Texas Medicaid cuts on hold … for now

Speech, physical and occupational therapists work independently.

AUSTIN - A state judge last week blocked Texas social services officials from cutting the Medicaid pay of therapists who serve disabled children and impoverished seniors.

Travis County District Judge Tim Sulak’s ruling prevents the Health and Human Services Commission from cutting the fees of speech, physical and occupational therapists who work independently for rehabilitation clinics or home health agencies. Under the budget passed last May, the cuts in their fees could be as much as 90 percent.

Judge Sulak said the lowered reimbursement rates “will probably cause multiple Texas Medicaid providers to go out of business,” which would deny “critical services” to at least some of the 243,000 Medicaid recipients who received outpatient therapy treatments last year.

The cuts were originally scheduled to begin Sept. 1, but that was delayed after parents of disabled children filed a lawsuit to halt the cuts. That case was dismissed, but the parents immediately filed a second lawsuit as the cuts were delayed until Oct. 1. With this most recent ruling, the cuts now have been put off until next year. Judge Sulak set the matter for trial on Jan. 18. The state is expected to appeal his temporary injunction, and a separate ruling that said home health care agencies and children bringing the lawsuit had legal standing to do so.

In his order granting the injunction, Sulak wrote that the commission’s proposed rate cuts “are probably based on arbitrary criteria that lack adequate … consideration for the impact on service providers or recipients.”

He agreed with a central contention of home health agencies that have bitterly opposed the reductions. Sulak said Texas A&M University researchers’ analysis last winter of rates paid to therapists by other states’ Medicaid programs and commercial insurers “is seriously flawed.”

This budget intrigue is, in part, a by-product of the way Texas government works. Under the state constitution, the Legislature meets every two years for 140 calendar days. In considering all the needs of the state, they are required to deliver a balanced budget.

This past session, legislators passed a budget of $209.4 billion. Of that amount, $78.3 billion was earmarked for education. Medicaid was the second largest expenditure at $61.2 billion. If those numbers sound huge, they are. Texas is a large state with a massive population. These two items consume a lion’s share of the budget and are the subject of much legislative wrangling. The House version of the budget contained $800 million more for Medicaid than the Senate version but House members agreed to go along with larger cuts as long as it “didn’t affect access to care.”

Now that the impact of the cuts has become clear, officials speaking on behalf of Gov. Greg Abbott and Lt. Gov. Dan Patrick insist the cuts reflect the intent of the Legislature and must be implemented. A large group of legislators from both parties strongly disagree.

Rep. John Otto was chairman of the House Appropriations Committee that authored the House version of the budget. He said the budget provision “was never intended to jeopardize access to care.” A certified public accountant, the Republican from Dayton presumably knows something about numbers, and since he has announced he would not seek re-election in 2016, it’s more difficult to construe his remarks as political.

Two other Republicans, state Sens. Robert Nichols, who represents an East Texas district that includes Orange County, and Jane Nelson, who was the Senate’s chief budget writer, also voiced serious reservations about the cuts. 

Rep. Dade Phelan, (R-Port Neches) also serves on Appropriations and said while he supports cuts to Medicaid, the method being used is not appropriate.

In a letter to Texas HHS Commissioner Chris Traylor, Phelan wrote, “It is imperative that we consider the full magnitude of these rate cuts on the young Texans who require long-term therapy assistance.”

Phelan provided some insight into the final days of the session when these cuts materialized. “We were 138 days into a 140-day session when this matter came up,” he said. “You could say it caught many members by surprise.”

More serious consideration of these cuts was short-circuited by the impending end of the session, and a Texas A&M study widely touted as proving Texas therapists were more lavishly compensated than those in other states, implying that access to care would remain intact.

That study, which Judge Sulak described as “deeply flawed,” was not as advertised. Charges were made that researchers cherry-picked the data to come to their conclusions. It calls to mind a phrase popularized in the United States by Mark Twain (among others), who attributed it to the British Prime Minister Benjamin Disraeli: “There are three kinds of lies: lies, damned lies, and statistics.” That might be a little harsh, but there has been some backpedaling about the way the study was used. Health and Human Services Commission officials admitted in court that they did not study the question of access to care.

By design, lawmaking is usually a slow, deliberative process on both the state and federal level with a bill having to pass muster with multiple committees before becoming law so its full implications can be considered. That clearly did not happen in this case with the House budget, which was overwhelmingly approved by a 141-5 vote. The Senate version that would have cut Medicaid even deeper than the $800 billion added an item that was not in the House budget – $800 billion for border security. 

Although some of the Senate’s budget cuts were restored, the final budget document contained sufficient shortages to threaten the livelihood of many therapists, and threaten the care of the disabled children and impoverished seniors they look after. But others are weighing in on this issue, as well, as it becomes clear what the Legislature has done, albeit without the clear understanding of many members.

Bill Noble, a spokesperson for Texas Association for Home Care & Hospice, said, “We know that, at the end of the day, this is exactly what industry observers and experts pointed to with the risk of having such deep cuts. If you don’t ask people what kind of impact the actions of the Legislature would have in making a budget cut, you end up with unfortunate outcomes.”

Ed Sills of Texas AFL-CIO was more blunt: “Why on earth would the state of Texas want to cut therapy services for special-needs children when it is sitting on some $18 billion in unspent funds?”