Providers alarmed over Medicaid cuts
In her first year, it looked as if Ariel Reyes was destined to live completely dependent on others. She was born with spina bifida, an incomplete closure of the backbone and membranes around the spinal cord, and doctors didn’t know whether she’d be able to walk or perform the simplest of tasks.
“She was like a rag doll,” her mother, Paulette Reyes, said. “Wherever you would put her, she would just hang out there. If she would lean too much to one side, that was it. She couldn’t get back up.”
But after years of physical, occupational and speech therapy, the precocious Houston 7-year-old’s life has been transformed. By age 4, she no longer needed a wheelchair or a walker, and she is due to start first grade in the fall.
Therapy providers are warning that such success stories are at risk because of deep cuts in Medicaid
therapy payment rates due to take effect Sept. 1. Home health agencies and outpatient clinics say the reductions threaten to limit access to therapy services, leaving thousands of Texas children unable to overcome the challenges of their disabilities. The cuts could apply to short-term rehabilitation therapy for adults, but will primarily affect children with ongoing therapy needs.
Medicaid experts argue, however, that the cuts are needed to rein in a sharp rise in Medicaid spending, caused by therapy providers taking advantage of their virtually unfettered ability to provide services and by generous payment rates. The reductions, advocates say, could limit services for those who truly need them in an effort to stamp out overuse.
Dramatic increase
The $200 million in cuts were included in the appropriations bill passed in the last legislative session. Lawmakers relied on a summary provided by the Health and Human Services Commission contending that Medicaid therapy payment rates in Texas were far out of line with those paid by other states or by private insurers.
The summary showed a dramatic increase in the cost of pediatric acute care therapy services, from $412 million in 2009 to $699 million in 2014. Spending peaked at $732 million in 2012. The number of clients jumped from 94,039 in fiscal 2009 to 148,293 in 2014.
Assured that the cuts would not threaten access, lawmakers approved the overall reduction, leaving it to the health agency to determine how to adjust rates accordingly. The agency released the proposed rates on July 8, with cuts ranging from 20 percent to 90 percent depending on the therapy provided. Speech therapy rates were hit hardest, absorbing an average cut of more than 30 percent, while other therapies saw average reductions of 18 percent to 20 percent.
Therapy providers say the summary provided to lawmakers was misleading. The cuts would force many home health agencies and outpatient rehabilitation clinics to pull back on services provided to Medicaid clients, they say.
“If you look at it just from a numbers perspective and that’s all you do, then obviously, you could decimate a program without also considering what would be the outcomes of implementing such a rate reduction and would it impede care?” said Rachel Hammond, executive director of the Texas Association for Home Care and Hospice.
Hammond said the information provided to lawmakers failed to note that while private insurance may pay lower rates for a given service than Medicaid does, insurers allow therapists to bill for multiple services in a single visit, while Texas Medicaid does not. The report had other inaccuracies, she said, including comparing rates paid to home health agencies in Texas to those paid to physician clinics in other states.
Hard enough already
Therapy providers mobilized their patients and staff to testify in opposition to the cuts at a July 20 hearing of the health commission.
“It’s really hard to have to tell a parent that their child needs therapy,” said Lacy Anderson, a speech language pathologist with SageCare Therapy in Dallas. “So please don’t make us have to tell them it’s not available.”
Hearing the warnings of dire consequences from providers and families, many legislators who had backed the measure that included the reductions began to second-guess their votes. A group of 28 state representatives signed a letter asking the state to reconsider the cuts, and a number of other lawmakers sent personal appeals.
The Health and Human Services Commission is reviewing the issue and plans to announce the final rates at least 10 days prior to the Sept. 1 implementation date.
Hammond said the short notice will give therapy providers little time to adjust their business practices.
Agencies or clinics that provide all three types of services could change their mix in response, providing less speech therapy and more physical or occupational therapy to minimize their losses, or could opt to see fewer Medicaid patients and more with private insurance. Those that focus on speech therapy alone might not survive, Hammond said. Home health agencies might reduce the area they serve to cut down on transportation costs, which could affect access to services in outlying areas.
Providers are urging the state to restructure the cuts to minimize their impact and to stagger the implementation date. But Health and Human Services Commission spokesperson Bryan Black said the agency has no flexibility to reduce the magnitude of the cuts or the Sept. 1 start date. Hammond would not rule out the possibility of litigation to try to head off the cuts.
Even if the cuts take effect, however, their impact may be short-lived. Currently, disabled children may join Medicaid managed care plans, which incorporate cost-saving features, but most choose to remain in traditional fee-for-service Medicaid.
Starting in September 2016, however, Texas will require those with disabilities to choose a new StarKids managed care plan. That could address the current concerns about excessive use of services.
“There is concern about whether or not all of the speech therapy and home physical therapy is always appropriate,” said Ken Janda, CEO of Community Health Choice, a Houston-based Medicaid managed care plan. Leaders of these plans noticed the rise in therapy use several years ago and worked to prevent inappropriate use, but lawmakers had to resort to cutting payment rates instead.
‘Unintended consequences’
“It’s the only tool they’ve had in the past to control Medicaid costs,” he said. “You can’t really control the number of enrollees because it’s a federal entitlement and you can’t really control utilization and you can’t really measure outcomes.”
Managed care plans typically limit the number of therapy appointments per week and per year.
“That can really leave therapists in a challenged position to make difficult decisions,” said Shelley Squier, clinical coordinator for therapy at Children’s Memorial Hermann Hospital in Houston. “This would be the goal that we would like to have for this child, but is that going to be possible in the visits that we have available?”
Cutting payment rates, however, could have an indiscriminate impact, affecting those who truly need therapy services as well as those who might be bilking the system.
“These big massive hammers have all sorts of unintended consequences,” said Tim Schauer, a Texas health care lobbyist.
“Are they going to reduce utilization? Of course they are. It’s a very blunt instrument and it’s going to take down a lot of providers, but it will negatively impact some people that they didn’t intend to negatively impact as well.”