Parents Steamed Over Texas Medicaid Cuts

AUSTIN, Texas (CN) - Parents and home-health agencies say that Texas' proposed Medicaid reimbursement rates will force providers to shut down and leave thousands of children without affordable pediatric health care.

Lead plaintiff Diana D. and three other parents filed suit on behalf of their minor children against the Texas Health and Human Services Commission and its executive commissioner Chris Traylor on August 11 in Travis County Court.

Also joining in the lawsuit as plaintiffs are the home-health agencies Care Options for Kids, ConnectCare Therapy for Kids, Atlas Pediatric Therapy Consultants and Pathfinder Pediatric Home Care.

The health-provider plaintiffs give physical therapy to children with "mild to severe defects in gross motor skills, specializing in the treatment and management of a variety of congenital, developmental, neuromuscular, skeletal, and acquired disorders and diseases," according to the complaint.

They also have speech language pathologists who "remediate communication disorders" to increase a child's communication skills to an age-appropriate or functional-ability level. The providers use occupational therapists to help children with development issues, daily activities, social interaction and independence.

The Health and Human Services Commission administers the Texas Medicaid Program and arranges for the delivery of most Medicaid services by contracting with managed-care organizations (MCOs) that are licensed with the state department of insurance.

The MCOs contract with doctors and other health care providers to create provider networks for Medicaid beneficiaries. The Health and Human Services Commission pays each MCO a monthly amount to deliver health services for Medicaid members enrolled in the MCO's health plan. Pediatric services including occupational, speech, and physical therapy are part of the state health plan, according to the complaint.

Diana D. says her nine-year-old daughter, KD, currently receives pediatric services from Care Options for Kids. KD is nonverbal, non-ambulatory and suffers from Rett syndrome, delayed development, and a seizure disorder. Because of her condition, KD is "unable to receive therapy outside her home," the complaint says.

KD's mother says she cannot afford the rates of commercial health providers and that she relies on the Texas Medicaid program for KD's pediatric services.

The complaint describes similar situations for Karen G., Guadalupe P. and Sally L., none of whom can afford the rates of commercial providers of pediatric services. They all depend on the Texas Medicaid program for the home-health services their children need.

According to the complaint, the Medicaid reimbursement rates will impose severe cuts to pediatric services. This would cause many Medicaid providers to discontinue services or close down their operations entirely.

"Such closures will deny needed services to children, including KD, TG, ZM, LP, and CH, who are now served by the Texas Medicaid program," the parents say in their complaint. "Accordingly, the rates, if implemented, will cause imminent and irreparable harm to the children of Texas, the most vulnerable Medicaid beneficiaries."

The plaintiffs say the Health and Human Services Commission's new rates violate multiple Texas statutes and regulations.

"First, defendants have based the rates on '145 percent of the median Texas commercial reimbursement rate.' That measure violates Texas laws which require that reimbursement rates be based on rates charged by specified governmental payers, not commercial provider rates," the complaint says.

"Second, defendants have promulgated the rates without conducting the economic impact analysis or regulatory flexibility analysis required by Texas law.

"Third, Defendants have not prepared the local employment impact statement required by Texas law.

"Defendants have not complied with Texas law which requires that a state agency promulgating a new rule must provide information about the costs and benefits of the new rule, as well as all other statements required by law," the complaint says.

The Health and Human Services Commission also violated its duty to maximize the Medicaid finance system, according to the complaint.

"If implemented, the rates will have exactly the opposite impact on the Texas Medicaid system because they will create disincentives for preventive care, dramatically decrease the number of providers, impair the quality of care, and fail to accurately reflect the costs borne by the providers," the parents say in the complaint.

The Health and Human Services Commission's new rates will impact MCOs, which must "ensure the reasonable availability of specialists for all covered services requiring specialty care," according to state law. And each contract between an MCO and the state must provide for a "sufficient number of specialty pediatric providers of home and community-based services. "But the proposed rates will prevent access to services and providers required by state law, the parents say.

Additionally, the rates would "deprive KD, TG, ZM, LP and CH of mandated and necessary services and destroy the economic viability of the provider plaintiffs. The rates are arbitrary, capricious, and not based on fact. The rates cannot arguably be rationally related to a legitimate governmental interest," the complaint says.

The rates also violate the Texas Constitution in that they "deny plaintiffs, citizens of Texas, the right not to he deprived 'of life, liberty, property, privileges or immunities except by the due course of the law of the land,'" according to the complaint.

The new Medicaid reimbursement rates for physical, occupational, and speech therapy services take effect Sept. 1.

The Health and Human Services Commission told Courthouse News it does not discuss pending litigation.

The plaintiffs seek declaratory judgment that the reimbursement rates are invalid and void and that the Health and Human Services Commission violated Texas law in promulgating the rates.

They also want injunctive relief to stop the implementation of the new rates for pediatric services and other physical, occupational, and speech therapy services under the Texas Medicaid program.

They are represented by Daniel Richards of the firm Richards Rodriguez & Skeith in Austin.

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