Massive Medicaid Cuts for Therapy Services on Hold — For Now

A 2013 Medicaid Matters rally.
A 2013 Medicaid Matters rally.

On Wednesday morning, dozens of Medicaid therapy providers, parents of kids with disabilities, and healthcare lobbyists expected to spend their day packed into a Travis County court room. They expected to wait hours as lawyers with the Texas Health and Human Services Commission made their case for cuts to Medicaid reimbursement rates that would have affected thousands of children with disabilities and care providers.

Instead, the hearing was over in less than ten minutes.

Making things unexpectedly simple, HHSC reps arrived in court a little early to tell the judge that, actually, it planned to throw out its entire rate-reduction proposal and just “start over.”

The cuts came after the Legislature instructed the HHSC to find a way to save $350 million spent on Medicaid for speech, occupational, and physical therapy over the next two years. Therapy providers expected to see Medicaid reimbursement rates cut by 18 to 20 percent for occupational and physical therapists, 30 percent for speech. Lawmakers opposed to the cuts estimated this could have cost 7,500 therapists their jobs and affected 60,000 Medicaid patients.

A judge was set to decide Wednesday whether to impose a temporary restraining order to stop the cuts from going into effect on September 1. Several families and providers had filed a lawsuit and planned to testify at the hearing about the detrimental effects these cuts would have had on their children and clinics' ability to provide care. Although HHSC made its rate-reduction proposals earlier this spring, a hearing in which the public could have voiced concerns about those cuts didn't happen until July 20.

So this time around, attorney Ben Hathaway, who represented families and providers in the lawsuit against HHSC, says his clients “really just want the HHSC to go through the process they should have gone through to start with: getting feedback from the public, feedback from the providers, all the affected stakeholders.”

HHSC has not announced any plans on how it will rethink new rate reductions or other cuts. But Dr. Alfredo Sepulveda, a Houston-based healthcare analyst, is thinking the commission will toss out the controversial Texas A&M study that justified the cuts in the first place. It was problematic, he said, because it compared Texas's Medicaid rates to commercial rates in other states. "It's just two different animals," Sepulveda said.

But even with a new study, it might be too soon for optimism.

In a statement HHSC released to the Houston Press, the commission began by indicating it “plans to move forward with implementing the full Medicaid therapy rate reductions” and ended by explaining that it will “re-start the process to set reimbursement rates to achieve the full savings as mandated by the legislature.” So even though it will redo the process, for now, it appears the agency is aiming for the same conclusion.

In addition to that, the HHSC released a separate proposal last week that will make it harder for therapy providers to obtain authorization to treat Medicaid patients. That proposal would change the definition of "medical necessity" for people who need to have therapy at home instead of at a clinic.

Sepulveda thinks that's bound to be the next chapter in this ongoing Medicaid battle. “The war isn't over yet,” he said.

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