Budget Cuts for Therapy Won't Harm Kids, Judge Told

Hefty cuts to a state Medicaid program that pays for poor and disabled Texans to receive in-home therapy won't endanger patient lives or destroy livelihoods, a state district judge was told Tuesday.

Coming from a major health insurer that covers foster care youth and children with disabilities, that assertion has added another layer to an already contentious eight-month legal fight over whether Texas has been overpaying companies to provide services like speech, occupational and physical therapy.

In 2015, state lawmakers approved a two-year budget that ordered a roughly 25 percent cut to the amount of money some pediatric therapists were paid by Medicaid, the federal-state insurer for the poor and disabled. A group of in-home therapy providers and families of children with disabilities immediately cried foul and sued the state in August to prevent the payment cuts from taking effect.

On Tuesday, a lawyer for Superior HealthPlan told a state district judge that reducing payments to therapists would not stop the insurer from providing children with “all of the services they need.”

Superior “studied this rate cut independently of the state” and is “absolutely convinced that there’s going to be adequate access to the network,” said Jim McClendon, a lawyer for the company.

The remarks added a third-party voice to a hotly disputed lawsuit over children’s access to health care services that has spurred the involvement of state leaders. The health plan's comments painted a significantly different picture than what has been argued by in-home therapy companies and advocates for children with disabilities.

Lawyers representing the home health companies have said cutting payments as mandated by state lawmakers last year would force the businesses to close their doors.

They were in court Tuesday seeking to expand their lawsuit to include Superior after the health insurer told at least one home health care company it would begin paying providers less money for speech, physical and occupational therapy. State District Judge Tim Sulak last year ordered that the state could not cut Medicaid payments at least until the issue went to trial, and the home health companies argued before the same judge on Tuesday that a private company operating within Medicaid should have to follow the same rules.

McClendon, speaking from the courtroom audience because Superior is not actually a party of the suit, said the company made its decision to lower payments independently of the state. The new amount the insurer would pay for therapy services, according to the lawsuit, would be about 70 percent as much as what traditional Medicaid paid for those services.

“My client would be put out of business by Superior,” said Dan Richards, the attorney representing the home health companies and the families of children with disabilities. “This is, in fact, a backdoor rate cut to get around the injunction that is facing this court.”

The two-year budget approved by state lawmakers in 2015 ordered a roughly $350 million cut in Medicaid funding for pediatric therapy services. The decision was based largely on a study commissioned by the state that found Texas paid up to three times as much for therapy services as other states, but therapy providers dispute those findings and say the study's methodology was flawed.

The number of Medicaid patients receiving therapy services, whether at home or in a facility, has increased nearly 40 percent since 2009, from roughly 170,000 to 240,000 Texans, according to the Texas Health and Human Services Commission. Costs have grown at an even faster clip, rising 65 percent over the same time period.

Supporters of the cuts argue that home health companies are overpaid, noting that one of the businesses suing the state is backed by a private equity firm. At least one other private health insurer operating in Medicaid has made similar comments to Superior’s, saying the rate cuts pose little risk of limiting children’s access to health care.

“We would have no problem with our Medicaid members accessing a therapist with the proposed rate cuts,” Mary Dale Peterson, chief executive of the South Texas-based Driscoll Children’s Health Plan, told The Texas Tribune in October. “We have plenty of therapists in our network."

But home health agencies say the looming payment cuts would cause the companies to be reimbursed at rates that are “below the cost of actually providing the services,” according to court filings.

The lawsuit will continue on Wednesday, when an appeals court will hear arguments about whether the state should be kept from immediately moving forward with the cuts.