constitutional methodologies that are not being used back on 3/2015, prior discussion on methodology (see the second paragraph after point no. 12)

On the surface, neither one appears to resemble anything TX HHSC utilized to come up with their 145%-Texas-median-commerical-based rates. HHSC used this particular metric because the TAMU-SPH study researchers were asked to calculate such rates (median thereof of all various Texas commercially paid rates for therapy) as a means of comparison with the current Texas Medicaid rates. One would then guess that HHSC used 145% because the ratio 1.45 was an average ratio of  a therapy Medicaid rate to the corresponding median commercial therapy rate or at the least, was a ratio that made sense based on a weighted average ratio using weights that were relative utilization frequencies (based on most used codes) and would achieve the additional $50M savings per year. If this was indeed the approximate methodology used then it would behoove HHSC to publish it. HHSC’s motive might have been that the 1.45 ratio would better serve providers than a ratio based on Medicare rates or the TAMU-SPH study’s Truven 11-state median paid rates. Of course, any small enough ratio of any fee schedule would be damaging and so, what were the alternatives to HHSC using other states’ Medicaid fee schedules (or central tendency estimates of them thereof) or CMS’s Medicare fee schedule (which are used in calculating floors for commercial rates as percentages of the Medicare RBRVS) as baselines (or combinations thereof) for their rate proposals? Also, commercially paid therapy is simply administered differently than government subsidized paid therapy. There is more overhead in administering Medicaid claims than commercial claims (think pre-authorizations and more stringent medical necessity requirements in a 100% managed Medicaid scenario by next year). Therefore, the cost of servicing Medicaid therapy patients may be more expensive than servicing commercial or private therapy patients.

One other question should be asked of these calculations – was all commercial payer data used to calculate these median commercial rates and if so, how was the data wrangled in order to make sense of the gaps and discrepancies in certain data items in commercial claims? The study does explain some of these “data wrangling methodologies”, but it is inconclusive on the uniformity of it, (i.e., some things were sweep under the rug as anomalies that could be statistically smeared out). The plot thickens and the saga continues, but there may be more than just injunctions impressed on the TX HHSC – there may need to be subpoenas issued in order that the data be properly vetted and verified. At this point in its recent history, can the TX HHSC avail itself to objectively vet its own analysis and data collection? These are issues (among many others, including the precarious condition of Medicaid beneficiaries in the state) that the preceding judge will have to ponder over in future interim and final rulings.